Nine Steps To Dealing With Medical Debt

A broken bone, mental health therapy, a long-term illness, a car accident, a premature baby. All of these situations—and so many more unexpected ones—can land a family in medical debt. And you can’t comparison shop for a needed surgery or delay treatment for cancer until you have the money to pay for it in full.

When most people think of medical debt, they think of a person or family with no health insurance at all, yet a large percentage of Americans who have incurred medical debt actually do possess health insurance (also known as the “underinsured”). According to an article by Eileen Ambrose in the Baltimore Sun online, “It’s not just uninsured patients who rack up steep medical bills. Even if you have insurance, you might not realize that your coverage is inadequate until you’re sick and overwhelmed by co-payments and other health costs.”

If you find yourself facing medical debt, here are some steps and options to consider.

  1. Make sure the amounts you are being billed are correct. Doctors, nurses, medical billers and other staff can make mistakes in billing, so make sure you are being charged for services you actually received. If you have insurance, call your insurance company to confirm that all itemized amounts have been written off correctly in accordance with your policy.
  2. Contact your medical provider. One of the biggest mistakes people make is to ignore their medical bills. Bob Dahlseng, Certified Financial Counselor at The Village Family Service Center, advises people to contact their medical provider right away if they are going to have a difficult time paying a bill.
  3. Ask about community care or charity care. Dahlseng encourages people to ask about community care or charity care. “Most medical providers will have a process by which they will look at reducing or forgiving a medical bill.”
  4. Work out a payment arrangement with the provider. If you aren’t able to work out a payment arrangement, the provider will most likely turn the debt over to a collection agency. Dahlseng says, “Medical providers just do not hang onto their receivables for any length of time without an agreed-upon arrangement.”
  5. If your debt is turned over to a collection agency, don’t panic. The idea of a collection agency may be a bit scary, but Dahlseng says, “It’s not the end of the world and some can be very cooperative.” On the other hand, others are not so cooperative and will use the threat of judgment or garnishment to get you to pay off the debt. The key is to stay calm and try to work with them.
  6. Stick to your payment arrangements the best you can. If you find yourself unable to pay during a given month, call the provider instead of simply not sending the money. They are more apt to work with you if you keep up the lines of communication.
  7. Use money from a savings account or other source to make a down payment. Sometimes you can negotiate a lower final payment if you are able to pay a large enough down payment.
  8. Consider carefully before borrowing on an IRA (individual retirement account) to pay medical bills. You may be able to borrow on your IRA tax-free for medical purposes, but Dahlseng doesn’t recommend it. “IRA’s are meant for retirement, not for paying off medical debt,” he says.
  9. Be wary of suggestions to put your medical debt on a credit card. It may be tempting to use your credit card to get the collector off your back, but unless it’s just a couple thousand dollars, Dahlseng doesn’t think it’s a good idea. Even a credit card with a low interest rate is probably going to charge higher interest than the medical provider, and “if you can’t handle a payment arrangement with your provider, what makes you think you can handle the credit card payment,” he says.

By Kerrie McLoughlin for The Village Family Service Center. McLoughlin is a seasoned mom of five who blogs at