Medical debt can be among the most stressful financial burdens to carry – especially when it comes unexpectedly or during an already difficult time. But there are practical steps you can take to address it. Whether your goal is to reduce what you owe, find a manageable repayment plan, or understand how your assets might play a role in relief, this guide walks you through responsible strategies to help regain control.
1. Review and Negotiate Your Medical Bills
Start by taking a close look at your medical bills. It’s not uncommon for billing errors to inflate the amount you owe. Request an itemized bill from your provider, and don’t hesitate to ask questions about any charges you don’t recognize.
Once you understand what you’ve been charged for, you may be able to negotiate the total. Many healthcare providers are willing to reduce bills, especially if you’re uninsured or experiencing financial hardship. In some cases, they may offer a discount if you're able to pay a portion of the bill upfront. It's also worth asking whether interest-free payment plans are available, which can make large bills easier to manage over time.
Tips:
Always ask for an itemized bill to check for errors.
Contact the hospital or billing office to discuss possible reductions.
Ask about financial hardship policies or internal aid programs.
2. Look Into Financial Assistance and Forgiveness Programs
Many patients qualify for help, but don’t realize it. Nonprofit hospitals are legally required to offer financial assistance policies (also known as charity care), which may reduce or eliminate your medical debt depending on your income and household size. These programs often aren’t advertised prominently, so you may need to request the policy and apply directly.
There are also local and state-level programs that may help, especially if your income has recently changed or you’ve experienced a qualifying event. In some states, you can even apply for retroactive Medicaid coverage for services received up to three months before your application – as long as you were eligible at the time.
Tips:
Ask your hospital for a copy of their financial assistance policy.
Check your eligibility for state programs or Medicaid expansion.
Avoid for-profit debt relief companies that charge fees upfront. Instead, look into nonprofit credit counseling.
3. Budget Strategically With Medical Debt in Mind
A smart budget can help you make consistent progress on medical debt without sacrificing essentials like housing, food, and utilities. Start by organizing your expenses into “must-pay” categories, then see what’s left to allocate toward debt repayment.
Basic frameworks like the 50/30/20 rule (50% needs, 30% wants, 20% savings/debt) or zero-based budgeting (assigning every dollar a job) can help you stay intentional. Even small monthly payments can prevent your medical bills from going to collections or harming your credit – especially since some providers won’t report medical debt as long as you’re making an effort to pay.
Tips:
Prioritize medical debt behind essential living costs, but stay in communication with providers.
Use budgeting tools to track and allocate funds.
Consider negotiating payment plans that align with your monthly budget.
4. Consider Asset-Based Solutions for Managing Medical Debt
If you’re dealing with high medical debt and own a home, your equity could provide a path forward—though these options come with trade-offs and should be weighed carefully.
Traditional home equity loans or home equity lines of credit (HELOCs) offer lower interest rates than credit cards or personal loans and can be a useful tool to pay down significant debt, including medical bills. Keep in mind that they use your home as collateral, which introduces risk if you fall behind on payments.
Alternatively, some homeowners explore equity-sharing home loans, which combine elements of traditional financing with a shared investment approach. These loans provide access to cash by leveraging the equity in your home, but unlike a standard loan, repayment is partially tied to the future value of your property. One potential benefit is that monthly payments are often lower than those of conventional loans, which can ease the financial burden when cash flow is tight.
These arrangements aren’t right for everyone, but they may be worth exploring if you have significant home equity and are looking for a way to manage large debts – like medical expenses – without adding high monthly payments to your budget.
Tips:
Speak with a financial advisor before using home equity to pay off debt.
Understand how shared equity products impact your long-term home value and sale proceeds.
Make sure any loan or agreement fits with your future financial goals and exit plan.
5. Understand Your Rights and Credit Protection Rules
Medical debt is now treated differently from other types of consumer debt by credit reporting agencies. As of April 2023:
Medical collections under $500 are no longer included on credit reports.
You have one full year before unpaid medical debt is reported to credit bureaus—giving you time to resolve issues or set up a payment plan.
Additionally, the No Surprises Act protects patients from unexpected out-of-network charges in emergency situations or when receiving care at in-network facilities. And if you're contacted by a debt collector, the Fair Debt Collection Practices Act gives you the right to dispute the debt, request validation, and avoid harassment.
Tips:
Monitor your credit reports regularly.
If your medical debt was reported in error or before the 12-month grace period, file a dispute.
Know your rights under federal laws to protect yourself from unfair debt collection practices.
Taking Control of Medical Debt: It Starts With a Plan
Getting out of medical debt won’t happen overnight, but you do have options. From negotiating your bill to building a debt-aware budget and responsibly using the assets you already have, it’s worthwhile to explore every avenue. The most important thing is to stay proactive – ask questions, understand your rights, and explore solutions that make sense for your unique financial situation.
If you’re feeling overwhelmed, start small: review your latest bill, make a phone call, or create a simple budget. Every step is a step towards progress (even the small ones).
About the Author
Unison
We're the pioneers of equity sharing, offering innovative ways for you to gain access to the equity in your home. For more than a decade, we have helped over 12,000 homeowners to pursue their financial goals, from home renovations to debt consolidation, retirement savings, and more.
