Money Talks, So Should You

3 steps to help you avoid medical debt

Steve Higgins
by Steve Higgins, Dimespring Contributor

Yes, you’re young and healthy — but an unexpected health crisis can strike you or a loved one at any time. Are you ready financially?

Medical costs continue to rise. The average cost of health care services covered by commercial insurance and Medicare increased by 6.05% between May 2011 and May 2012, according to Standard & Poor’s. That was a higher rate of increase than in 2011.

And one of the biggest dangers of mounting medical costs is the effect on household debt. What can you do, to avoid that from happening to you?

READ: Planning medical care now with Medigap

You can take these three steps:

1. Understand your policy. “Make sure you know exactly what your policy covers,” said Robert Zirkelbach, spokesman for
 America's Health Insurance Plans in Washington, D.C. “Don’t focus just on the premium.”
2. Know your needs. Each business and family is different, and health-care plans offer a wide variety of coverage options. “Some people like a lower monthly premium and a higher deductible, and others like the predictability of having a higher premium and knowing that the coverage will kick in more quickly,” Zirkelbach said.
3. Check the details. If you like a particular physician, make sure they are in your plan’s network before signing on. If you take medications regularly, make sure they are covered. Does it matter to you if your plan requires a referral to see a specialist?

READ: 3 benefits to using Health Savings Accounts

Just how serious is the problem of medical debt?

Nearly half — 47% of American households — carry medical expenses on their credit cards, according to the Demos 2012 National Survey on Credit Card Debt of Low-and Middle-Income Households, a poll of 997 adults taken in February and March. The average amount of health-care related credit card debt was $1,678. Medical debt ranked second only to unemployment as a source of credit card debt.

The Demos survey also showed that 30% of households carry medical debt that is not on a credit card, with an average amount of $6,476.

Worse, “Medical debt caused one half of households with debt to skip treatment, not fill a prescription, or not see a doctor when necessary,” according to the Demos’ report, entitled “The Plastic Safety Net.”

One way to take the sting out of rising medical costs is to sign up for a health savings account, or HSA, which provides a way to save money for medical costs tax free. 


Steve Higgins became a freelance writer in 2007 after a 25-year career as a business reporter and editor for daily newspapers in Georgia, Florida, Arizona and Connecticut. To learn more about Steve, please visit