It’s the one kind of debt that nobody plans for, but that many of us will face at one point or another in life: You walk into the hospital with a sudden medical issue, and walk out with a pile of bills.

We live in an era of unprecedented medical knowledge and technology, and today’s doctors are able to treat and cure ailments that seemed impossible just a generation or two ago. But all of that know-how comes at a price, and a high one at that. It’s not uncommon for charges on a routine medical procedure to add up to several thousand dollars; if you have a life-threatening event or spend a long time in the hospital, those bills can mount into five or six figures. Scary stuff.

So we’re left with a paradox: The very treatments that can save our physical lives threaten to destroy our financial lives. If we’re not prepared to handle them, medical debts can turn us totally upside down. But with some solid planning and a bit of strategy, you can minimize the chances of a medical emergency putting your wallet in critical condition.

Before we go into detail about handling the financial aspects of medical emergencies, let’s retrace our steps and deal with some more fundamental issues. We’ve talked before about how debt is dangerous — in fact, we believe that it’s a form of financial slavery. Debt limits our ability to make the decisions that we want for our lives, and can cost us untold amounts of money in interest and penalties. Carrying debt loads keeps us from saving, investing, giving and enjoying the money that we earn to our full potential.

There is one caveat with medical debt: In most cases, medical bills do not incur interest. That means that when you carry medical debt from month to month, the balance that you owe isn’t growing. That’s a wonderful and merciful thing, and it mitigates the dangers of medical debt a bit. That doesn’t make it harmless though. Left outstanding, medical bills can limit you in a lot of areas of your financial life. It’s better to be prepared and deal with medical expenses ahead of time than to carry a debt around for months or years, even if that debt is interest-free.

So, what’s the key to beating medical debt? Here are five suggestions.

1) Insurance, insurance, insurance

No matter what station you occupy in life, you simply cannot afford not to carry medical insurance for every member of your family. Yes, insurance can be expensive, and if your employer doesn’t provide health insurance, buying insurance on your own can be difficult, time consuming and costly. But it’s much more expensive to have to pay the full amount of a $30,000 bill after an emergency surgery. Going without health insurance leaves your family dangerously exposed — one mishap among any of your dependents can wreck your finances for many years.

In addition to medical insurance, auto insurance and life insurance are important factors in this equation. Auto insurance can pay many of the medical bills that may come about as a result of a car accident. And in the unfortunate event that you or someone else dies due to a medical emergency, a life insurance payout can help dispatch the bills for their medical care with no worries.

2) Emergency Savings

Even the best insurance plans don’t pay all of the costs of major medical care — most pay somewhere around 80% of the costs. That means that you can still be left footing the bill for a large portion of medical care, which can be several thousand dollars or more. The best way to avoid going into debt on those expenses is to be prepared for them ahead of time — in other words, you need to have a good emergency fund. Emergency savings is intended to protect us from debt when life’s calamities happen, and a solid emergency fund can go a long way toward wiping out medical bills. Though each person’s emergency savings needs are different, this article gives you some good goals to begin with.

3) Preparation

Not all medical bills come from unforeseen emergencies — some medical expenses are very predictable. Things like having a baby, elective surgery, certain dental treatment and other medical care can be planned years in advance. If you can see a major medical event coming on the horizon, begin to prepare for it now by setting aside as much money as you can for it on a monthly basis. Check with your health care provider to see how much these procedures usually cost, and then find out how much your insurance will cover. Work out your monthly budget so that you’re saving as much as possible toward these costs. And if you can, avoid having the treatment until you’ve gathered enough cash to pay for it.

4) Negotiation

When you’re in the middle of dealing with a medical emergency, dickering with the doctor over your cost of treatment will be the last thing on your mind. But negotiation can play a key role in keeping medical costs low. After all, whenever you spend thousands of dollars on something (like a house or a car), you usually negotiate the price with the seller. What should make medical care any different?

Doctors, hospitals and other medical providers can be surprisingly open to negotiation. If you’re planning for a future medical event, see if you can negotiate a pre-set price for the care ahead of time — you may be able to arrange a discount by pre-paying for services. And if you end up with unforeseen expenses, don’t be afraid to negotiate with the doctor or hospital administrator over your bills. These folks would rather get some money from you now than wait months or years to collect the whole bill in full. A friend of mine recently had more than 30% cut off of a significant medical bill because he offered to pay the hospital in cash when the first bill came in. That’s a good argument for having cash on hand, and a great argument for using it to gain some negotiating leverage.

5) Prevention

We’ve spent most of this article dealing with emergencies and other unforeseen medical events. But the truth is that much of the medical care that Americans get throughout their lifetimes is foreseeable, and a lot of it is preventable. It sounds like generic, forgettable advice, but prevention really is the best medicine. If you smoke, drink, overeat, live loosely and generally fail to take care of yourself, you’re eventually going to need serious medical care. On the other hand, good clean living saves you a lot of money, both in the short term and the long term.

Be diligent to eat well, exercise regularly and use good judgement, and you can avoid a lot of medical hassles to begin with. Because there’s no better way to beat medical bills than to stay out of the hospital altogether.

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Photo by Alex E. Proimos. Used under Creative Commons License.