Making Sense of Medical Debt

Key Takeaways Medical debt often feels overwhelming because it shows up unexpectedly, varies wildly in cost, and is tied to stressful health events. You have more rights and options than you might realize—including the ability to negotiate bills, request financial assistance, or set up low or no interest payment plans or no interest payment plans. GreenPath Financial Wellness can help you understand your full financial picture and create a personalized plan to manage and reduce your debt manage and reduce your debt . Why Medical Debt Is So Confusing (and So Common) Medical bills arrive at the worst possible time—when you or someone you love is already dealing with health issues. Add complex billing systems, unclear insurance coverage, and high out-of-pocket costs, and it’s no surprise medical debt has become one of the most common forms of consumer debt in the U.S.ofpocket costs, and it’s no surprise medical debt has become one of the most common forms of consumer debt in the U.S. To understand the scope of the issue: As of 2024, about 14 million Americans owe more than $1,000 in medical debt, according to the Kaiser Family Foundation —with at least $220 billion owed in total medical debt nationwide. A 2023 Consumer Financial Protection Bureau report found that medical collections tradelines accounted for 57% of all collections items on consumer credit reports—meaning that of the debts listed in collections on credit reports, a majority were for medical bills. Those numbers paint a clear picture: medical debt isn’t a personal failure. It’s a systemic problem affecting people from all income levels, backgrounds, and health situations. All that said…you’re not powerless. There are concrete steps you can take to make sense of medical debt and regain control of your financial health. First, Understand What You Actually Owe Medical bills are often confusing—and errors are far more common than most people realize. Before you pay anything, take time to verify that the charges are accurate and that you’re only being billed for what you truly owe. 1. Request an Itemized Medical Bill An itemized medical bill lists every charge individually, including medications, procedures, lab work, imaging, facility fees, and supplies. Without this breakdown, it’s nearly impossible to confirm accuracy. Once you receive it, review the bill carefully and watch for common medical billing errors, such as: Charges for services or procedures you never received Duplicate charges for the same service Incorrect medical billing codes Out-of-network providers billed as in-network (or vice versa) Charges that should have been covered under preventive care Correcting errors at this stage can significantly reduce your balance before any negotiation begins. 2. Compare the Bill to Your Explanation of Benefits (EOB) Your Explanation of Benefits (EOB), issued by your insurance company, is not a bill—but it’s a critical tool for understanding your responsibility. It shows: What the provider charged What your insurance company approved and paid What portion is assigned to you (copays, coinsurance, or deductibles) If the amounts on your bill don’t match your EOB, contact your insurance company first. Billing discrepancies are often the result of processing or coding errors that insurers can correct. 3. Request a Billing Review or Coding Audit Most hospitals and clinics have billing advocates or patient financial services teams who can review disputed charges. If something doesn’t look right, request a formal review. You can also ask whether the charges were coded correctly. Medical coding errors can affect how services are classified—and how much you’re billed—making this an important step when costs seem unusually high. Know Your Patient Rights Medical billing rules vary by state, but several federal protections apply nationwide and can help shield you from unfair or unexpected charges. The No Surprises Act The No Surprises Act , which took effect in 2022, protects pati