What Is Medical Debt and How to Handle It

Medical debt is the leading cause of personal bankruptcy in the United States and one of the most common sources of financial distress for American families. Approximately 100 million Americans — nearly one-third of all adults — carry some form of medical debt, totaling an estimated $195 billion. Unlike other forms of debt, medical debt is often involuntary — it arises from necessary healthcare, frequently during an already stressful health crisis. Understanding the nature of medical debt, the options for managing or reducing it, and the significant consumer protections that have recently changed the medical debt landscape helps patients facing this challenge.

The Nature Of Medical Debt

Medical debt is unique in several ways that distinguish it from other consumer debt:

Involuntary and unexpected: Unlike a car loan or credit card debt, medical debt typically arises from necessity — an emergency, a serious illness, or necessary treatment — rather than from a discretionary purchase. Patients often have little ability to shop, compare prices, or avoid the debt.