Kentucky Gov. Andy Beshear said he is using $2.5 million in state funds to erase medical debt for tens of thousands of Kentuckians through a partnership with Undue Medical Debt.
The nonprofit, which has worked with states like Arizona, Illinois and North Carolina, buys bundles of medical debt for less than they’re worth and then forgives them. According to Beshear, only Kentuckians who qualify will have their debt erased — those who owe at least 5% of their annual income in medical bills or those who earn at or below 400% of the federal poverty level.
“What studies have shown is folks that fall within those two [categories] are never going to be able to pay off the debt that they have,” Beshear said. “It's impacting their credit, causing them problems all across their finances, and the hospitals know that they're not going to be able to recover this money either.”
Beshear said that letters will start going out to the first 46,000 Kentuckians who will have more than $100 million in medical debt erased. He said that more than 130,000 would eventually have their debts wiped out. People cannot sign up — they will receive a letter if their debt is eligible for erasure.
“We purchase medical debt for a fraction of what is owed and erase it based on the person's income or how much they owe relative to what they earn,” said Courtney Werpy Story, vice president of government initiatives with Undue Medical Debt. “There is no application, there is no paperwork, there are no hoops to jump through. A letter arrives telling them that some or all of their medical debt is gone.”
Undue Medical Debt also partnered with Lexington in 2024, when the urban county council allocated $1 million to relieve millions of dollars in medical debt for residents. As of February 2026, the organization said it has waived more than $18 million in debt for almost 10,000 Lexington residents.
About four out of every 10 American adults reported having some kind of medical or dental debt in 2022, according to KFF, a health policy research nonprofit. About half of U.S. adults said they would not be able to pay an unexpected medical bill that came to $500 out of pocket.
Beshear told reporters he has taken the $2.5 million for medical debt relief from $5 million that the General Assembly had allocated for housing from the rainy day fund. He said medical debt hurts Kentuckians’ credit scores; therefore, relieving the debt will help many secure housing in the future.
Beshear made the move through an executive order, and ordered the Finance and Administration Cabinet to provide any needed support “to expedite the process.”
Melissa Henry, who suffers from severe, chronic back pain, said she racked up thousands in medical debts from surgeries and appointments to manage her pain. She said Undue Medical Debt has erased the debt she accrued from her first emergency room visit, “a pebble on that giant mountain” of debt she has gathered.
But she said any amount of debt erased can change a person’s life. Paying off that looming debt, Henry said, isn’t a priority for many families that are struggling to pay for basic necessities.
“Medical debt, while it's such a large part of my life, took the back seat because my family, just like with many other families in Kentucky, are barely scraping by, living paycheck to paycheck with no savings,” Henry said. “Many people are one illness, one accident, one hospital visit away from losing everything. Housing costs, utility costs, food costs — all those everyday necessities are more urgent than medical debt.”
