What is RIP Medical Debt and how does it work?

RIP Medical Debt is a nonprofit organization that purchases portfolios of medical debt at a fraction of face value—typically for about 1 cent per dollar—and then forgives the debt entirely. People whose debt is purchased receive a letter saying the debt has been abolished with no tax consequence. You cannot apply directly; RIP selects portfolios based on geographic region and income criteria (generally under 400% FPL or with debt that exceeds 5% of annual income). As of 2025, the organization has abolished over $10 billion in medical debt.

Will forgiven medical debt count as taxable income?

In most cases, no. Under the American Rescue Plan Act of 2021, forgiven medical debt is generally excluded from federal taxable income. However, this exclusion has an expiration; consult a tax professional if you receive a large forgiveness notice. Charity care adjustments from a hospital are not considered income at all—they are simply a reduction in the amount billed.

I already paid part of my bill. Can I still get the rest forgiven?

Yes, in many cases. You can apply for hospital financial assistance even if you’ve already made payments, as long as you are within the 240-day application window from your first post-discharge bill. If your application is approved retroactively, the hospital may issue a refund for amounts paid beyond what you would owe under the approved assistance level. Ask about this explicitly when you apply.

Which states have passed laws specifically targeting medical debt relief?

New York, Colorado, California, and Washington have the most significant state-level medical debt protections as of 2026. New York has a strong mandatory charity care law and enacted the Medical Debt Protection Act limiting collections. Colorado’s 2022 Medical Debt Fairness Act expanded charity care eligibility and restricted extraordinary collection actions. California’s Hospital Fair Pricing Act requires discounts up to 350% FPL. Washington mandates charity care at all hospitals, including for-profit systems.

What should I do proactively to get my medical debt forgiven before it goes to collections?

Act within the first 30–60 days of receiving your first bill. Call the hospital financial counseling office and apply for financial assistance. Request a billing hold while your application is reviewed. Simultaneously ask about the self-pay discount (which requires no income verification). If the hospital is nonprofit, research the specific FPL thresholds in their published Financial Assistance Policy. The earlier you apply, the more options you have.

Medical Debt Forgiveness: Hospital Programs, RIP Medical Debt, and State Initiatives

Q: What should I do proactively to get my medical debt forgiven before it goes to collections?

Act within the first 30&ndash;60 days of receiving your first bill. Call the hospital financial counseling office and apply for financial assistance. Request a billing hold while your application is reviewed. Simultaneously ask about the self-pay discount (which requires no income verification). If the hospital is nonprofit, research the specific FPL thresholds in their published Financial Assistance Policy. The earlier you apply, the more options you have.

Quick Answer: Medical debt forgiveness is real and available through multiple channels: nonprofit hospital charity care programs (legally required for 501(c)(3) hospitals), the RIP Medical Debt nonprofit, and state-specific laws in New York, Colorado, California, and Washington. Most people qualify without knowing it. The key is to ask proactively—before the bill reaches a collection agency.

About 100 million Americans carry medical debt. Most assume they have no choice but to pay the full amount, set up a payment plan, or let the bill go to collections and damage their credit. All three of these outcomes are often avoidable. Medical debt forgiveness is not a loophole or a scam—it is a built-in feature of the U.S. healthcare billing system that most patients never access. This guide covers every legitimate forgiveness channel and tells you exactly how to use each one.

Nonprofit hospital charity care (501(r))

The most direct path to medical debt forgiveness is through the hospital’s own financial assistance program. Every nonprofit (501(c)(3)) hospital in the United States must maintain a written Financial Assistance Policy under IRS Section 501(r) rules. This is not optional—failure to comply can result in the hospital losing its tax-exempt status.

What forgiveness looks like under 501(r):

Full forgiveness (charity care): For patients below 200% of the Federal Poverty Level (about $31,300 for a single person in 2026), most nonprofit hospitals will reduce the bill to zero or to a nominal administrative fee.
Partial forgiveness (sliding-scale discount): For patients at 200–400% FPL, hospitals typically offer 25–75% discounts. Charges are also capped at the “amounts generally billed” (AGB) rate—what Medicare or Medicaid would pay—which is usually 20–40% of the chargemaster price.
Insurance balance forgiveness: Many patients with insurance qualify for assistance on their remaining balance (deductibles and coinsurance) after their insurer pays. Income, not insurance status, is the eligibility factor.

There are roughly 2,600 nonprofit hospitals in the U.S. For-profit hospitals are not subject to 501(r), but many maintain voluntary financial assistance programs—ask directly.

RIP Medical Debt: how it works

RIP Medical Debt is a nonprofit organization founded in 2014 that purchases medical debt portfolios on the secondary market at a steep discount—sometimes as little as one cent per dollar of face value—and then abolishes the debt entirely, notifying affected patients by mail.

Key facts about the program:

You cannot apply directly. RIP selects debt portfolios by geographic area and income criteria, then purchases them in bulk. Eligibility is generally individuals with income below 400% FPL or whose medical debt exceeds 5% of annual income.
Tax treatment: Under federal law, debt forgiven by RIP Medical Debt is not treated as taxable income to the patient.
Scale: As of early 2026, RIP has abolished more than $10 billion in medical debt, affecting roughly 4 million patients.
Funding: The organization is funded by donations, government partnerships, and hospital system contributions. Several state and local governments (including Cook County, IL and New Orleans, LA) have partnered with RIP to use public funds to purchase and forgive debt for residents.
How to stay informed: Register your contact information at ripmedicaldebt.org to be notified if your debt is part of a relief campaign targeting your area.

RIP Medical Debt is a genuine last-resort option for debt that has already reached collections and where the hospital’s own application window has closed. It is not a substitute for proactive financial assistance applications.

State medical debt relief programs

Several states have enacted laws that go beyond the federal 501(r) baseline, creating mandatory forgiveness thresholds, limiting collections on medical debt, or establishing public relief funds.

New York

New York’s Public Health Law §2807-k mandates charity care at all nonprofit hospitals. The 2022 Medical Debt Protection Act (MDPA) prohibits hospitals and collection agencies from reporting medical debt under $3,000 to credit bureaus, restricts lawsuits for medical debt, and limits wage garnishment. Patients at or below 200% FPL are entitled to free care; the sliding scale extends to 300% FPL.

Colorado

The 2022 Medical Debt Fairness Act requires all hospitals (including for-profit) to offer charity care to patients below 200% FPL and prohibits extraordinary collection actions against patients below 400% FPL without a court determination of ability to pay. Hospitals must proactively screen all patients for eligibility.

California

The Hospital Fair Pricing Act (Health & Safety Code §127400) requires nonprofit and district hospitals to offer discounts to uninsured or underinsured patients below 350% FPL, with free care for those below 200% FPL. California also enacted AB 1020 in 2023, expanding protections and limiting medical debt credit reporting.

Washington

RCW 70.170.060 requires all hospitals in Washington—including for-profit facilities—to offer charity care to patients below 200% FPL and sliding-scale discounts to 400% FPL. Washington is unusual in that its mandate applies to for-profit hospitals, not just nonprofits.

State program comparison table

State	Applies to For-Profit Hospitals?	Free Care Threshold	Discount Threshold	Credit Reporting Restriction
New York	No (nonprofits only)	200% FPL	Up to 300% FPL	Yes—debts under $3,000
Colorado	Yes	200% FPL	Up to 400% FPL	Restricted (2022 law)
California	No (nonprofits & district)	200% FPL	Up to 350% FPL	Yes (AB 1020, 2023)
Washington	Yes	200% FPL	Up to 400% FPL	Limited restrictions
Illinois	No (nonprofits only)	200% FPL	Up to 600% FPL	No specific restriction
Massachusetts	No (nonprofits only)	300% FPL	Up to 400% FPL	No specific restriction

Proactive vs. reactive: timing matters

There are two very different situations patients find themselves in, and the right strategy differs significantly:

Proactive (bill received, not yet past due)

This is the ideal position. You have time to apply for financial assistance before any collection action begins. The hospital must accept your application for at least 240 days from the first post-discharge billing statement. Apply as early as possible—approval at this stage prevents the account from ever going to collections and stops interest from accruing.

Reactive (bill already in collections)

If your account has been sent to a collection agency, you still have options, but they are more complex:

Contact the original hospital billing department, not the collection agency. Under 501(r), the hospital retains financial assistance obligations even after selling or placing the account with a collector.
Request that collection activity be suspended while your application is reviewed. Get this in writing.
If approved, request that the debt be recalled from collections and the credit reporting be corrected.
If the 240-day window has closed, ask whether the hospital will make an exception given your circumstances. Many do, especially for significant balances.
Explore RIP Medical Debt and state-funded debt relief campaigns as a supplementary option.

How to request forgiveness: step by step

Get the itemized bill. Request an itemized statement from the hospital so you know exactly what you owe and can identify any errors before applying.
Locate the Financial Assistance Policy. Find it on the hospital’s website under “Billing,” “Financial Services,” or “Patients.” Download the application form.
Gather income documentation. Most recent tax return, recent pay stubs or benefit statements, and bank statements if self-employed.
Call the financial counseling office. Say: “I would like to apply for financial assistance under your charity care program. Can I get a billing hold while my application is reviewed?”
Submit the application in writing. Email or certified mail. Keep copies of everything.
Follow up in two weeks. Confirm receipt and ask for a decision timeline.
Appeal if denied. Request the specific reason in writing. Provide additional documentation or a hardship explanation letter if applicable.