60% of Americans Are Worried About Medical Debt: 4 Steps to Avoid It

by Maurie Backman | Published on Nov. 9, 2021

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A mom holding her young daughter in her lap while talking to the doctor in an examination room.

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Medical debt is unavoidable sometimes. But it's best to try to steer clear of it.


Key points

  • Medical debt can have negative consequences, such as credit score damage.
  • While it's not always possible to anticipate healthcare costs, there are steps to take to avoid landing in debt from medical bills.

It's an unfortunate fact that many people wind up with medical debt even when they have health insurance. In a recent survey by HealthCareInsider.com, 60% of respondents say they're very or somewhat concerned a major health situation could lead to debt.

But racking up medical debt can have serious consequences. If you're forced to charge medical bills on your credit cards, too high a balance could damage your credit score. Plus, the interest charged on your debt could amount to quite a lot of money if you're forced to carry that debt for many years.

That's why it's best to avoid medical debt if possible. These tips could help you do just that.

1. Save for emergency healthcare expenses ahead of time

You never know when a sudden illness or injury might wreak havoc on your finances. That's why it's crucial to set money aside for medical emergencies. You can do so in a regular savings account, a flexible spending account, or a health savings account.

How much money should you sock away for healthcare emergencies? Without a crystal ball, it's hard to know what any single issue might cost you. But a good starting point is to save enough to cover the deductible on your health insurance plan. (That's the sum you'll need to fork over before your insurer starts paying for your care.)

2. Work ongoing medical expenses into your budget

Not all medical bills are emergencies. The run-of-the-mill colds and viruses you pick up during the year that result in doctor visits could also drive you into debt if you don't budget for copays.

Take a look at your medical bills from the past couple of years and figure out what you spend on average each month for non-emergencies. Then, factor that sum into your budget so you're allocating money from your paycheck every month to cover your costs.

3. Negotiate with providers

Healthcare providers are often sympathetic to people who are stuck with high out-of-pocket costs and may cut them a break on their bills. Though this isn't guaranteed to happen, it never hurts to try negotiating with your provider the next time a big medical bill lands in your lap.

4. Read all of your medical bills carefully

Sometimes, all it takes is a billing code error to cause your health insurance company to deny a claim, leaving you on the hook for a large bill. That's why it's important to read your medical bills and insurance company statements thoroughly, and dig deeper when something doesn't look right.

Say you're suddenly being charged $400 for lab work that your insurer has always covered. It could be that your coverage changed this year and you didn't realize it. But it could also be that your lab tests were coded or billed incorrectly, causing your insurance company to deny the claim rather than approve it.

Medical debt can be harmful to your finances and detrimental to your mental health. With any luck, these tips will help you avoid landing in debt when healthcare expenses or emergencies arise.

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