Growing Share of Personal Loans Going Toward Medical Expenses, Even As More Americans Struggling to Make Ends Meet Forgo Non-COVID-19 Care

A growing share of personal loans is being used to help pay medical bills, according to the latest study from LendingTree. In fact, the share of personal loan inquiries for medical expenses was 50% higher in the last full week of 2020 compared to the equivalent week in 2019, according to our data.

Meanwhile, the pandemic has caused many Americans to forgo non-COVID-19 care — especially those who rely on loans and credit cards to make ends meet. According to U.S. Census Bureau Household Pulse Survey data, 56.5% more Americans who rely on debt to make ends meet skipped non-COVID-19 care than those using the same income sources to meet spending needs as before the crisis.

Many Americans needed non-COVID-19 care that they didn’t receive because of the crisis, but those having trouble with their finances were more strongly impacted.

Key findings

• The percentage of LendingTree personal loan inquiries that were for medical expenses rose 50% in the last full week of 2020 compared to the equivalent week in 2019.
• At least 5% of personal loan inquiries were for medical expenses in 10 of the last 11 full weeks of 2020.
• Americans who skipped non-COVID-19 medical care were 56.5% more likely to rely on debt to make ends meet than to have the same income sources as before the pandemic.
• Rhode Island (107.5%), North Dakota (106.6%) and Oklahoma (95.2%) saw the biggest gaps when it came to forgoing non-COVID-19 medical care between those who rely on debt and those who rely on regular income.

By the end of 2020, larger percentage seeking personal loans for medical expenses

LendingTree data shows personal loan inquiries for medical expenses fell sharply at the start of the pandemic before rising to 5.4% of total inquiries in the final full week of 2020 — higher than before the pandemic began.

During the week of March 1 — before a global pandemic was declared — 4.5% of inquiries were for medical expenses. The figure dropped more than a percentage point between the weeks of March 15 and March 22, supporting claims that nearly 50% of Americans (or their family members) skipped or delayed medical care early in the crisis. As hospitals halted many elective surgeries, there was less need for medical loans.

The percentage of personal loan inquiries for medical expenses continued to drop, hitting its 2020 low point of 2.3% the week of April 12 and again the week of April 26. In the first week of April, non-COVID-19 hospital admissions were at their lowest point of the year — 69.2% of what was predicted — according to Kaiser Family Foundation data.

It hit a new high point of 5% the week of Oct. 11 — seeing incremental increases (and incremental decreases) before hitting 5.4% the final two weeks of the year. In total, the rate of people seeking personal loans for medical expenses was 5% or higher for 10 weeks last year.

How personal loan inquiries for medical expenses in 2020 compared to 2019

Pick almost any data point in 2020 and it’ll likely look different than its counterpart from 2019, simply because of the irregularity of the pandemic.

But it’s helpful to compare to 2019 to see how much circumstances changed. For example, 5.4% of completed personal loan inquiries during the last full week of 2020 were for medical expenses, compared with 3.6% during the equivalent week in 2019 — an increase of 50%.

Between March and December 2019, personal loan inquiries for medical expenses hit a maximum share of 4.1%, compared with 5.4% in the same time frame in 2020.

Notably, the proportion of personal loan inquiries for medical expenses at the start of March 2019 was 3.6%, which was the same value at the end of the year. This static is opposite the trend in 2020, when such inquiries finished the year on a high.

Americans who rely on debt have had to forgo non-COVID-19 medical care at greater numbers

Americans who needed non-COVID-19-related medical care had to postpone or forgo their needs for many reasons during the first year of the pandemic. But for financially burdened people, this was particularly heightened.

“If you have to rely on debt to make ends meet, you can never get ahead,” said Matt Schulz, LendingTree chief credit analyst. “You can’t build an emergency fund. You can’t invest. You can’t look ahead to retirement. The smallest unexpected expense can be a really big deal.”

People who used debt were 56.5% more likely to forgo medical care in the previous month, according to the U.S. Census Bureau Household Pulse Survey data that surveyed Americans during a two-week period at the end of December 2020. Breaking that down, 34.9% of people who skipped medical care rely on debt to get by, compared with 22.3% who have kept their usual source of income.

Full rankings: How relying on debt to make ends meet impacted non-COVID-19 medical care at end of 2020

Some states were impacted more strongly than others when it came to forgoing non-COVID-19 medical care. For example, even though those across the U.S. who skipped medical care were 56.5% more likely to rely on debt than those with their usual income, that figure jumped to 107.5% in Rhode Island, 106.6% in North Dakota and 95.2% in Oklahoma.

Montana was the only state in the U.S. where residents who skipped non-COVID-19 medical care were more likely — 62%, in fact — to have the same income sources as before the pandemic than those who rely on debt to make ends meet.

Georgia was next, where those who had to forgo non-COVID-19 medical care were 22.6% more likely to rely on debt than have the same income sources as before the pandemic. New York was just ahead of Georgia at 22.8%.

5 tips to ease medical debt burden

“Medical debt can be brutal, and it can be so expensive that no amount of saving can prepare you for it,” Schulz said. For those who do fall into medical debt, there are options.

• Negotiate debt: Those in debt can try to negotiate their debt with their medical office or hospital — or with a debt collector if it’s already in collections. “It may not always work, but it can’t hurt to ask,” Schulz said. People should gain an understanding of what their bill is for and whether the pricing structure is set or will vary. This is especially important for those without health insurance, as out-of-pocket costs charged directly to a patient can often be higher than what a medical office charges an insurance company. Try uncovering the lowest price for the product or service.
• Send a no-contact letter: Federal laws prevent debt collectors from calling anyone before 8 a.m. or after 9 p.m. or at work (in certain scenarios). They must also stop contacting consumers about a debt after receiving a cease-and-desist letter.
• Find a consumer advocate: Debt can be stressful, but consumers do have resources to help them navigate their options. Many local credit unions and nonprofits offer credit counseling services.
• Apply for Medicaid: Those who qualify for Medicaid could get help paying previous medical bills during their retroactive eligibility period. This begins on the first day of the third month prior to the month in which the individual applies for Medicaid. It covers procedures that are deemed medically necessary and provided by Medicaid-enrolled providers.
• Refinance and consolidate medical loans: Refinancing medical loans at a lower rate could help save thousands over the course of a loan. This money can be applied to the loan principal to help repay the debt faster. “Personal loans can be amazing tools for refinancing debt,” Schulz said. “They’re often used to help pay off credit card debt, but they can certainly help with medical expenses, too.”

“The worst thing that you can do is nothing,” Schulz added. “No one cares as much about your finances as you do, so be sure to take the initiative to help yourself. It may be awkward and nerve-wracking to haggle over these expenses, but it sure is better than going further into debt.”

Methodology

Personal loan data was captured from the LendingTree personal loan platform, where prospective borrowers are asked the intended purpose of their requested loan.

LendingTree researchers also used U.S. Census Bureau Household Pulse Survey data from the period of Dec. 9 to Dec. 21, 2020 — the last full period of 2020.

The survey question focused on those who needed medical care for something other than COVID-19 over the prior four weeks but didn’t get it because of the pandemic. We then broke this down by those who use credit cards or loans to meet spending needs versus those who used the same regular income sources as before the pandemic.