As the cost of living continues to increase, many seniors on Medicare are finding it difficult to manage their medical expenses. As a result, many are turning to medical credit cards. These are a niche credit offering that makes it easy for consumers to finance out-of-pocket medical expenses.
Financing allows you to spread your out-of-pocket medical costs over time, rather than all up front. This is easier for many people than paying up front to cover large deductible or Part B coinsurance costs.
This is part of a larger national trend. First, the number of credit card holders has nearly tripled over the past ten years. Second, according to the Center for Retirement Research, the number of Americans age 65+ carrying debt overall has been increasing since the 1990s.
Medical credit cards are a heavily marketed purported solution for seniors strapped with rising medical expenses, high out-of-pocket costs, and gaps in Medicare coverage.
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What Medicare DOESN’T Cover
Even though Medicare provides extensive health coverage for seniors, it has several notable gaps:
- Dental Care – Traditional Medicare doesn’t cover most dental procedures.
- Vision Care – Routine eye exams and glasses are generally not covered.
- Hearing Aids – It doesn’t typically cover the costs of hearing aids or fitting exams.
- Long-Term Care – Medicare doesn’t cover most long-term care services.
In addition to the coverage gaps, there are several out-of-pocket costs to factor in:
- Deductibles – Before any services are covered, you’ll have to pay the annual deductible. In 2025, the deductible for Part A inpatient hospital services is $1,676 per benefit period. The annual deductible for outpatient services and doctor visits is $257.
- Copayments – Many services have a fixed fee that is your share to pay.
- Coinsurance – For some services, you’re required to pay 20% of the total cost.
Beware the MOOPs
If you have a Medicare Advantage plan, the out-of-pocket maximums (MOOP) can be costly.
Medicare Advantage plans do cap out-of-pocket costs, but in 2025 these limits can still be as high as $9,350 annually for in-network services.
MediGap (Medicare Supplement) policies cover many gaps in Original Medicare, but these plans may not be available to all Medicare Advantage enrollees.
Out-of-pocket expenses can add up quickly, especially when a plan’s coverage is limited.
More Than 1 in 5 Seniors Are in Medical Debt
Approximately 22% of adults aged 65 and older report having outstanding medical or dental bills.
This means that more than one in five seniors are grappling with healthcare-related debt. This financial strain can lead to a number of follow-on effects:
- Delayed or neglected medical care
- Accumulation of significant medical debt
- Reduced quality of life due to financial stress
Opening a line of credit to help defray immediate costs may seem like the only option in an emergency.
However, the additional debt combined with compounding credit card interest too often makes things even worse for senior citizens.
But first, let’s take a closer look at these financial products.
Medical Credit Cards
Medical credit cards, such as the CareCredit card, are specialized credit cards designed to cover healthcare expenses.
Issuing banks market these credit cards as a convenient way to pay for medical costs not covered by insurance.
Learn More: Medicare Open Enrollment: Your Annual Opportunity for Better Coverage
Disadvantages of Medical Credit Cards
Despite their apparent convenience, medical credit cards can pose serious financial risks –– especially if you have trouble repaying the debt on schedule.
Before you borrow, here are some of the disadvantages of medical credit cards you should understand before you signing up:
1. Zero-interest promotion periods are temporary
Many of these cards offer promotional periods with 0% interest.
But if you don’t pay off the entire balance by the end of this period, you’ll be charged interest on the full original amount, not just the remaining balance. This can cause quite a shock, especially at high credit card interest rates.
2. Medical Credit Cards Have High Interest Rates
Once your zero-interest promotional period is over, your interest rate can skyrocket, sometimes exceeding 25%!
3. Complex Terms
Medical credit card agreements are often structured differently than ordinary revolving debit cards.
Many customers don’t read the fine print carefully, which can lead to unexpected charges.
4. Compounding Interest
The combination of high interest rates and retroactive charges can trap seniors in debt for years, potentially impacting their overall financial stability.
5. Risk to Your Credit Score
Regular medical debt you have directly from the provider receives favorable treatment under FICO scoring rules. But medical credit card debt is treated like any other credit card debt. This is disadvantageous to consumers who use credit cards to pay medical bills.
Late payments or high balances can quickly damage your credit score. And credit card debt stays on your credit record much longer than traditional medical debt.
6. Limited Use
These cards can typically only be used for specific medical expenses, limiting their overall usefulness and flexibility.
But they still count against your overall debt utilization ratio, the same as much more flexible credit cards. This impacts your credit score and makes it more difficult for you to borrow in the future.
7. Severe Penalties
With medical credit cards, even a single missed payment can trigger retroactive interest charges on the entire borrowed amount.
This can quickly balloon a manageable debt into an overwhelming financial burden.
8. Depleted Retirement Savings
For seniors on fixed incomes, relying on credit cards to cover medical expenses can cause severe debt problems.
High credit card interest rates make it very difficult to escape from this debt. This can have long-lasting effects on financial stability and quality of life in retirement.
Because of all these drawbacks, you should think of medical credit cards as a last resort. If you can’t come up with the cash, nearly any other way of financing the cost is better.
Alternatives to Medical Credit Cards
Instead of relying on medical credit cards, consider these alternatives to help reduce medical costs:
1. Enroll in MediGap
Medicare by itself still leaves you with potentially unlimited out-of-pocket costs in the form of deductibles, copays, and especially the 20% coinsurance under Medicare Part B.
But you can cap your out-of-pocket expenses for Medicare Part A and B-approved services as low as $270 per year by enrolling in MediGap Plan G or Plan N.
You can also limit your exposure to prescription drug costs to just $2,000 per year (as of 2025) by enrolling in a Medicare Part D prescription drug plan.
2. Negotiate with Healthcare Providers
Many providers offer discounts or payment plans for those struggling with medical bills. Also, if you use a health sharing plan such as the Medi-Share 65+ plan, you may qualify for cash-payer discounts on many services.
3. Request Financial Assistance
Hospitals and healthcare providers often have financial assistance or “charity care” programs for those who can’t afford to pay.
4. Use Your Health Savings Account (HSA)
You can use your HSA to pay for some Medicare expenses including your Medicare Part B, Part D, and Medicare Advantage plan, deductibles, copays, and coinsurance.
5. Look into Payment Plan Platforms
Services like Credee or ClearGage can help set up manageable payment plans without the risks of credit cards.
6. Spread Out Prescription Drug Costs
A new feature of Medicare Part D plans, the Prescription Payment Plan, allows you to spread the out-of-pocket cost of prescription drugs out over time. This may be easier on your budget than paying your entire Part D deductible and/or copays up front for a prescription.
This is generally far preferable to going into credit card debt to purchase prescription drugs.
7. Explore Prescription Drug Assistance
Look into programs like Medicare’s Extra Help program to assist with prescription drug insurance and other out-of-pocket costs.
8. Consider Health Sharing
Medi-Share 65+ is an excellent lower-cost, non-insurance alternative to MediGap coverage. This affordable health sharing plan shares large and catastrophic healthcare costs. It also caps your out-of-pocket expenses at $500 per household for Medicare Part A and B expenses.
Pricing usually compares favorably with MediGap Plan G but with very similar benefits.
9. Finance With Your Provider
Many providers will let you make payments on some or all of your up-front costs. Or they may contract with a consumer finance company that specializes in medical financing. Many times, their terms are better than those offered by medical credit card companies.
10. Opt for a Regular Credit Card
While not ideal, if you have good credit, a regular credit card with a 0% APR introductory offer might be a better option than a medical credit card.
Learn More: The Less Expensive Medicare Supplement Alternative: Medi-Share 65+
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What to Do If You’re Already in Medical Debt
If you’re currently struggling with existing medical debt, it’s not too late to make some helpful changes.
There are a few things you can do now to help improve your situation:
- Review Your Bills Carefully. Medical billing errors are common. Always check for mistakes or duplications to make sure you haven’t been overcharged for services.
- Negotiate with Providers. Many healthcare providers are willing to reduce bills or set up payment plans for people experiencing hardships if you just ask. For complex or high medical bills, a professional advocate can help negotiate on your behalf.
Note: MediGap Advisors clients have access to an excellent medical bill negotiation service.
- Seek Financial Assistance. Look into local and national programs that help seniors with medical costs. Organizations like the HealthWell Foundation, Patient Access Network Foundation, and Patient Advocate Foundation offer financial assistance for medical expenses.
- Consider Credit Counseling. A reputable credit counseling agency can help you develop a plan to manage your debt.
Medical expenses can be overwhelming at times, but there are often more options available to assist than you might think.
Don’t be afraid to ask questions, seek help, and explore all your alternatives before turning to high-interest credit options. By being proactive and informed, you can better manage your healthcare costs and protect your financial well-being.
Conclusion
While medical credit cards may offer a short-term fix, they often create long-term financial consequences that can be particularly challenging for seniors.
These cards may seem like an easy way to pay for out-of-pocket medical costs. But they can often lead to more debt and more financial hardship in the long run.
By considering options like MediGap, Part D plans, and Medi-Share 65+, Medicare recipients can better m
Manage healthcare expenses without relying on high-interest credit.
Take time to evaluate your current situation, and plan for future health care needs. Make an appointment with a Personal Benefits Manager to help you find financial solutions that protect both your health and your financial future.
For Further Reading:
Leslie Alford is a Personal Benefits Manager at MediGap Advisors. Leslie has a passion for bringing clarity to those confused about Medicare. She is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Leslie on her Bio page.