How to Prevent Medical Debt

Medically Reviewed by Dan Brennan, MD on August 24, 2021
4 min read

Modern healthcare saves lives, but it can also be expensive. Health insurance covers many costs including doctors’ pay, testing equipment, and medications. Patients are responsible for paying a portion of these costs. Sometimes, that portion is higher than expected. Understanding your health insurance and payment options can help prevent medical debt.

Health insurance is a financial system meant to make healthcare affordable for patients. Health insurance plans vary widely in how they set prices and payments, select which hospitals and doctors to include, and other details. ‌

Many people have health insurance plans through their employer. Others pick their own health insurance plans independently. In either case, health insurance usually doesn’t cover 100% of the cost of any treatment. A patient usually pays some of it through deductibles and premiums.

A premium is a general monthly fee for being enrolled in health insurance. A deductible is the amount of money you have to pay for certain medical services before the health insurance covers the rest. A health insurance plan with a high premium will usually have a low deductible and vice versa.

Sometimes, the patient’s portion of healthcare treatment costs can be unaffordable. You may receive a high medical bill after a hospital visit due to:

Out-of-network care. Many health insurance plans cover a network of specific hospitals, physicians, and other healthcare providers. A patient may visit a hospital that their health plan doesn’t include in their network. This can raise the patient’s out-of-pocket cost for the visit.

A patient may also receive out-of-network health services as a smaller part of an overall procedure. For example, someone may get surgery at a hospital included in their plan’s network. But, the anesthesiologist may not be included. In this case, the patient will need to pay a higher price since the insurance won’t cover that particular anesthesiologist.

Non-covered medical tests and treatments. Health insurance plans cover a wide variety of tests and treatments, like blood tests and X-rays. However, they may exclude:

Mistakes and typos. A hospital’s billing department may make a typo on the bill they send. These typos can falsely raise the cost of treatment.

Over time, unpaid medical bills become higher with interest rates and late fees. Hospitals often hire collection agencies to continue contacting a patient until they pay their debt.

A hospital can sue a patient for not paying back their medical debt. Unpaid debt can also affect a patient’s credit score. This impacts whether they can access future loans like car payments and a mortgage. In extreme cases, the collections agency can access a patient’s bank account or paycheck and take the amount needed.

There are many ways to prevent medical debt before a non-emergency surgery, treatment, or other medical services.

Compare prices. Many websites help patients compare prices between different hospitals and care centers. The patient can enter their insurance type if they wish to stay in-network for the medical service or supplies they need. These online tools can estimate the end price both in and out-of-network.

Understand your health insurance plan. Patients can review the treatments and services that their health insurance covers. In-network vs. out-of-network doctors also vary in price depending on a patient’s health insurance. Some insurance plans require a referral from a general doctor to see a specialist like a dermatologist.

A doctor may order blood tests for a patient. The patient can ask which labs nearby are in their insurance network to prevent high out-of-network costs.

Open a health savings account (HSA). A health savings account is a special type of savings account that goes toward medical expenses like copayments and deductibles. The government doesn’t tax this type of account. Many health insurance companies and banks offer HSAs.

Not everyone can open an HSA. Most HSAs are only available to people with high-deductible health insurance plans. A general savings account through a bank can also go toward medical expenses.

Double-check medical bills. Typos and other errors on bills are possible. Carefully check each item on the bill to make sure it reflects the right medical services. Contact the medical billing office with any questions.

Negotiate a payment plan. Many hospitals offer financial assistance, or “charity care,” for patients with high medical bills. These programs vary widely based on the hospital’s location and management. They may take into account a patient’s income, amount of debt, and other personal details. A hospital’s billing office can provide more information about financial assistance options.