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Big Medical Bills: How to Cope When You Can’t Afford to Pay the Docs

Every year, I have thousands of interactions with readers, friends, and other bloggers about personal finance. Over the years, I think the thing that has scared me most is the potential for a major illness or injury to wipe out your finances.

Think about it: One day you’re on your way to work, the next day you wake up in the hospital after a terrible car accident and learn you need three surgeries and two years of physical therapy to recover. Not only will such an injury take a massive toll on your body and your life — there’s that not-so-little issue that we live in the United States. Health care isn’t free.

A large number of personal bankruptcies result from medical bills that pile up after an illness or an injury.

Although the uninsured are at greatest risk for facing unaffordable healthcare bills, even if you have insurance with a high deductible and out-of-pocket maximum, a major illness could take a toll.

This brings up two points:

  1. Having health insurance, even though it’s expensive, is one of the most important things you can do to protect your finances.
  2. If medical bills begin to pile up, you need to understand your options and make a plan.
You may not be able to control your health or avoid an accident, but you can be savvy about coping with medical bills. Here are some tips.

Keep records

The first thing to do when you start to get medical bills is get organized. For example, having a baby is anything but free, so as the doctor’s bills from Lauren’s pregnancies began to roll in, we scanned in all of her bills and the explanations of benefits (EOB) – the records your insurance company sends to show what they paid and what you owe. I also created a spreadsheet to track everything both the insurance company and we have paid, so we will know when we hit our deductible and out-of-pocket max.

Later this week, Maria will write more about how to keep your medical bills organized.


It’s grossly unfair, but the rates medical insurers pay for an ER visit, blood test, or doctor’s appointment may be as little as a third what an uninsured patient will have to pay. That’s because insurers pre-negotiate rates based on the millions of patients in their network.

That’s the bad news. The good news is: You can negotiate your medical bills, too. You can either attempt to negotiate directly with the hospital and doctor’s office or you can even find professional healthcare negotiation consultants who will work to reduce your bills for a fee.

Avoid borrowing

When faced with thousands in medical bills that you can’t pay, it may be tempting to put them all on a credit card and worry about it later. (After all, almost every medical biller happily accepts MasterCard or Visa.) But unless you have a surefire plan for repaying the entire balance in short order, that may just be robbing Peter to pay Paul. And Peter’s going to charge interest!

Secondly, do NOT borrow against your home to pay medical bills. Medical bills are unsecured, meaning if you can’t pay them, the hospital doesn’t have a legal claim to any of your property. A home equity loan, however, is secured by your house, meaning if you don’t pay, the bank can foreclose on your home.

If you can’t afford big medical bills, you may be able to ask for a payment plan with the billers, which would be preferable to borrowing.

If you don’t pay your medical bills, they will eventually be sold to collection companies who will hound you for payment. These collections accounts may also appear on your credit report as negative items. The upside, however, is that you may be able to negotiate with the collection agencies to settle for a less than the full amount. If you do, just be sure to get the agreed settlement in writing before sending payment.

In this case, a credible credit counseling agency may be able to help you stop collection calls and put your many bills into one easy payment. I found one such agency, CareOne, useful in getting out of my own credit card debt.

This PDF provides more ideas for dealing with medical debt you can’t afford.

When Bankruptcy is the best option

I’m an advocate of accepting responsibility for your debts and paying them in full, but if you’re over your head because you got sick – or perhaps you can no longer work because of medical issues – bankruptcy is there as a lifeline.

Depending on your income, medical bills can be discharged in Chapter 7 bankruptcy or put into a court-administered payment plan that you can afford under Chapter 13 bankruptcy. In either case, bankruptcy is not a decision to be taken lightly and should only be made after you’ve exhausted alternatives and consulted with an attorney.

Although you can’t plan for every contingency, the best way to protect yourself from getting in over your head with medical bills is having health insurance and having savings. If you don’t have one – you most definitely need the other!

Have you been blindsided by big medical bills? What happened? How did you cope?

Published or updated on November 6, 2012

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Anja says:

    not really true that self paying patients pay more than those with insurance. My friend has an insurance company in Germany while living in USA. She always pays as a self paying patient and sending the bill to her insurance. Almost always her bill is half of what she would pay as an insured patient in USA. We are not talking about big bills like hospital stays or cancer treatment, just the regular stuff that you have to cover with your deductibles and out of pocket expenses. Even I once used self pay for ultrasound that I needed but insurance would not cover. The difference again was 50% of what I would have to pay using my insurance. It did not go towards my deductibles but I could not afford at the time to pay the big bill. Insurance billing is a rip off and one of the reasons why health care is so expensive in this country.

  2. I’ve found that doctors and hospitals are fairly easygoing when you have a larger bill and will work with you to pay it over time if you don’t have the cash upfront. In my case, they didn’t even charge interest. I just had a regular monthly payment. Of course, maybe I was just lucky!

  3. Scary! I had an ER visit while in Greece in college. Cost me $800 I didn’t have at the time. Definitely used a credit card for that medical emergency.

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