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Financial services company EarnIn partnered with nonprofit RIP Medical Debt to erase $13.9 million in debt from 9,908 low-income Bexar County residents last week.
Bexar County was one of three counties, including Maricopa County in Arizona and Clark County in Nevada, which received millions in medical debt relief through the partnership.
EarnIn CEO Ram Palaniappan said clearing medical debt was in line with what his business does for people.
“What we’re focused on is helping people get financial momentum,” Palaniappan said. “We’re able to do that by letting people get access to their pay when they need it. And we see this as being something towards the same mission.”
EarnIn functions as a sort of payday lender with an ethical streak, including no interest and no mandatory fees, according to Palaniappan. The idea started when, at a previous company, he began advancing his employees their pay before payday when they needed it.
“What I realized is that if you give someone access to their pay when they need it, that life is much simpler,” he said. “They’re paying all their bills on time, bills aren’t piled up on payday with late fees, no more overdraft fees, no more payday loans.”
EarnIn charges fees if users want to get their money faster and asks users to give them an optional “tip” after their transaction to help keep the company running, but there are no mandatory costs for users.
EarnIn was only able to erase $13.9 million in medical debt with the help of RIP Medical Debt.
RIP Medical Debt’s CEO Allison Sesso explained how they operate. “We mimic a for-profit debt-buyer,” she said. “So we’re able to take $1 and relieve $100 of medical debt because of the pricing in the for-profit debt markets that we mimic.”
Medical debt is bought and sold, with hospitals selling it to brokers for less than it’s worth after failing to get debtors to pay. Those brokers then try to collect that debt or sell it to other brokers for even less. That’s how $1 can buy $100 worth of medical debt, on average, and how $13.9 million in medical debt can be bought and erased for a much smaller price.
Bexar County residents whose debt was relieved began to receive letters last weekend to inform them. Sesso said there are no strings, no application to fill out — the debt is just gone.
“There’s no action that anybody has to take,” she said. “So like, if somebody doesn’t receive the letter or they throw it out, the debt is still gone.”
She said her organization buys and relieves debt because they believe it shouldn’t exist in the first place.
“Medical debt is really a systemic problem that, you know, the number one indicator of whether or not you end up in medical debt is not how well or under-insured you are” Sesso said. “It’s whether or not you get sick in the United States of America today.”
RIP Medical Debt focuses on relieving medical debt for Americans that are 100% below the poverty line or for whom the debt is 5% or more of their income.
“The reason we do this is because we need debt relief today,” Sesso said. “There’s too many people that are struggling under the weight of medical debt, and it’s hurting people’s willingness to go to the doctor and get the care that they need. It’s undermining people financially. It is creating mental health stress on families.”
Sesso said donors can give money to their nationwide mission, specific states, or set up their own regional campaigns to eliminate medical debt. Go to ripmedicaldebt.org to learn more.
