Increased health care costs leave many Americans feeling helpless or trapped. As reported by NBC News, 72% of survey respondents revealed their medical bills prevented them from homeownership or starting a family. About half of Americans surveyed are struggling with unpaid medical debts worth at least $5,000.
According to Credit Karma, members of the online personal finance community experienced a 9% growth in outstanding medical bills over a one-year period. By March of 2021, its members held a collective $2.8 billion worth of past-due medical expenses.
Medical issues and a loss of income could cripple a budget
Illnesses requiring unpaid time off from work to recover or to care for a family member could result in a growing pile of unpaid bills. Individuals unable to get back to work may begin using credit cards to pay for necessities.
An unexpected job loss often results in losing an employer’s insurance coverage, which could lead to charging treatments or prescriptions on credit cards. The result could be overwhelming charge card balances to cover care an employer’s insurance plan would have paid.
Credit reports and collectors may handle medical debts differently
Unpaid medical debts sent to collections take longer to appear on an individual’s credit report than charge cards, according to Health.com. It may take the three major credit reporting bureaus about six months to begin displaying medical bills in arrears. Some collection agencies may work out payment plans for health care expenses without adding interest or fees to the original medical debt.
Americans facing unpaid medical debts may have concerns about how credit-reporting agencies share their information. Companies may assign less weight to unpaid health care bills than credit card bills, but the overall debt load could still become overwhelming. Bankruptcy may provide a workable option to discharge unmanageable debts and offer a fresh start.