What To Do If You’re Struggling With Medical Debt

By Richard Eisenberg, Next Avenue

Considering that a three-day hospital stay costs $30,000; on average, a third of workers with employer-based health plans face annual deductibles of $2,000 or more; and that private health insurance and Medicare often require people pay 20% of their doctor bills, it’s understandable that more than 100 million Americans have medical debt.

Nearly half of adults with medical debt are paying off $2,000 or more, a study by The Commonwealth Fund found. Medical debt is also the largest source of debt in collections, more than credit cards, utilities and auto loans.

The Canary In The Coal Mine

“Today, the amount of our medical bills is so much higher than it’s ever been,” said Patricia Kelmar, senior director of health care campaigns at U.S. PIRG Education Fund. “So, all of a sudden, a family is faced with a bill that’s not a couple of hundred dollars, it’s a couple of thousand dollars. And they’re expected to pay it within 30, 60 or 90 days or they’re in arrears.”

Larry Levitt, executive vice president of the KFF health research group, wrote on the Journal of the American Medical Association website, “Medical debt is the canary in the coal mine for health care affordability, and the canary is not doing well.”

Sometimes, this debt is the result of steep medical costs. Other times, it’s due to things like inaccurate medical bills, ambulance charges to get to the ER or out-of-network fees for employer-sponsored health plans and Medicare Advantage plans from private insurers.

Medical Debt And Medicare

The percentage of Americans on Medicare owing medical debt is lower than for younger people — 16% of those age 65 to 75 have medical debt, for example, vs. 27% of ones age 50 to 64, according to The Commonwealth Fund.

“It’s a good sign that Medicare is helping to prevent a lot of people from going into medical debt,” said Gretchen Jacobson, vice president of the Medicare program, at The Commonwealth Fund. “But people shouldn’t be accumulating medical debt when they’re on Medicare.”

One in 10 people age 65 or older with health care debt owe $10,000 or more, according to a KFF study. “That is an extraordinary number,” said Tricia Neuman, senior vice president of KFF.

As a result, 29% of Medicare-age adults with health care debt have been contacted by a collection agency in the past five years, KFF found.

Neuman said a big reason some older adults incur medical debt: traditional Medicare doesn’t cover most dental services. Some Medicare Advantage plans have dental benefits, but those are generally limited.

The Impact Is Greater Than The Numbers

“I think the impact of medical debt is greater than the numbers,” said Allison Sesso, president and CEO of the nonprofit Undue Medical Debt. “I think it’s in the mental health and the psyche of individuals across the country. There’s this element of: ‘Can I afford to be sick?'”

A Commonwealth Fund survey found that a full 79% of Americans ages 19 to 64 with medical debt said it has caused them anxiety or worry. The anxiety goes far beyond just worrying about paying off the hospital and doctor bills.

Having this type of debt can lower your credit score; unpaid medical debt usually stays on your credit report for seven years. Sometimes, this debt can lead to draining retirement savings and even personal bankruptcy.

It can also make it harder to get a mortgage, apartment, car loan, credit card or home equity line or stick you with a higher interest rate than otherwise when you do qualify for another type of debt.

Yet, medical debt has limited value in predicting creditworthiness, according to the federal Consumer Financial Protection Bureau. That’s because this type of debt often isn’t something someone chooses to get, like a car loan. It’s typically a consequence of something unavoidable, like a medical condition, illness or injury.

Skipping Medical Care Due To Medical Debt

The medical debt albatross can lead to other problems, too.

KFF’s 2024 study discovered that of all the people aged 65 and over who have medical debt (or live with someone who has it) 62% have delayed, skipped or sought alternatives to needed health care or prescription drugs due to costs in the past year.

“When you don’t get the care you need, it can lead to higher costs down the road and worse health outcomes,” said Jacobson.

People with medical debt often feel like they’ve failed in some way, Sesso said. “They should not feel ashamed of having medical debt; it is a very common problem. The system is set up against people,” she said.

The plague of medical debt and fury over it is coming at a time when the public has grown increasingly angry at health insurers, doctors and hospitals, as shown by some reactions to the recent murder of UnitedHealthcare CEO Brian Thompson.

Fortunately, initiatives by the federal government, state governments and credit bureaus are addressing medical debt in America. The Undue Medical Debt group is even sometimes eliminating the debt owed by low- and middle-income people.

Here’s what’s being done to reduce the effects of medical debt, the big loophole in those efforts, how President Donald Trump factors into this and the steps you can take if you’re dealing with medical debt:

The Federal Government And Medical Debt

The federal CFPB has been sounding the alarm about medical debt for over a decade.

Most recently, the agency in January 2025 issued a rule taking effect in March that will remove as much as $49 billion of medical debts from credit reports. The CFPB expects that, as a result, Americans with medical debt on their credit reports could see their credit scores rise by an average of 20 points.

ACA International, a trade group representing collection agencies and others, told the CFPB that its rule would lead to more consumers being sued, higher borrowing costs and more expensive medical costs.

One federal law that former President Joe Biden and Congress enacted — The Inflation Reduction Act of 2022 — is expected to help stem medical debt for people 65 and older starting in 2025.

It will cap out-of-pocket prescription costs at $2,000 for people on Medicare, so beneficiaries will be less likely to face exorbitant medication expenses. “That’s a very promising development,” said a CFPB official.

Bipartisan Support — Except In Washington

But the election of Trump has put in doubt whether the proposed rule will take effect. Elon Musk, expected to head Trump’s Department of Government Efficiency, has favored eliminating the Consumer Financial Protection Bureau.

“Whether that rule will ever get finalized is obviously a question with the change in administration,” said Sara Collins, vice president of health care coverage and access and tracking system performance at The Commonwealth Fund.

Yet in nationwide polls, over 80% of Republicans and Democrats support limits on medical debt collections and stiffer rules requiring hospitals to offer patients financial aid.

Credit Bureaus And Medical Debt

In 2022 and 2023, the three big national credit bureaus (Equifax, Experian and TransUnion) took several steps to keep some medical bills from showing up in credit reports.

Now, all medical debt that has been paid in full won’t show up on those bureaus’ reports. Also, unpaid medical debt less than a year old or below $500 no longer appears on the credit reports.

“Those changes have had a very significant effect on the number of people who have medical debt on their credit reports,” said Michael Karpman, principal research associate at the Health Policy Center of the Urban Institute think tank.

Medical debt in collections is also no longer used in calculating credit scores by Vantage, a big credit scoring firm.

Partly because of these moves, the share of Americans with medical debt in collections appearing in credit reports has fallen from roughly 12% to 5% and about 27 million adults have seen a significant improvement in their Vantage credit scores, according to the Urban Institute.

But, the CFPB official said, if you use a general-purpose credit card (like Visa, MasterCard or American Express) to pay off medical debt, those charges are not covered by the new credit bureau rules. The reason: it’s hard for the bureaus to know whether those payments are for health care.

The States and Medical Debt

“A lot of states have passed a series of laws that try to create more robust consumer protection measures” regarding medical debt, said Karpman.

According to a report from the Third Way think tank, California, Colorado and New York removed all medical debt from credit reports of people living in those states. Connecticut abolished medical debt on a state level for low-income residents.

Arizona and Delaware now restrict debt collectors from being able to garnish wages for medical debt. Vermont prohibits hospitals from collecting copayments that exceed 5% of Medicaid patients’ income.

California also requires all its hospitals to provide financial assistance to low-income residents and give patients information about their charity-care programs that help people pay medical bills.

The Medical Credit Card Loophole

But there’s what KFF’s Neuman calls a “giant loophole” in many of the federal, state and credit bureau efforts to protect people from the effects of medical debt: Medical credit cards are often exempt.

These are the cards doctors and hospitals increasingly suggest patients sign up for to pay off medical bills over time.

“Several years ago, we started seeing medical credit cards being offered mostly in medical settings where people don’t have insurance — dentist offices, eye doctors,” said Kelmar. “Before this was an option, they would just set you up on a payment plan of $50 a month for the next two years or so.”

That type of payment plan has been replaced by a front-desk worker handing you a medical credit card form or telling you to go online and sign up.

With a medical credit card offer, “there can be an implied trust; it’s your doctor offering you this financial instrument,” said Kelmar. “You trust your doctor with your life and think, ‘Why would they offer me something that financially isn’t right?’ It’s a tempting option.”

But medical credit cards can be nefarious.

That’s because although these cards often start with 0% interest rates for six to 18 months, the period when you’re expected to pay them off, if you don’t erase the debt by the end of that deferred-interest period or you’re either late on a payment or miss one, the issuer generally then starts charging you a double-digit interest rate.

The typical medical credit card rate is now around 27%, compared to 20% or so for a general credit card, according to the CFPB. Worse, that steep interest rate is retroactive to when you first got the card. Late fees on medical credit cards “are usually quite significant,” said Kelmar.

Sometimes, people with medical credit cards don’t realize what they’re signing up for or understand the deferred-interest charges, the CFPB official noted.

What Undue Medical Debt Is Doing

Lately, the small nonprofit Undue Medical Debt has become a fairy godmother for some with medical debt.

Undue Medical Debt gets donations from individuals, corporations and state and local governments and uses the money to extinguish medical debt of some low- and middle-income people.

Over the past 10 years, the group has eliminated nearly $15 billion of medical debt for almost 10 million families.

“We buy medical debt from health care providers and groups that have bought the debt from them and we do this at a market rate — pennies on the dollar,” said Sesso.

When Undue Medical Debt purchases the debt, “we send out letters to all the individuals whose debts we bought,” Sesso said. “They don’t have to take any action on their own. There’s no application. It’s a surprise letter in the mail that says you have been freed and cleared of this medical debt that we’ve been able to get our hands on.”

John Cook, a semi-retired Chicago man who worked in sales and marketing and served as a deacon of a Catholic church for 17 years, received one of those letters.

In 2012, Cook had emergency open-heart surgery. “Then I lost my insurance,” he told Undue Medical Debt. As a result, he stopped seeing his cardiac specialist to avoid that physician’s cost and struggled to pay his medical bills.

“One of the things that’s important for my health is not to be stressed,” Cook said. “So, when I got the letter from Undue Medical Debt, it was just unbelievable. When you get this kind of debt relief, it does something for you psychologically, emotionally and physically. They truly are saving lives.”

Said Sesso: “We are a small nonprofit with a big mission — to end medical debt to the point where we don’t have to exist as an organization.”

What to Do If You Struggle With Medical Debt

Experts have five suggestions when you find yourself owing medical debt that’s giving you anxiety:

1. Get a free copy of your credit report from Annualcreditreport.com. You’re entitled to one from each of the three big credit bureaus once a year. See if the report is accurate and whether it includes medical debt that shouldn’t be there due to the credit bureaus’ recent rules. If you see a mistake, contact the credit bureau to contest the report.
2. If you’re uncertain about the accuracy of a medical bill, “request a detailed list of charges and then negotiate the amount you owe if you can,” said the CFPB official. If the hospital or doctor can’t resolve your concerns, submit a complaint with the CFPB, particularly if you have a problem with a debt collector. “It’s a way for the consumer to get information and communication with a company that may not have been very responsive otherwise,” the CFPB official said.
3. See if you can work out a payment plan with the hospital or doctor, said Kelmar. “I don’t know that you’ll always be able to get a payment plan, but you have to ask,” she added. Kelmar recommends offering to pay a certain amount each month over a specific time period, such as two or three years. “Some people have really good luck with that,” she said. If you’ll be charged interest, it will likely be a significantly lower rate than a medical credit card’s rate after the deferred-interest period ends. Some doctors and hospitals will give you a discount if you offer to pay some of your medical bill immediately.
4. For medical debt due to a hospital stay, ask if you qualify for the medical center’s charity-care program. Many nonprofit hospitals have charity care that can be free or discounted.
5. Be your own advocate. “You have to dedicate real time to being a go-between between the insurance company and the health care provider,” advised Sesso.

This post has been updated to reflect the completion of President Donald Trump’s 2025 inauguration and new details regarding leadership of the Department of Government Efficiency.