Courtesy Kevin SturmanAbout a year ago, when Sara Cook first got a letter in the mail telling her that someone had paid off a chunk of her medical debt, she thought it was fake. “It seemed like one of those emails you get that says you have a long lost uncle and you just inherited two million dollars,” Cook says. Cautiously, she called the number listed on the letter. What she learned was that this wasn’t a scam or a joke. It was 100 percent real.
A church in Grand Rapids, Michigan, via an organization called RIP Medical Debt, had donated the money that paid off $5,000 worth of medical bills she had racked up from several back surgeries. Knowing that a complete stranger had made this gesture, without her even asking for it, completely wowed Cook. “I felt really loved and blessed,” she says, “knowing that a complete stranger just did that out of the goodness of their heart.”
Prior to getting the letter, Cook says she was feeling really down. After her back surgeries, she couldn’t work anymore (she’s a nurse). She mostly stayed home and felt like she had nothing to offer her community. “But after this letter, I realized that my life really doesn’t suck. I can do things. I may never be able to work as a nurse again. But I can go and sit at the school library for two hours twice a month and help kids read or serve up food in the soup kitchen once a month.”
Her benefactor was RIP Medical Debt, a nonprofit organization that uses donated funds to buy medical debt and eliminate it. Founded in 2014 by two former debt collections executives, Craig Antico and Jerry Ashton, the organization has eliminated over $1 billion in medical debt in the U.S.
Medical debt hits everyone
America has a medical debt crisis. The Kaiser Family Foundation points out that roughly one-fourth of U.S. adults say they or a household member have had problems paying medical bills in the past year. About half of this group (12 percent of all Americans) say the bills had a major impact on their family. Health care costs regularly deter people from getting the care they need or filling necessary prescriptions.
Even people with health insurance feel the burden. One reason is surprise billing, which is when someone gets medical treatment thinking it’s covered and then learns that it’s not, says J.B. Silvers, PhD, professor of health care finance, banking, and finance at Weatherhead School of Management with a joint appointment in the Case Western Reserve University School of Medicine in Cleveland. This usually happens in scenarios where people are told that one specific doctor that saw them was out-of-network, for example. Another reason is that insurance plans with more affordable premiums have very high deductibles, and people end up not fully understanding their plans and don’t have the disposable income to handle a health emergency when it arises. Some hospitals will help work with you and adjust bills based on income, Silvers says. “But some will just send the overdue bill to collection agencies or sue you.”
RIP Medical Debt
Collection agencies are where Antico and Ashton got their start. Antico, who is founder and director of debt operations at RIP Medical Debt, says that he and Ashton met in 2000 at an industry event. Before they began their own venture, they were approached by some people in 2013, explains Ashton: They wanted to buy medical debt and forgive it, no questions asked. After a healthy dose of skepticism, the two men decided to get involved. “The organization ended up abolishing $20 million to $30 million of debt in the first two years. But then at the end of 2013, they closed shop” says Antico.
He and Ashton saw the good the organization was doing. They knew they were in the best position to keep it going—so they forged ahead with RIP Medical Debt, focusing specifically on hospital bills.
It wasn’t easy, though. “We knew how to buy debt and abolish debt, so we started to try to raise money. It was impossible—we knew nothing about how to raise money for a charity,” says Antico. At the time, he was running a collections agency in New Jersey. However, he quit in the middle of 2014 to focus on RIP Medical Debt. They only raised about $3,000 that first year.
By 2016, his family was in debt, and they had to sell their home. “I was doing everything I could to keep it going,” Antico says. And then, things finally came together. RIP Medical Debt got its 501(c)(3) determination letter (designating it as a tax-exempt charitable organization) and the next week, HBO got in touch. The organization was featured on comedian John Oliver’s Last Night Tonight, which brought in $300,000 of donations over the next three months, says Antico.
“From then on, we have grown like gangbusters,” Antico says. They raised $2.5 million in 2017; $5.5 million in 2018; then $12 million in 2019.
How the magic happens
In the United States, if you don’t pay a hospital bill, after a certain length of time it will go to collections. This means that a collections agency, like the ones Antico and Ashton worked for, will buy that debt from the hospital for a fraction of the price. This gives the hospital some cash flow and makes it so they get something from the unpaid bills without having to chase down patients themselves, Antico explains.
The debt collectors determine how much they’re willing to pay for the debt by basically looking at files. These files are stripped of personal information—they only contain demographic and medical information. Collectors use this information to guess how much they can expect to actually collect on each bill over the next five to 10 years. They pay pennies on the dollar to take over the debt, and if they guess correctly, they end up collecting more than they paid: Over the next five to 10 years, the debt collector might make 2.5 to 3 times the amount they paid, Antico says.
Antico and his small team of collectors are begin by operating just like debt collectors, buying debt from collections agencies. They buy bundled portfolios with the donations they get, allowing them to snap up millions of dollars in debt at a fraction of the original cost. But instead of chasing down patients to collect, they’re letting the debtors know their debt has been paid. Instead of trying to profit off people’s financial stress, they’re absolving them of it.
They’re also wiping the debt off each beneficiary’s credit report. “We demand the credit report be fixed before we buy the debt,” says Antico. “We own the debt now, we own that asset. So the agencies have to take it off because they are no longer collecting it.”
Who they’re helping
RIP Medical Debt has three qualifications for choosing the debt it targets. First, they focus on abolishing medical debt for very low-income people—specifically, those who make 2 to 2.5 times the federal poverty level and below, says Antico. They also look for people whose debt (medical alone or combined with other debt) is equal to five percent or more of their gross income. Third, they look to see if a person is bankrupt.
Donors who give $15,000 or more can choose how their donation is applied. They may want to target their gift based on demographics, geographics, affiliation (veterans, first responders, etc.), or particular ailments. (Donors can also decide if they want to target someone with a slightly higher income than what falls under the organization’s general guidelines.)
Unfortunately, you can’t reach out to RIP Medical Debt to request your own debt be abolished. They tried it in the past, Antico says, and had 10,000 to 15,000 people sign up. He says it was a disheartening experience because he wasn’t able to help all of the people who had applied. The organization’s approach now allows them to help people who really need it and not let anyone down.
Impact beyond finances
RIP Medical Debt only eliminated was only a small portion of what Cook owed. But, she says, it had a huge impact on her. “When people do something out of the kindness of their heart, sometimes they may walk away and wonder, Does it really make a difference? Did I really make it a positive impact? Was it a negative impact? And I want people to know that this had a positive impact and it still is having a positive impact,” says Cook. She shares her story with everyone. The church she goes to now is in contact with RIP Medical Debt and plans to make donations.
Antico and Ashton set out to free people from medical debt, but it seems they’ve done so much more. To have someone lift the weight of medical debt off your shoulders can be life-changing. They don’t meet the people they help—they often don’t even know their names. But RIP Medical Debt plans to keep making a difference for hundreds of thousands of people.