The scale of medical debt in the United States

Americans owe roughly $195 billion in medical debt, though the exact figure shifts as people pay down old bills and new medical events create new ones. This is not a single national debt — it is millions of individual debts scattered across hospital systems, collection agencies, and credit reports. The debt exists because medical bills in the US are often much higher than what insurance covers, and many people do not have insurance at all.

Medical debt is different from other kinds of debt. A person can have a $5,000 medical bill from a single emergency room visit, while someone else might owe $50,000 from cancer treatment spread across multiple providers. The amount depends entirely on what happened, where it happened, and what insurance (if any) the person had at the time.

About one in four American adults report having some form of medical debt — either an unpaid bill, a debt in collections, or a payment plan they are still working through. The debt often appears on credit reports and can affect a person's ability to borrow money for a car, home, or other major purchase.

Key Takeaways

  • Medical debt in the US totals around $195 billion, spread across millions of individuals rather than held by any single entity.
  • About one in four American adults carry some form of medical debt, ranging from a few hundred dollars to tens of thousands.
  • Medical debt can appear on credit reports and affect loan applications, even if the bill is being disputed or paid through a plan.
  • Medical debt is often the result of emergency care, chronic illness treatment, or gaps in insurance coverage rather than elective procedures.
  • Some states and localities have laws that limit how medical debt can be collected or reported, so protections vary by where you live.

Why medical debt is so common

Medical debt happens for a few concrete reasons. A person without insurance goes to the emergency room and receives a $10,000 bill. Someone with insurance gets a surprise bill from an out-of-network provider. A chronic illness requires ongoing treatment that costs more than the person can pay even with insurance. A hospital billing department makes an error and the person spends months trying to correct it.

Insurance does not always cover what people think it covers. A plan might have a high deductible — meaning the person pays the first $3,000 or $5,000 or $10,000 out of pocket before insurance kicks in. A procedure might be deemed "not medically necessary" by the insurance company, leaving the full bill with the patient. A provider might be out of network, meaning the insurance pays less and the patient owes the difference.

Job loss, illness, or injury can also create the conditions for medical debt. A person loses their job and loses their insurance at the same time. They get sick and cannot work, so their income drops while medical bills arrive. They have insurance but cannot afford the copays and deductibles alongside rent and food.

How medical debt gets reported and collected

When a medical bill goes unpaid, the provider or hospital typically waits 30 to 90 days before sending it to a collection agency. The collection agency then owns the debt and can pursue payment through phone calls, letters, and legal action. If the debt is not paid, it can appear on a credit report and stay there for seven years from the date of first delinquency.

Medical debt on a credit report affects credit scores, which lenders use to decide whether to lend money and at what interest rate. A person with medical debt in collections might be denied a mortgage, charged a higher rate on a car loan, or rejected for a credit card. Some employers and landlords also check credit reports, so medical debt can affect housing and job prospects.

The rules for collecting medical debt vary by state. Some states limit how much a collection agency can pursue or require that certain protections be in place before a lawsuit can be filed. A few states have laws that prevent medical debt from being reported to credit bureaus at all, though these are rare. Understanding your state's rules matters because they determine what a collector can actually do.

Medical debt by age and income

Medical debt is not evenly distributed. Older adults are more likely to carry medical debt because they have more medical events and often live on fixed incomes. Adults between 45 and 65 report the highest rates of medical debt, partly because they are old enough to have accumulated health problems but not yet on Medicare.

Lower-income households are far more likely to have medical debt. A person earning $25,000 a year cannot absorb a $5,000 medical bill the way someone earning $100,000 might. Even with insurance, low-income people often cannot afford copays and deductibles, so they skip care or let bills go unpaid. People without insurance — disproportionately lower-income, younger, and people of color — face the full cost of any medical care they receive.

Uninsured people account for a large share of medical debt. In states that did not expand Medicaid, the uninsured rate is higher and medical debt is more common. In states with Medicaid expansion, more people have some form of coverage, though coverage gaps and high out-of-pocket costs still create debt.

What happens when medical debt goes to court

If a collection agency cannot collect through phone calls and letters, they may file a lawsuit. The person who owes the debt receives a summons and complaint. If they do not respond or show up in court, the collector usually wins by default and can then pursue wage garnishment or bank account levies.

Wage garnishment means the collector takes a portion of the person's paycheck before they receive it. Bank account levies mean the collector freezes and takes money directly from a bank account. Both are powerful tools that can make it very difficult to pay rent or buy food. Some states limit how much can be garnished or levy, and some protect certain income sources like Social Security, but the rules are complex and vary widely.

A person who receives a court summons for medical debt should respond, even if they cannot pay the full amount. Responding gives them a chance to negotiate, set up a payment plan, or argue that the debt is wrong. Ignoring the summons almost always results in a judgment against them.

State and local protections against medical debt

A handful of states have passed laws that limit medical debt collection or reporting. New York, for example, restricts how collection agencies can pursue medical debt and requires certain disclosures. California has laws about surprise medical bills and out-of-network charges. Some cities have passed local rules about medical debt reporting or collection practices.

However, most states have no special protections for medical debt. It is treated like any other consumer debt, which means collection agencies can pursue it aggressively. The federal Fair Debt Collection Practices Act sets some baseline rules — collectors cannot harass, threaten, or lie — but it does not prevent collection lawsuits or wage garnishment.

A person facing medical debt collection should research their state's specific rules. A legal aid organization, consumer protection agency, or attorney can explain what protections exist where they live and what options are available to them.

Bankruptcy and medical debt

Medical debt is one of the most common reasons people file for bankruptcy. Chapter 7 bankruptcy can wipe out medical debt entirely, though it also affects credit and other debts. Chapter 13 bankruptcy creates a repayment plan that might reduce what is owed on medical bills.

Bankruptcy is a serious step with long-term consequences for credit and borrowing. It should be considered only after exploring other options like payment plans, debt settlement, or financial hardship programs. A bankruptcy attorney can explain whether bankruptcy makes sense for a specific situation.

Some hospitals and providers offer financial hardship programs that reduce or forgive bills for low-income patients. These programs exist but are not always well publicized, and the rules vary by hospital. Asking directly about hardship programs or charity care is worth doing before accepting a large bill or letting it go to collections.

Frequently Asked Questions

Does medical debt affect my credit score?

Yes, if it goes to a collection agency and is reported to credit bureaus. Medical debt in collections can lower a credit score by 50 to 100 points or more, depending on the score and other factors. It stays on a credit report for seven years from the date of first delinquency, even if you pay it off later.

Can a hospital sue me for unpaid medical bills?

Hospitals can sue for unpaid bills, though many do not. They often sell the debt to a collection agency instead, and the collection agency files the lawsuit. If you receive a court summons, you should respond rather than ignore it, because a default judgment can lead to wage garnishment or bank levies.

What is a surprise medical bill?

A surprise bill occurs when you receive care from an out-of-network provider without knowing it, or when a provider bills more than your insurance covers. Federal law now requires some protections against surprise bills, but they do not cover all situations. State laws vary on what protections exist.

Can medical debt be forgiven?

Some hospitals have financial hardship or charity care programs that reduce or forgive bills for low-income patients. You can ask your hospital's billing department about these programs. Debt settlement companies claim to negotiate forgiveness, but many charge high fees and do not deliver results — be cautious.

What should I do if I cannot pay a medical bill?

Contact the provider or hospital directly before the bill goes to collections. Ask about payment plans, financial hardship programs, or negotiated reductions. If the bill is already in collections, you can still negotiate with the collection agency, though they have less incentive to reduce the amount. Consulting a legal aid organization or attorney is worth considering if the debt is large.