Many Older Adults Face Unpaid Medical Bills Despite Insurance Coverage

This week, the Consumer Financial Protection Bureau (CFPB) Office for Older Americans released an issue spotlight on medical billing and collections showing that many older adults have unpaid medical bills and are in collections. This is despite most older adults having health insurance coverage, including Medicare and Medicaid. The findings reveal that these bills are often the result of improper and inaccurate billing.

According to the CFPB data, most people aged 65 and older have health insurance (98%). But nearly four million had medical bills that they were unable to pay in full in 2020. The highest incidence (13%) was among those without insurance, and the lowest was for those with Medicare plus employer-sponsored coverage (4%). Over two-thirds of those with unpaid bills (70%) had coverage from more than one source such as Medicare, Medicaid, Medigap, employer-based coverage, or Tricare.

While the incidence of unpaid bills is lower for older adults (7%) than younger ones (11%), probably due to near-universal Medicare coverage, the dollar amount unpaid is increasing. In 2019, older adults reported $44.8 billion in debt; in 2020, that number rose to $53.8 billion. Those with unpaid bills were more likely to be older adults of color, to be in poor health, to have other debts, or to have incomes between 100 and 200% of the federal poverty level.

CFPB flags inaccurate billing as one of the main drivers of unpaid bills, showing that older adults are more likely to have numerous chronic health needs, conditions that are billed at a higher intensity which require greater documentation, and to rely on coverage from multiple sources. This combination can lead to delays in payment, errors in who is billed for what services, and providers seeking inappropriate reimbursement from patients.

People who are dually eligible for Medicare and Medicaid see disturbingly high levels of unpaid medical bills. Most dually eligible individuals should have little out-of-pocket exposure to medical costs, but they report both higher incidence of unpaid bills and higher dollar figures for the bills than their non-dual counterparts. CFPB notes that this suggests providers are billing beneficiaries for amounts they do not owe.

Unpaid medical bills cause personal and financial stress, landing people in collections and having negative effects on credit ratings. Recently, the three major credit bureaus stopped reporting cleared medical debt, medical debt in collection below $500, or medical debt in collections for under one year. But this does not alleviate the stress of unpaid bills or eliminate collections activities.

At Medicare Rights, we urge CFPB, Medicare, and policymakers to do more to protect everyone, including older adults and people with disabilities, from high out-of-pocket costs and inaccurate billing. We support limiting Medicare beneficiary spending, expanding financial assistance, educating providers about billing rules, and improving oversight of providers and insurance payers. Stronger guardrails are needed system-wide.

Read the issue spotlight.

Read more about out-of-pocket expenses in Medicare.