Protect Your Health and Your Wealth: Tips To Beat Medical Debt

Even though I have enough saved for early retirement, I still worry. As someone with lifelong chronic conditions, I know all too well how healthcare costs can creep up, even when everything else seems under control. 

Medical debt is one of the sneakiest ways financial stress shows up in people’s lives. According to Kaiser Family Foundation’s (KFF) analysis of government data, Americans owe at least US $220 billion in medical debt. Approximately 14 million adults owe more than $1,000, and another three million carry medical debt over $10,000.

And the stress around money, and especially healthcare, is very real. According to Bankrate’s Money and Mental Health Survey, 43 percent of U.S. adults say money negatively affects their mental health at least some of the time.

Understanding your health care coverage is an essential part of a healthy financial plan for you and your family. Here are six practical tips to protect both your health and your wealth.

1. Check your insurance coverage carefully

Don’t wait until you’re in a hospital bed or at the doctor’s office to find out what your plan actually covers.

Before any procedure, call your provider and ask about deductibles, copays, coinsurance and whether your doctor is in-network. A ten-minute phone call could potentially save you thousands of dollars. 

Recently, my primary care doctor referred me for a CT scan. When I reviewed my coverage, I found that it would cost me over $1,000 out of pocket. Because I looked into this before my procedure date, I had time to investigate alternatives and avoid a nasty surprise.

Many people don’t understand how these terms translate into real-life situations, so here’s an example. Imagine you need surgery that costs $5,000:

• According to your plan, your deductible is $1,500. You pay that first.
• After that, your insurance kicks in and you pay 20 percent coinsurance on the remaining $3,500, or $700.
• If your plan has a $50 copay for the hospital visit, that gets added too.
• Your total out-of-pocket cost for this surgery would be $2,250 ($1,500 deductible + $700 coinsurance + $50 copay).

2. Match your “Keep Calm fund” to your deductible in a high-yield savings account

You’ve probably heard about the importance of having an emergency fund. I like to call mine a ‘Keep Calm Fund’ because that’s precisely what it does in a crisis — it gives me peace of mind so I can stay level-headed. At a minimum, set aside the amount of your deductible; having your out-of-pocket maximum saved can be a long-term goal. That way, if a worst-case scenario hits, you can cover your medical costs without spiraling into debt or panic.

Using the $5,000 surgery example above, having at least $1,500 in your Keep Calm Fund means you can cover the deductible right away. 

The average annual out-of-pocket healthcare cost for employees was over $1,100 in 2024. If you have more saved, you’ll have breathing room for coinsurance, copays or other unexpected costs that may arise.

Keep your funds in a high-yield savings account so they can earn interest for you in the meantime.

3. Read every line item and ask about discounts

I can’t emphasize this enough: Pore over your medical bills with a fine-toothed comb, and speak directly with billing departments or your pharmacy about any discrepancies. Mistakes happen all the time, including incorrect codes, duplicate charges or bills for services you didn’t receive. I reviewed some physical therapy bills recently and found duplicate charges that would have cost me several hundred dollars.

Plus, discounts, subsidies or assistance programs are often available but aren’t widely advertised or readily apparent. For example, one of my prescriptions ordinarily costs thousands of dollars a month, but the pharmacy helped me find a copay assistance program that covered most of it.

Asking those questions and pushing back when something looks off can make a huge difference.

4. Avoid credit cards, use HSAs or similar plans instead

Credit cards are often the most expensive way to cover healthcare costs. Unless you can pay them off immediately, interest charges can balloon a $1,000 bill into thousands more over time. 

A better option? If you have access, consider using a Health Savings Account (HSA) or a Flexible Spending Account (FSA). 

Contributions go in tax-free, withdrawals for qualified medical expenses are tax-free, and with HSAs, your money can even grow tax-free if you invest it. 

That’s a triple advantage that even medical credit cards will never give you. HSAs and FSAs help you save for medical costs in advance while reducing your taxable income to help you save at tax time.

5. Consider medical tourism

Here’s a tip you don’t hear often: consider looking beyond U.S. borders for medical care.

If you’re able and willing, medical tourism, especially for certain elective or screening services, can be a safe, affordable option to avoid medical debt. 

After reviewing research and speaking with American expats in Portugal and Spain, I confirmed that many of our healthcare costs are inflated and don’t necessarily guarantee higher-quality care simply because it’s American.

During a recent trip to Malaysia, my husband and I received comprehensive medical screenings, including labs, imaging and consultations. The appointments were all scheduled for a single day, and our total out-of-pocket cost was less than $800. In the U.S., the same services could easily cost several times that and take weeks to complete.

But don’t rely on second-hand information and anecdotal reports. Call these medical centers directly and have your list of questions and concerns ready. You may just find a smoother, less expensive process.

Final thoughts: Advocating for your own health is a worthwhile fight

Lastly, but most importantly, don’t take no for a final answer on insurance denials. Insurance companies often deny valid claims with the expectation that patients won’t argue or will eventually give up. According to a KFF survey, 18 percent of insured adults reported experiencing a denied claim in the past year. Among those who use health services the most, that figure jumps to 27 percent.

Here are some steps you can take:

• Read the denial letter carefully. It should reference the policy clause or term used to deny your claim.
• Gather documentation, including doctor’s notes, lab results and referrals to support your case.
• File an appeal. Many denials are overturned on appeal, but only if you challenge them.
• Enlist help if needed, including patient advocacy groups or consumer assistance programs. You don’t have to fight alone.

In my experience, my medical providers have been willing to help me fight denied claims. Think of these efforts like preventive care for your financial plan.

A little preparation, a questioning and curious mindset and a strong financial cushion can make a world of difference. The healthier your money habits, the less likely you are to need a financial emergency room.