How to Deal With Medical Debt

Ask for help, negotiate, and dispute billing mistakes to keep medical debt under control.


Alex Cramer

Key Takeaways:

It’s the phone call that everyone dreads. “There was a spot on the x-ray…..the tests came back positive…..we saw something on the MRI.”

There are few events more traumatic than learning that you or someone you love is facing a major medical emergency. Whether it's cancer or a car accident, it's impossible to prepare yourself for everything you’ll go through emotionally as you come to terms with this devastating situation.

And in addition to protecting your health and healing your body, you’ll soon realize that there is another serious issue you may have to deal with: managing your medical bills.

Medical debt can quickly spiral out of control when you’re going through a medical crisis because in addition to paying all of your hospital bills, you still have to keep up with your day-to-day finances even if you’re too sick or injured to work. 

We spend a lot of time speaking with our members, and the one issue that comes up more than any other is the struggle they endured when facing a serious health situation. 

“Between 2000 to 2004, I was in and out of the hospital at least eight to ten times,” Mission Lane member Tom told us. “And they were lengthy stays of two weeks or more. I had a lot of medical bills. And some of them honestly, I just could not pay.”

Mission Lane Member Randy had a similar experience when a family member was diagnosed with cancer. “My wife and I each took a month off of work so we could take them to have surgery. We ended up with over one hundred thousand dollars of debt and there was just no way for us - in our lifetime we couldn’t repay that.”

Crippling medical debt is so common in fact that The American Journal of Public Health reports that 66.5% of bankruptcies in the US are the result of medical emergencies that lead to massive medical debt and lost wages from an inability to work.

There’s no bigger threat to the financial well being of most Americans than medical debt, and yet, few of us are actually prepared to financially face a major medical emergency. 

Medical insurance can help, of course, but it's actually something that you should view as the first step in protecting yourself, not the last. 

There are some other important ways to prepare in the event of a medical crisis:

Establish an Emergency Fund

There are many good reasons to build your emergency fund, but having the ability to deal with a medical crisis is near the top of the list. Imagine if you were to break your leg and weren’t able to work for a few months. Even if your insurance pays your medical bills, it won’t make up for your lost wages and you’ll still be responsible for your rent, utilities, food, and other bills.

Mission Lane member Annie learned this when she was diagnosed with breast cancer. Her health insurance helped with her medical bills but all of her time away from work severely reduced her income.

“Once you use up your sick and vacation time, you have to start taking leave without pay and that meant my checks were always short.”

Even if you’re entitled to worker’s compensation or some other form of support, it can take months for that money to come through and an emergency fund will keep your head (and your credit) above water. 

Contribute to a Health Savings Account

A Health Savings Account (HSA) lets you contribute pre-tax dollars into a savings account that you can use to pay for qualified medical expenses such as insurance deductibles, prescription drugs and lab fees.

The IRS announced that it’s changing HSA contribution limits starting in 2023 to adjust for inflation. The maximum you’ll be able to contribute to an HSA for self-only care in one year will be $3,850 or $7,750 if you have a family plan. You can also roll that money over year-after-year so that you can build up a large savings if you don’t need to tap into it for a few years. 

Understand Your Insurance

Do you know what the difference between your deductible, premium, co-pay and out-of-pocket costs are? You may not want to take the time to learn them now, but you definitely don’t want to have to figure them out in the middle of an emergency. 

Understanding how your insurance works will not only ensure that you know how to use your plan, but that you have the right plan for your needs. If you have a chronic illness or are at risk for particular diseases you’ll want to make sure that your insurance will cover the treatments at the level you’ll need. 

Likewise, as your life changes and your family grows, you’ll want to make sure that you have the right plan for your stage of life. For example, if you think you might need fertility treatments, you’ll want to make sure that your preferred doctor is in your insurance plans network. 

It's not a lot of fun digging into all of the intricacies of your healthcare plan, but what you understand today, could save you thousands of dollars tomorrow. 

What to do With a Large Medical Bill 

The reality is, you can’t prepare for everything. What do you do when you’ve just left the hospital with a $100,000 bill in your hand?

There are several strategies you can try to reduce your bill and manage your debt.

Look for Mistakes

Medical billing is a complex process and it's possible that you were charged for services you didn’t use or doctors that you didn’t see. You have rights as a patient and one of those rights is to receive an itemized bill that outlines every individual drug, treatment and doctor’s visit that you’re being asked to pay for. 

Go down this bill line by line and make sure that you received everything that appears on your bill, checking the billing codes to make sure they match your charges.

Medical billing errors are surprisingly common and making sure that you actually received what you are being charged for is the first step to reducing your bill. Speak to your hospital's billing department or your insurance company if you think you’ve found a mistake or just need an explanation for a charge you don’t understand.


One of the most effective ways to lower your medical bills is to ask. You can call the hospital billing department and ask if your can be reduced.

A 2021 survey found that 75% of people who have medical debt have tried to negotiate their bill; and 92% of those who did negotiate were at least partially successful in getting their bills reduced. With that kind of success rate, there’s really nothing to lose in asking. 

Most hospitals are nonprofit entities, and under the Affordable Care Act, are required to post their policies online as well as provide financial assistance for low-income patients. You could be eligible for a partial or full reduction of your bill if you qualify. 

You can also ask to be placed on a no-interest payment plan so you can reduce your monthly payment load to a more manageable number. Your provider still receives payment, albeit over a longer period of time, and your debt doesn’t accrue additional interest or get sent to collections. 

Get Help

If all of the above sounds complex or daunting, that’s because it is. It's not a simple thing to negotiate a medical bill or catch billing errors in medical codes. The good news is that it's not something that you have to do alone. 

There are both paid and free advocacy organizations all over the country that will work with you to help you understand your bills, search out errors and help you navigate through the maze of billing departments and insurance companies that determine what you owe, so that you can make sure that you're being charged fairly and accurately. The National Foundation for Credit Counseling can provide you with resources and member agencies to help you. 

When facing overwhelming medical debt it's just as important to manage your emotional well being as it is your finances. No one ever asks to be sick or seriously injured and the bills that you face are largely beyond your control. 

There’s no easy way to deal with a major medical bill, but knowing your options can put you in a better emotional place to cope with the financial challenges.