- Credit Karma members in the U.S. hold $48.6 billion of medical debt in collections.
- Since the start of the pandemic, we’ve seen Credit Karma members in the U.S. take on an additional $3.6 billion in medical debt collections.
- Medical debt makes up about 44% of members’ total collections debt.
Medical expenses are a leading cause of debt for Americans. This makes sense when you consider, prior to the pandemic, the majority of Americans did not have $400 saved to cover an unexpected emergency. Now, with a global pandemic, Americans’ health and finances are even more at risk.
To understand how Americans’ finances are impacted by rising medical debt, Credit Karma conducted an analysis of anonymized member data to see exactly how much medical debt is held in collections by members in the U.S., based on their credit reports. In September 2020, about 20 million U.S. members held $45 billion of medical debt in collections. Fast forward one year later — Credit Karma members in the U.S. now have an additional $3.6 billion of medical debt in collections, amounting to a whopping $48.6 billion spread across 22.6 million members.
Here’s a look at how medical debt has trended by quarter since January 2020:
Will the problem worsen as many federal pandemic-era relief benefits come to an end?
Now, as many Americans grapple with the end of federal pandemic-era relief policies, can we expect this number to grow as the COVID-19 pandemic carries on? These are benefits many Americans have come to rely on for financial stability throughout the pandemic. In fact, in a recent consumer survey we conducted 30% of respondents said they don’t feel financially stable right now. Of those, 22% said they do not feel financially stable because they do not have money to pay medical bills, the top reason behind not having money saved and not having money to pay for bills.
|Why don’t you feel financially stable? Select all that apply.|
|I don’t have money saved||57%|
|I don’t have an emergency savings fund||50%|
|I don’t have money to pay my bills||38%|
|Don’t have money to pay medical costs||22%|
|I’m unable to find work||13%|
|I lost my job and am no longer employed||13%|
Is it possible we’re just starting to see the pandemic fallout?
It is typical for a health care provider to wait to sell unpaid medical debt to a collections agency anywhere from 60 to 120 days after a consumer is past due on their bill. Factor in the 180 days the credit bureaus must wait before listing unpaid medical debt on consumers’ credit reports, and that’s up to a nearly 10-month period of time before a person might see any impact to their credit. While this could indicate that we’re only just starting to see the financial fallout of the pandemic for many Americans, specifically as it relates to rising medical debt, the silver lining is that there is still time to come up with a plan before taking a hit to their credit.
“We are seeing a steady increase in medical debt in America during the course of the pandemic and we can expect it might get worse as medical bills take time to hit collections,” said Credit Karma financial advocate Colleen McCreary. “While facing costly medical bills is a daunting reality for many Americans, it should never keep you from getting the medical attention you need. If you’re concerned about being able to pay your medical bills, speak up prior to receiving care or directly after receiving your bill. This shows good intent and your medical provider will typically help you assess your options, whether that be an interest-free payment plan or other means of financial assistance.”