5 medical debt relief options that actually work

If you're struggling under the weight of your medical debt, there are ways to get some much-needed relief. Getty Images

The cost of healthcare in the U.S. has always been high, but for many Americans, the issue has gone from frustrating to financially devastating. More than 41% of adults are now carrying some form of healthcare-related debt, according to a recent KFF Health Care Debt Survey — which includes healthcare debts owed to credit cards, collections agencies, family and friends, banks and other lenders. And it's not just those without insurance who are facing this type of issue. Those with coverage are also falling behind due to issues with high deductibles, denied claims and unexpected bills that show up months later.

What makes medical debt especially tricky is that it often stems from emergencies or unexpected diagnoses. Unlike credit card debt or personal loans, where you knowingly agree to borrow money, medical debt is something most people don't willingly sign up for. They get sick, they get care and then get stuck with a bill they can't afford. And, to make matters worse, some unpaid medical debt can show up on your credit report or get sent to collections, creating even more financial stress.

If you're struggling with medical bills, though, you do have some options to consider. Healthcare providers, government programs and debt relief organizations offer various pathways to reduce or eliminate medical debt, but to take advantage of this type of relief, you'll need to know which options are available and how to navigate them effectively.

Find out how you can start tackling your debt problems now.

5 medical debt relief options that actually work 

Here are some of the most effective ways to deal with overwhelming medical debt right now:

Negotiate directly with the provider

Before you take a more drastic step, try calling the hospital or provider's billing office about your medical debt. Many healthcare providers are surprisingly open to negotiating, especially if you're willing to pay a portion of the bill upfront. By doing this, you may be able to:

Settle the debt for less than the full amountSet up a low-rate or interest-free payment planAccess discounts for uninsured or low-income patients

In some cases, nonprofit hospitals are even required to offer financial assistance under federal law, so it may pay to ask about the programs available to you.

Explore how debt relief could help get your finances back on track.

Apply for hospital financial assistance or charity care

If your income is below a certain threshold, you might qualify for your bill to be reduced or forgiven altogether. These programs, often referred to as charity care, are offered by most nonprofit hospitals, and they often go unused simply because patients don't know they exist.

Eligibility varies, but in general, if you earn below 200% to 400% of the federal poverty level, you could be a candidate. Make sure to submit your application as soon as possible, ideally before the bill is sent to collections.

Use a medical bill advocate

A medical billing advocate is like a detective for your healthcare expenses. They'll go through your bills line-by-line to catch errors, double charges or services you shouldn't have been billed for at all. Studies have shown that the majority of medical bills contain some kind of mistake, so taking this route could pay off.

These services aren't free, though. Some advocates charge a flat fee or a percentage of the savings while others work on a contingency basis, meaning you don't pay unless they lower your bill. But if your bill is over $1,000 or looks confusing, it may be worth the extra cost.

Enroll in a debt consolidation or debt management program

If your medical debt is mixed in with credit card debt — let's say you used a credit card to pay for procedures — then a traditional debt relief strategy, like debt consolidation, could help. A debt consolidation loan can be used to combine multiple debts into a single monthly payment, typically at a lower interest rate than your credit cards. This won't reduce the total you owe, but it can make the repayment process more manageable.

You also have the option of working with a credit counseling agency to create a debt management plan, which allows them to negotiate lower interest rates and handle disbursing the monthly payments for you. You make one payment to the credit counseling agency each month and the money is then used by the credit counseling agency to pay your creditors. If you want to take this route, though, just be cautious of companies that promise quick fixes and always verify credentials before signing up.

Consider debt settlement (with caution)

Pursuing debt settlement is also an option (though it should be a last resort in most cases), especially if your medical debt is already in collections and you're unable to pay in full. You or a professional debt relief expert can offer a lump sum payment that's less than what you owe in exchange for clearing the debt. Many debt collection agencies will accept 50% to 70% of the total balance.

This strategy has risks, though. Settled debt can hurt your credit score, and if you work with a for-profit company, you'll also have to pay fees on your settled debt. Any forgiven debt over $600 may also be considered taxable income by the IRS, so weigh the pros and cons carefully.

The bottom line

Medical debt can feel crushing, especially when it comes on the heels of a health scare or emergency, but there are more ways to get help than you might think. From negotiating with providers to applying for financial assistance or exploring traditional debt relief options, there are real, actionable ways to take control of your situation. But if you want to maximize the chances of a positive outcome, make sure to start the process early if possible. The sooner you explore your options, the more likely you are to avoid lasting damage — and maybe even save more money in the process.

Angelica Leicht

Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.