Lexington relieves another $5.6M in medical debt for local residents
Over 3,000 Lexington residents will soon get a letter in the mail letting them know their medical debt has been relieved.
Through a partnership with national nonprofit Undue Medical Debt, the city announced Wednesday that a second wave of medical debt to the tune of about $5.7 million has been relieved for nearly 3,200 Fayette County residents.
After the first wave of relief was announced in November, the total of Lexington medical debt relieved through the partnership totals $18.3 million, according to the city.
Officials have not made public the health care systems or collection agencies which Undue Medical Debt purchased the debt from.
Lexington residents whose debt has been forgiven do not have to apply or take any action. A letter in the mail will simply inform them that they no longer owe the outstanding balance of their overdue medical bills.
Not all Fayette County residents with debt qualify for relief, though. Those with an income at or below 400% of the federal poverty level, about $100,000 a year for a family of three, or those with medical debt equal to 5% or more of their annual income will see relief.
How Lexington’s medical debt cancellation program started
Lexington allocated $1 million in interest earned from federal American Rescue Plan Act dollars to enter the agreement with Undue Medical Debt. Undue Medical Debt negotiates with health care providers and collection agencies to purchase medical debt owed by residents. Rather than collecting on the debt, the nonprofit simply forgives it.
The nonprofit estimates it will be able to leverage that $1 million investment to relieve up to $90 million in medical debt for Lexington residents.
While the council unanimously approved the partnership in 2024, Lexington Mayor Linda Gorton let the agreement pass without her signature, saying in a letter “given the magnitude of the administrative costs and the questionable overall benefit ... these expenditures may have for the residents of Fayette County, I have instructed the Council Clerk to withhold my signature from this resolution.”
Over one-third of the $1 million contract between the city and Undue Medical Debt goes toward administrative and indirect costs associated for the organization, a much higher percentage than other agreements between the city and social service nonprofits.
Undue Medical Debt, as well as Vice Mayor Dan Wu, who was the lead council advocate for entering this partnership, have defended those costs.
“For me, the ultimate question came down to: it’s a million dollar investment, and it’s a potential $90 million worth of relief. Those two numbers are the only two numbers that I’ve cared about,” Wu told the Herald-Leader in a December interview. “I think it’s very fiscally responsible to get that kind of ratio.”
This story was originally published February 25, 2026 at 10:56 AM.
