Home Debt City budgets $330K to wipe away resident medical debt

City budgets $330K to wipe away resident medical debt

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KALAMAZOO, MI — The city of Kalamazoo is preparing to approve its 2024 budget, which includes more than $18 million of COVID-19 relief funding the city must use or lose by the end of 2026.

Of that, $330,000 is budgeted toward medical debt forgiveness for residents.

City officials won’t be responsible for settling the debt — they’re working with a Long Island-based nonprofit called RIP Medical Debt, which buys back debt from hospitals at a fraction of the original cost.

The city is partnering with Kalamazoo County on the initiative. In October, the county approved its budget, which included a line item of $466,000 to help wipe out $89 million of medical debt for 38,000 county residents who earn 400% of the poverty level and below annually, Kalamazoo County Commissioner Jen Strebs said.

The city’s contribution doesn’t mean more than the 38,000 qualified county residents will receive debt forgiveness, however. It will help reach the county’s goal of eliminating the $89 million of debt residents hold.

“The money allocated by the city of Kalamazoo, the county and the state of Michigan … should be more than enough to cover that outstanding debt burden in the county and erase it entirely,” Strebs said.

The state money is also new to the pot, as Michigan has allocated $4.5 million to go toward erasing medical debt in five counties — Kalamazoo, Kent, Ingham, Oakland and Wayne, said Kalamazoo County Administrator/Controller Kevin Catlin.

Catlin did not know how the money would be divided, he said at the Board of Commissioners meeting on Tuesday, Jan. 16. It will be administered by the Michigan Department of Health and Human Services, he said.

No action is required on from the debt holders who get their debt erased. They will simply receive a letter in the mail telling them their debt is no longer owed, because the nonprofit acquired and canceled the debt.

The Kalamazoo City Commission will vote to approve the city budget on Monday, Jan. 22. The 2024 proposed budget includes $81.1 million in total revenues and $81.8 million in expenditures. The overall budget is for $288.3 million, about 5% lower than the 2023 budget.

To read about each component of Kalamazoo’s 2024 budget, click here.

Kalamazoo Gazette/MLive reporter Brad Devereaux contributed to this story.

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