LEXINGTON, Ky. (LEX 18) — Lexington has made history as the first city in Kentucky to abolish medical debt for some of its residents, with Vice Mayor Dan Wu announcing that more than $12.6 million in medical debt has been erased for 6,484 Fayette County residents.
The groundbreaking initiative, three years in the making, began when Wu proposed allocating $1 million to tackle the growing medical debt crisis. The Urban County Council unanimously approved the plan in October 2024, partnering with Undue Medical Debt, a national nonprofit that purchases large bundles of unpaid medical bills at steep discounts and eliminates them completely.
"Today, I am thrilled to announce the first round of medical debt relief here in Lexington, Fayette County," Wu said. "In partnership with Undue Medical Debt, we have purchased and abolished $12,641,416 of medical debt providing much needed relief to 6,484 of our residents."
The city's $1 million investment is projected to help erase up to $90 million in medical debt over time. Undue Medical Debt can eliminate approximately $100 of medical debt for every dollar donated by acquiring debts in bulk at a fraction of their face value.
"With costs going up on everything, we had an important opportunity to put real money back into Lexington families' pockets," Wu said. "We may not be able to fix all the problems with the national healthcare system, but as the form of government closest to the people, we can take meaningful steps to improve day-to-day lives."
Who qualifies for debt relief
Eligibility for the medical debt relief is based on current Lexington-Fayette County residency and one of two financial criteria: income up to 400% of the Federal Poverty Guidelines (just over $100,000 for a family of three) or medical debt equal to 5% or more of annual income.
Recipients will receive notification letters from Undue Medical Debt starting this week. The debt relief does not result in income tax liabilities or penalties.
Wu urged recipients to keep their notification letters as proof for creditors that their debt has been canceled.
The scope of Kentucky's medical debt crisis
The initiative addresses a significant statewide problem. According to Kentucky Voices for Health, Kentucky ranks 10th in the nation for residents with debt in collections. Over half of Kentuckians (58%) report experiencing a healthcare affordability burden, with the median amount of medical debt in collections at $520.
The problem disproportionately affects communities of color, Appalachian counties and rural areas.
Aqsa Qureshi, a physician assistant who supported the initiative, sees the impact firsthand through her work at a free clinic.
"I work a lot at the free clinic, we see the underserved community, the community unable to get to normal appointments because of debt and insurance issues," Qureshi said. "The relief they're gonna feel, the debt that's been hanging over their heads is gone? They're able to live an easier life, to not fear asking for help and accessing healthcare," Qureshi said.
Medical debt relief is source-based, meaning the nonprofit can only erase qualifying medical debts it's able to acquire from partners like hospitals. As such, medical debt relief cannot be requested by individuals.
Lexington joins a growing number of cities and states taking local action to relieve residents' medical debt, bringing meaningful financial relief to thousands of families.
