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How to Ease the Burden of Medical Debt

Medical debt sucks. If you’ve ever had to take a trip to the emergency room, you know it’s true. Some visits to the hospital are routine and planned, like your dad’s knee replacement. Others? Not so much. Maybe you’re a first-time parent needing some peace of mind when those fevers get dangerously high. Or maybe the latest game of The Floor Is Lava went haywire, ending in a broken bone and lots of tears.

Whatever your reason for needing care, one thing is for sure—no one looks forward to that medical bill hitting their mailbox. Especially if you don’t have the cash to wipe out the bill right away. The truth is, the burden of medical debt can be pretty overwhelming. But it doesn’t have to be. So . . . take a deep breath—it’s going to be okay. It’s time to learn how to tackle that mountain of medical debt one step at a time.

What Is Medical Debt?

Medical debt is debt you owe after a medical issue happens—like an operation, emergency room visit or surgery. It’s the kind you don’t sign up for on purpose. Medical debt hits you like a ton of bricks when something like an illness, six-week-long NICU stay or kidney stones pop up. And unlike credit card debt, medical bills are outside of your control most of the time. You can’t really plan for it (if you do know a medical expense is coming, a Health Savings Account could be a good option for you).

If you’re drowning under medical debt, you’re not alone. In fact, 1 in 5 Americans are carrying the burden of how they’re going to pay for their medical bills.1

How Do I Pay Off Medical Debt?

Medical bills can add up so quickly. And before you know it, you’re buried under a $200,000 bill you’re not sure you’ll ever be able to pay back. When you’re looking at those medical bills, it can feel like things are hopeless and the walls are closing in on you. But there is hope! Don’t let fear and worry lead you to make knee-jerk decisions—like emptying your retirement account, signing up for a medical credit card, or even declaring bankruptcy. Here’s how you can pay off your medical debt:

1. Put your family first.

When you’re dealing with a medical emergency, it’s hard not to see dollar signs every time you visit the urgent care center or emergency room. But let’s be really clear here: Don’t let money stop you from taking care of your family—or yourself. If you have a medical crisis on your hands, the last thing you need to do is worry about those future bills when you or your family needs care.

Do everything you can to put bills out of your mind and stay calm in the moment. Wait until the dust settles, your family is back in good health, and all of the bills are in your hands. Then you’ll be able to create a plan for how you’re going to chip away at them.

2. Look at your bills.

Read over every single bill carefully to make sure you’re not being overcharged (or unfairly charged) for medical care. If your family member went to the ER for a broken arm but you’re billed for a three-night stay . . . uh, you might have a slipup there.

If you have medical insurance, make sure your doctor’s office sent the bill to them first. And always make sure you follow up with your insurance company to ask why they didn’t cover something. It could just be a simple mistake, but you’ll never know if you don’t ask.

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Pay off debt fast and save more money with Financial Peace University.

As you begin to work your way through your bills, think about your assets too (anything of value that you could sell). If you don’t have any assets, it’s going to be harder to pay back a $200,000 hospital bill—but not impossible. That’s where a budget comes in handy.

3. Make a budget.

If you’re not using a zero-based budget, now would be the time to start! And now that you have all your bills laid out in front of you, you can create a plan that tells every single dollar where to go. But before you start paying on your medical bills willy-nilly, you need to make sure your Four Walls are covered:

  • Food (Keep the fridge—and your bellies—full.)
  • Utilities (Keep the water running and the lights on.)
  • Shelter (Make sure you’re up to date on your rent or mortgage payments.)
  • Transportation (Keep enough money in the bank for a tank of gas or bus ticket to get you to and from work.)

Maybe you’re thinking to yourself, Why does all this matter? Here’s the bottom line: If you only have $50 left to your name, you want to make sure you have food in the fridge before sending that cash to cover your medical bills.

4. Start negotiating with your health care administrator.

If you can’t fully pay your debt, set up a meeting with the hospital administrator or billing department. Check your pride at the door, because you’re asking for mercy. Explain your situation to them in person. Show them your income, assets, budget, and what you can truly pay. Tell them how grateful you are for the service they provided, then ask if they’re willing to settle for a lower amount or work out a payment plan with you.

Remember: You’re not trying to get out of paying here. You’re just asking if they’ll accept less money based on what you can afford to pay. People can be pretty understanding and compassionate when you’re thankful, honest and up front about your situation. A lot of times, they’d rather get some money than none at all.

5. Use the debt snowball method to pay off medical debt.

It’s time to make a plan. Now that you have the total amount you owe and maybe even a deal with the hospital, it’s time to start attacking the debt. And the best way to get rid of medical debt (or any type of debt) is by using the debt snowball method.

  • List your debts smallest to largest—don’t pay attention to the interest rate.
  • Pay minimum payments on everything but the smallest debt you have.
  • Attack the smallest debt with everything you’ve got. This means you’re paying that minimum payment, plus you’re tossing any extra cash you have at this debt. Get that thing out of your life fast. Keep on making the minimum payments on the rest of your debts too.
  • Once that debt is gone, take that payment you were making each month and add it to the next smallest debt on your list.

See what we mean by snowball here? You pack it with more and more cash until you’ve got a huge snowball to smack your debt in the face with. The more you pay off, the more your freed-up money grows and gets thrown onto the next debt.Keep repeating these steps as you plow your way through that debt. The more you pay off, the closer you’ll be to yelling, “Freedom!”

How Do I Deal With Medical Debt Collectors?

Debt collection usually starts when you’re already past due on your medical bills. If you haven’t paid anything toward your medical bill for at least three months, the hospital might send your account to collections. Yeah, not fun.

But you don’t have to end up there. In fact, you should try to avoid this at all costs by talking (and negotiating) with your hospital or doctor’s office first. Try to do everything you can to keep your bill out of the debt collector’s hands. Here’s how to make that happen:

1. Know your rights.

Dealing with debt collectors is the last thing anyone wants to do. But the best way to deal with them is by knowing your rights and what they can and can’t do—before you ever give them a penny. 

Remember: Their only job is to get you to pay up. So they’ll use every trick under the sun—even if it means lying, trying to embarrass you, or telling you they’ll take money from your paycheck (without taking you to court first). Listen: No one can take your wages from you without a court ruling. So don’t let them bully you.

If you have debt collectors harassing you or you think they’re breaking any rules when it comes to the Fair Debt Collection Practices Act, you can report them to the Federal Trade Commission and your attorney general’s office.

2. Know what you owe.

Don’t stay in the dark here. We know it’s hard to count up all that you owe, but you have to do it so you can make a game plan to pay it off. Be sure you know how much you owe on your debt—right down to the penny. And remember to get it in writing before you give them any money. If they still send you to collections, you should expect this in writing. Most of the time, they’ll send a letter in the mail saying your bill is in collections.

3. Know how to negotiate.

Here’s the deal with debt collectors: At the end of the day, their job is to get you to pay. And remember what we talked about before? Paying something is a lot better than nothing. You can talk with the collectors and try to negotiate a payment plan. But don’t give them any money until you have the settlement offer in writing. And once you do, don’t give them access to your bank accounts—because they’ll wipe you out. Send a check or a prepaid debit card with the monthly amount you agreed to until the debt is paid.

Does Medical Debt Qualify for Bankruptcy?

Medical debt does qualify for bankruptcy. But you don’t get to pick and choose what debts get wiped out. That’s the court’s job. Still, medical debt is the most common debt that makes people end up filing for bankruptcy. A study from academic researchers showed that about 67% of people who file bankruptcy do it because they’re drowning in medical bills.2

Listen closely: Bankruptcy might look like your saving grace if you’re struggling with medical debt, but there’s no sugarcoating it—bankruptcy is a wrecking ball. It makes a mess of everything in your life. While some think it’s an answer to their problems, it actually causes a lot more. Not to mention what it does to you emotionally as you invite the courts to stick their nose in your family’s every financial move over the years.

When you’re faced with a mountain of medical debt, things can look bleak and hopeless. But before you call a lawyer, try doing everything in your power to avoid the dreaded B-word—bankruptcy. If you absolutely need to file bankruptcy, it’s not the end of the world. But just remember it’s not your only option.

What Happens to Medical Debt When Someone Dies?

You know how the old saying goes: You can’t take it with you when you die. And in most cases, that includes medical debt too.

When it comes to taking care of a loved one’s estate (that’s all of the money, property and assets they owned before they passed), it’s natural to worry about any debt they left behind. Is it covered in their will? Who pays it? Do you get stuck with their old medical bills? Will their estate cover the debt?

Am I Personally Responsible for My Loved One’s Debt?

The short answer? Nope. Depending on what state you live in, debts are usually taken care of by your loved one’s estate. But just in case, let’s go over the few times you might be held responsible for their debt:

• You cosigned on a loan with the deceased

• You had a joint account (like a credit card)

• You owned property with the deceased (each state is different)

• You live in a community property state (state law will make a spouse sell any assets to pay for the debt)3

Moral of the story? It’s important to stay as far from debt as possible. Debt sucks. Whether it’s medical debt, credit card bills, car payments, student loans or even debt from the IRS, it drains the life out of your future and leaves you stuck paying for your past—or your loved one’s past.

If you’re feeling overwhelmed by medical debt, there’s still hope! Learn how to pay off your debt fast with Financial Peace University (FPU). This course has helped millions of people feel more confident with their finances. And now it's your turn! Start FPU and get the game plan for getting medical debt out of your life for good!

Or maybe you just need someone in your corner to walk you through your options and ease the burden of medical debt. That's where a financial coach can help! They'll answer your questions and help you navigate your specific situation. Book a free coaching consultation today and get the help you need!

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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