1 in 3 American adults have medical debt. Here’s how to avoid it


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It is easy to assume that medical debt is a problem for the uninsured. But a new Healthcare.com investigation reveals that about 1 in 3 Americans aged 18 and over have some medical debt. Many Americans go into debt with medical bills despite their insurance.

Even with coverage in place, high deductibles and high coinsurance and copayments can still leave patients burdened with costs that their regular paychecks cannot cover. If you’re worried about getting into medical debt, the good news is that there are steps you can take to avoid it. Here are a few to work on as soon as possible.

1. Pay back your savings

The more money you have available in your savings account for surprise expenses, the less likely you are to be in debt, including medical debt. If you’re not sure how much to save for medical bills, start by saving enough money to cover your annual deductible, which is the amount you need to spend each year before your insurance kicks in and starts covering your healthcare expenses. .

It’s also a good idea to try and set aside several hundred dollars on top of your annual deductible so that you can manage expenses like copayments as they arise. If you typically see the doctor five times a year and pay a co-payment of $ 40 each time, you can spend an additional $ 200 for these early visits.

2. Have an account dedicated to medical expenses

While you can put money into a regular savings account to cover medical bills, you may want to take advantage of one of two special health savings accounts that offer tax benefits. The first is a flexible expense account (FSA), which allows you to allocate a sum of money to spend on healthcare within a limited time frame (usually a year, although some of these plans have a grace period that gives you a bit more time).

The second is a health savings account (HSA), which allows you to save money for health care expenses that you can use at any time in your life. HSAs also allow you to invest money that you don’t need immediately so that it turns into a bigger sum.

FSA and HSA contributions are tax exempt. This means that if you put $ 1,000 into either account, the IRS will not tax you $ 1,000 of your income.

You can save in an FSA or an HSA, but you can’t have both at the same time. Plus, only certain health insurance plans make you eligible for an HSA, so you’ll need to see if that’s even on the table. If not, an FSA is a good fallback option.

3. Always check your medical bills before paying them

Sometimes all it takes is a simple billing error to leave you with a much higher tab for medical care than you should have paid. In fact, in the aforementioned survey, 8% of people with medical debt who are insured report having disembarked on this boat due to bad billing.

That is why you should always carefully check every medical bill you receive before paying it. If something is wrong, ask questions. Call your provider as well as your insurance company and ask why you are being charged the stated amount. It’s especially important to dig deeper if you’re billed for something your insurer normally covers or has covered in the past.

Medical debt can be extremely stressful and overwhelming. Follow these tips in order to avoid medical debt as much as possible.

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