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Student Loans Aren’t the Only Debts Millennials Have to Worry About

Millennials have surpassed baby boomers as the biggest age demographic in America, making them a constant focus for marketers and media companies. But it’s not all avocado toast and rose’-soaked brunches for Americans aged 18 to 35. Already saddled with significant student loan debts, millennials are also racking up a growing share of the nation’s medical debt.

Millennials had $38 billion in medical debt through June 2017 surpassing baby boomers, per Experian data. That’s a 12% increase compared to 2016. Millennials were also the only demographic to see their debt grow. The $38 billion was also the second-highest tally, trailing Generation X, ages 36 to 50, with $44 billion. The average medical debt balance was $2,470 as of June 2017 for adults according to Experian data. That is a 13% increase compared to the 2016 average balance of $2,421 for adults.

Medical Debt in Collections (in billions)

A combination of factors explain why millennials are taking on more medical debt. The most common is the fact they don’t have health insurance. According to 2016 data from the Center for Disease Control and Prevention, 16.5% of adults aged 25-34 lacked health insurance coverage. While that percentage has come down over the years, it is still twice as much as adults aged 45-64. Another reason is that millennials can’t afford insurance since many are struggling to find a job. The unemployment rate for adults between the ages of 20-34 was 11% in the second quarter vs. 4.4% for the total U.S. adult population.

Why Do Millennials Have Medical Debt?

Meanwhile, baby boomers’ medical debt is in decline due to a combination of Medicare eligibility and the declining percentage of those without insurance since the Affordable Care Act was introduced. Only 8.9% of adults aged 45-64 did not have insurance in 2016 per the Center for Disease Control.

Managing Medical Debt

If you already have medical debt, try to get either public or private insurance so that you can avoid racking up more if you get sick or injured. Medical expenses are the number one cause of bankruptcy in America, so having no insurance is financially reckless—even if you’re young and healthy. And if you’re under 26 years old, get added to your parent’s insurance if possible.

About one in four adults in America have past-due medical bills per the Urban Institute study. If you’re behind on your payments, get a better understanding of the danger of debt in collections. Here is what you can do to get back on track:

  • Check your credit report: Make sure that everything is accurate on your credit report, and that nothing looks unusual.
  • Make a plan: Start to get an idea of how you spend and how you can always pay your bills on time.  Paying on time is one of the best ways to maintain a healthy credit score.
  • Create a budget: This will help you stay on track over time if you factor in recurring expenses.
  • Have an emergency fund: Leave a little extra in savings in case an unexpected expense pops up.

Whether the issue is medical debt or some other hardship, taking these steps and using credit responsibly can help you achieve your financial goals.

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