Try to negotiate a mutually acceptable payment plan with your health care provider and tap your emergency cash reserve to make the payments.

Key Points

Millions of working-age Americans from all income groups are struggling to pay medical bills and manage accumulated medical debt. Many will continue to face problems with medical bills for years after their care was provided.

If you have been hit with unexpected, costly medical expenses, consider some of these tips for coping with your situation.

 Talk to your health care provider.

If you find your medical bills are piling up faster than you can pay them, don’t hesitate to call your service provider and be honest about your situation. Ask for a reduction in fees or discuss setting up a payment plan that is satisfactory to both of you. It never hurts to ask, and you may be pleasantly surprised to find that it is not that difficult to negotiate a solution.

 Avoid using credit cards or bank loans to finance the debt.

Perhaps the only positive aspect of medical debt is that health care professionals rarely report payment information to credit monitoring bureaus unless the debt has been passed off to a collection agency. On the other hand, credit card and installment loan data is routinely reported. So the wiser strategy may be to deal directly with the doctor or hospital to work out a payment plan, especially if you are concerned about maintaining a healthy credit score.

 Review your bills carefully.

Medical bills typically arrive long after the service was rendered and they are notoriously complex, including multiple line items for physician time, laboratory tests, radiology, etc. Take time when the bills arrive to read through them and make sure you agree not only with the services performed, but also the details of how much coverage is provided by your health insurance.

 Tap your emergency fund.

If there ever was a good argument for maintaining an emergency fund, an unexpected medical bill is it. While emergency funds may not cover your entire debt, they can help finance a payment plan that enables you to chip away at the debt a little each week, each month, etc.

 Obtain disability insurance.

Disability insurance is a critical safety net to deploy in the event that you become ill and cannot work. This type of policy, which is often available through employers, will pay you a portion of your salary for a predetermined period of time, depending on the type of policy.

 For additional help with medical debt, contact The Access Project at or call 617-654-9911. The Access Project provides free counseling to people with medical debt, regardless of their income.


© 2012 McGraw-Hill Financial Communications. All rights reserved.

March 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by D3 Financial Counselors, a local member of FPA.