Nearly 1 in 5 Older Americans Have Medical Debt Despite Medicare Coverage, Study Shows

Nearly one in five Americans aged 65 and older are carrying medical debt despite having access to Medicare, according to new research.

A study by the Urban Institute released this month found that 17.6% of adults aged 65 and older reported that they or a family member owed medical debt in December 2025. Across all age groups, the figure was 26.6%, or more than one in four adults.

Traditional Medicare also excludes several services frequently needed by older Americans, including most routine dental care and long-term custodial care. The Urban Institute found that more than half of adults with medical debt, 53.8%, owed at least $1,000, while 15.5% had balances of $5,000 or more.

The financial consequences extend beyond unpaid bills. More than one-third of adults with medical debt, 35.2%, said a collection agency had contacted them, while 21.7% reported that their debt had damaged their credit score.

The findings come as older Americans face mounting concerns about the affordability of medical care. A separate KFF analysis published in May found that 49% of Medicare beneficiaries aged 65 and older expected their health care costs to become less affordable over the following year.

Medicare provides coverage to approximately 70 million Americans, including people younger than 65 with qualifying disabilities. But the program's coverage gaps can leave beneficiaries facing significant bills, particularly when they need ongoing treatment or services that are not fully covered.

One of the biggest financial vulnerabilities involves traditional Medicare, which has no annual out-of-pocket spending cap for services covered under Parts A and B. According to KFF, approximately 3.5 million traditional Medicare beneficiaries lacked supplemental insurance in 2023.

In 2026, traditional Medicare beneficiaries face a $1,736 hospital deductible for each benefit period and generally pay 20% coinsurance for many outpatient services after meeting the Part B deductible. The standard monthly Part B premium is $203.

Many retirees purchase supplemental insurance to reduce that exposure, but those policies carry their own costs. KFF estimates that Medigap premiums average approximately $2,600 annually.

The financial strain is particularly significant for retirees living on fixed incomes. KFF estimates that one-quarter of Medicare beneficiaries had annual incomes below $24,600 in 2024, while one-quarter had savings of less than $18,950. Among Hispanic Medicare beneficiaries, one-quarter had incomes below $14,150.

Health care costs also consume a disproportionately large share of older households' budgets. Medicare households devoted 14% of their total spending to health care in 2024, compared with 6% among households without Medicare.

In a separate calculation, KFF found that out-of-pocket health spending averaged $6,459 per Medicare beneficiary in 2023, equivalent to 36% of average per-person Social Security income that year.

The Urban Institute's findings arrive as Medicare's annual open enrollment period begins October 15, giving beneficiaries until December 7 to review their coverage for the following year.

The Urban Institute's survey included more than 10,000 adults and measured debt owed by respondents or their family members. Its findings do not establish whether the debts reported by older adults originated before Medicare enrollment or resulted from services received while covered by the program.