Image: Medical doctor © tetra images, Getty Images

Big medical bills can be frightening if you don't have insurance or don't have enough coverage. And frightened people can do stupid things, like hang up on someone who could help them.

Nicholas Newsad discovered this when he was an administrator for a surgery center in Ohio.

"I was amazed at how many patients wouldn't talk to us. . . . Quite a few just hung up when I called," said Newsad, who's now a senior associate at HealthCare Appraisers, a Castle Rock, Colo., company that values medical practices and services. "We had financial assistance and policies that would help them, but we couldn't help them because they wouldn't talk to us at all."

Newsad's experiences prompted him to write a book, "The Medical Bill Survival Guide: Easy, Effective Strategies for People Experiencing Financial Hardship," that outlines strategies for coping with medical debt.

A key point is that health care bills are different from most other debt:

  • Many people qualify for financial assistance that can dramatically reduce or eliminate their bills.
  • Most people can negotiate big discounts off the sticker prices of their treatments.
  • Health care providers often offer no-interest payment plans.
  • Even after bills have been turned over to collectors, people often have more options than they think.

Of course, you may be facing a mound of bills so high you could never pay them all off. But most people can get a better deal if they try. Here's what you need to know:

Liz Weston

Many bills contain errors. Hospital bills, particularly, can include charges for procedures that were never done, doctor visits that never happened and drugs that weren't administered. Ask for an itemized bill, and go through it line by line. You can use the Healthcare Blue Book, a free consumer guide, to see if charges might be excessive. If you find errors, alert the billing department.

One of my Facebook fans said the hospital bill for the birth of her daughter contained a number of billing mistakes.

"There were charges for pain/sleeping pills I never took . . . and some other dubious stuff," she wrote. "I went to billing office . . . and we went over line-by-line. Got several things knocked off."

Be alert if you don't get a bill after a visit to a medical provider. The provider may be sending the bill to the wrong address or billing the wrong insurer. The bill could be turned over to collections without your knowing, and collections can hurt your credit scores. Don't assume that no news is good news. If you haven't been billed or you keep getting billed for something your insurance should have paid, follow up to find out what's going on, and try to fix it before the bill ruins your credit.

If your bills are significant, you may want to hire help to review the charges and negotiate discounts. Medical Cost Advocate, Health Advocate and Chapman Consulting are three companies that offer these services.

Most hospitals and many other providers offer charity care. If your income is low, ask to speak to a financial counselor about charity assistance. Hospitals typically base the amount of help you're offered on the federal poverty line, which is currently just under $11,000 for a single person and $22,350 for a family of four.

Those whose incomes are less than twice the poverty-line limits often have their entire bills erased, Newsad said. That means you could make up to about $22,000 as a single person, or nearly $45,000 as a family of four, and be excused from the debt.

Even those who make more can get big discounts.

"If you're at 300% (of the poverty line), you get 75% off," Newsad said. "At 400%, you get 50% off."

Your medical providers may not volunteer that such help is available. You often have to ask. Even if your provider doesn't offer financial assistance or you make too much to qualify, discounts are still available. Read on.

Get the insurers' rate. Medical care is like buying a car or going to college: Few people pay the actual sticker price. If you've ever had insurance, you've probably noticed that the amount your provider bills your insurer and what your insurer actually pays are quite different. That's because insurers have negotiated various discounts with these providers.

Ask your providers to discount your bills down to what the largest insurer in your area would pay for the same treatment.

"That's a reasonable expectation," Newsad said. "Your bill shouldn't be higher than what an insurance company would pay."

Ask for a cash discount. If you are able to pay a bill within 30 days, many providers will give you a substantial break on your total. You may get an even bigger discount if you can pay on the spot.

"My hospital offers a 79% discount at discharge" and even more if a patient pays that day, one of my Facebook fans wrote. "So a $1,000 (emergency room) bill is whittled down to $168. It's shocking how many patients refuse to pay even that."

You shouldn't, however, give in to the temptation to pay a big bill before you've investigated whether you qualify for financial assistance or other discounts.

Don't automatically reach for a credit card. Be wary of using a credit card to pay a medical bill, since a provider has no incentive to work out a payment program or offer you discounts after you pay the tab. Once you've charged the bill, you'll be subject to the credit card's interest charges and vulnerable to credit score damage if you can't make the payments on time.

By contrast, medical providers may offer interest-free repayment plans if you can pay off the bill within two years. Also, medical payment plans typically aren't reported to the credit bureaus, although if you miss payments the account may be turned over to collections, which could hurt your credit.

Unfortunately, some medical providers have gotten into business with high-cost lenders who offer credit cards or installment loans with double-digit interest rates to pay for care. These are a last-resort option, if that. You certainly shouldn't agree to them before you've done your best to negotiate the bill as low as it can possibly be.

Ask your provider to take back a collection account. Here again, medical bills differ from other debt. Once a credit card account has gone delinquent, for example, the issuer typically writes off the debt and sells it to a collection agency. A borrower who's in a position to pay off the debt usually has to negotiate with the collector, rather than with the original lender. Medical debts, by contrast, are often collected on a commission basis -- in other words, the collector doesn't own the debt. The medical provider can take the debt back from the collector and negotiate directly with you. If your debts are very old, this may not be an option, but if you've incurred them in the past few years and are now able to pay, this is an option you should explore.

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If all else fails, consider bankruptcy. Medical debt, like credit card debt, can be wiped out in a Chapter 7 bankruptcy or be part of a Chapter 13 repayment plan. If your health problems are continuing, you should probably hold off on filing, since you can't have debt erased more than once every eight years. For more, consult an experienced bankruptcy attorney. The National Association of Consumer Bankruptcy Attorneys can provide referrals.

Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.