Did you know that medical debt is a leading cause of bankruptcy in the US?  What’s scary is that just having insurance doesn’t protect you from huge medical bills.  Many people enter the hospital with insurance but still end up owing large amounts of money.

Unlike consumer debt which accumulates over time, large medical bills can literally pop up overnight. An overnight hospital stay – depending on tests and treatments – could easily cost several thousand dollars.  The frustrating thing about medical debt is that it’s causes are often out of our control.  We don’t choose to get in an accident, have our appendix burst, or inherit a family health condition.

That being said there are things we can do to reduce the risks of medical problems. In addition, understanding the health care coverage we have and preparing our finances for the worst case scenario can help avoid massive amounts of medical debt.

Your health is potentially your biggest financial issue and like most financial crises, it’s tough to find solutions when you’re facing an emergency. Use the suggestions below to help prevent and prepare for big medical bills.

Improve Your Health
The Centers for Disease Control reports that 66.3 percent of non-institutionalized U.S. adults aged 20 or over are overweight or obese.  Getting involved in a personal or group weight loss program and actually cutting pounds will significantly lower your health risk factors. Quitting smoking and limiting alcohol intake are other good moves to make, but consult your primary care physician first to map out a strategy. 

Review your Health Insurance Coverage
If you are insured through an employer or buy your own coverage as a self-employed person, investigate what that coverage actually provides in everything from minor emergency room visits to major catastrophic diseases, such as heart problems or cancer. There’s a good chance those benefits change – and have probably decreased – year-to-year. 

Check your Disability Coverage
If you were sick and unable to work for a lengthy period of time, when would your disability coverage kick in and how long would it pay your living expenses? If you are self-employed or don’t have this benefit at work, you should discuss it with an expert.

Create a Health Care Spending Strategy
Granted, it’s tough to ask how much a hospital’s tests, medications and procedures are going to cost if you’re strapped unconscious to a gurney. But everything in a hospital has a price – everything from tissues to MRIs. Talk to your primary care physician about ways to save on costs during office visits and prior to any planned hospital stays and also talk about extended payment options if you feel you’ll need one.

Talk to a financial planner or health care insurance expert about ways to scrutinize hospital bills so you can refuse unnecessary items during your stay. Once you have these ideas written down, make sure the person you’ve designated as your health care power of attorney has them so they can act in your stead if you’re incapacitated. One more thing – these are particularly important questions to ask if you are moving an elderly relative into a nursing home or assisted-care situation where everything from aspirin to adult diapers carries an inflated price.

Create a Tax-Advantaged Savings Strategy
You may have the option to put money into flexible spending accounts (FSAs) at work and/or set up health savings accounts (HSAs) as part of your enrollment in a qualified high-deductible health plan. Unlike FSAs, HSAs allow balances to be carried forward year-to-year, growing on a tax-free basis as long as they’re used for medical expenses – this way, you can accrue a fairly large nest egg against uncovered expenses while you’re still healthy. Get some advice from an expert on how to best use one or both kinds of accounts if you have those options available to you.

Build a Health Insurance Emergency Fund
An emergency fund – separate of your main emergency fund – would be useful to cover the deductibles and co-insurance on your health insurance if you don’t have an HSA in place. Health insurance policies will list a “total out of pocket” amount on the coverage page, which can run thousands of dollars – try to keep this amount in reserve.  

This post is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.