‘This is going to bankrupt me’: Americans rack up $45B worth of medical debt in collections

Cathy Munzer is a single mother who lost her health insurance during the coronavirus pandemic. Munzer, who was a yoga and fitness instructor at two major gyms in Manhattan, was laid off in March and has struggled to find work.

Now her medical bills are in collections after she fell behind on payments from being treated in an emergency room for kidney stones.

After that, she began paying $200 per month for health coverage through Fidelis Care, a New York-based health insurance company, but it came with a $2,000 deductible. That’s increased her medical expenses further due to out-of-pocket costs. Every time she has visited a doctor since then she’s paid $150 per visit, she says.

“This is going to bankrupt me. My biggest fear is depleting my savings,” says Munzer, 53, who’s also been putting off oral surgery because her insurance won’t cover it. “What happens when unemployment runs out? How will I survive?” Medical debt is piling up as millions of unemployed Americans struggle to stay afloat after losing their health-insurance coverage following a historic wave of layoffs this year.

In August, consumer finance company Credit Karma conducted an analysis of nearly 20 million members in the U.S. and found that they have a total of $45 billion of medical debt in collections, which averages to about $2,200 of debt per member. Medical debt has been growing further during the pandemic, rising 7% from the end of last year and just over 3% from when the pandemic started, Credit Karma says. Experts expect it to continue to rise in the coming months since there’s a 180-day lag before unpaid medical debts can show up on consumers’ credit reports, according to Colleen McCreary, chief people officer at Credit Karma.

“This is a lot of money when you consider nearly half of Americans don’t have $400 saved in case of an emergency,” says McCreary. “What’s worse, this number is expected to rise in the coming months as Americans begin sorting out their finances in the aftermath of the pandemic.” Unforeseen medical expenses can drive people from the doctor to the debt collector. A separate survey during the pandemic shows that 56% of U.S. adults had medical debt sent to collections and nearly two-thirds owe under $5,000, while 5% owe more than $50,000, according to a Debt.com survey conducted from June 17 to July 6.

Hospitalization accounted for a quarter of the medical debt, the study showed, followed by diagnostic tests for X-rays, MRIs and lab fees (22%), emergency room visits (19%) and doctor visits (15%).

“We often hear horror stories about chronic conditions or complicated surgical procedures that drive up medical bills to shocking levels,” Don Silvestri, president at Debt.com, said in a note. “Even smaller amounts can overwhelm your income and savings. The result is a debt collector pursuing you.”

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