How to Finance Healthcare Expenses

We’ve all been there—sitting in an exam room, doctor’s bill in hand, wondering how on earth you’ll afford the treatment they’re recommending. As your mind races through monthly budgets and credit card balances, your health suddenly seems like a luxury you can’t justify.  

But taking care of yourself shouldn’t depend on your financial situation. Within this guide, you’ll discover affordable ways to manage healthcare expenses that just might take the weight off your shoulders. 

8 options for financing healthcare expenses  

From personal loans to government assistance programs, you have several healthcare financing options to help cover medical bills without breaking the bank. 

1. Government programs 

Government programs like Medicaid and Medicare can help cover healthcare costs for those who qualify based on income and age. Medicaid provides coverage for low-income families and individuals while Medicare helps older Americans and those with disabilities. VA health care can help those who have served in the military.  

For those who qualify, these programs are often the most affordable healthcare option. 

Pros: 

• Often low (or no) out-of-pocket costs for eligible individuals. 
• Broad coverage for various medical services. 
• Specialized care for veterans under VA benefits. 

Cons: 

• Eligibility restrictions based on income, age, or military service. 
• Possible coverage limitations, depending on the program. 
• Might require the use of specific healthcare providers or facilities. 

2. Health savings accounts (HSAs)  

A health savings account (HSA) is a tax-advantaged savings account just for healthcare expenses. It’s available to anyone enrolled in a high-deductible health plan (HDHP). With an HSA, you deposit pre-tax money into the account, up to an annual limit. Then, you can use the money tax-free for qualified medical expenses like doctor’s visits, prescriptions, and more. 

Pros: 

• Tax-deductible contributions; tax-free withdrawals for medical expenses. 
• Money rolls over year to year. 
• Can be invested, potentially growing over time. 

Cons 

• Only available to those with high-deductible health plans. 
• Penalties for non-medical withdrawals before age 65. 

3. Payment plans 

Some healthcare providers offer payment plans, which can help make medical expenses more manageable. These plans allow you to receive medical treatments immediately and pay for them over time in installments.  

People are even using Buy Now, Pay Later (BNPL) platforms for healthcare, which are similar to payment plans. Walnut is a new up-and-coming healthcare BNPL service. Even popular BNPL platforms like Klarna—which are traditionally for online shopping—are being used to manage rising healthcare costs.  

Pros: 

• Makes expensive treatments more manageable by breaking them into smaller payments. 
• Some plans might offer interest-free periods. 

Cons: 

• Interest and fees can add up if not managed carefully. 

4. Personal loans for medical bills 

A personal loan is an unsecured loan you take out from a bank, credit union, or online lender. You receive a lump sum payment upfront that you can use to cover medical expenses. Then, you repay the loan in fixed monthly installments over a set period of time.  

For example, you can get a medical loan through Prosper, which is exclusively for healthcare costs.  

Pros: 

• Can use a personal loan for almost any medical expense. 
• Fixed repayment terms help you budget. 
• Quick access to funds can help in emergency medical situations. 

Cons: 

• APRs can be high without a good credit score. 
• Additional fees, like origination fees, can add to the cost. 
• Requires a hard credit check. 

5. Medical credit cards  

Medical credit cards are designed specifically for healthcare costs. You can use them to pay providers directly for services like doctor visits, procedures, prescriptions, etc. Some cards offer promotional periods where eligible balances don’t accrue interest if paid off before the promotion ends.  

Pros: 

• Access to immediate funding for healthcare needs. 
• Often come with promotional periods of low or no interest. 
• Can be used for a range of medical procedures and treatments. 

Cons: 

• High interest rates if the balance isn’t paid off during the promotional period. 
• Limited to use only for medical expenses. 
• Risk of increasing debt if not managed carefully. 

6. Crowdfunding 

Crowdfunding is a way to raise money for healthcare expenses through online platforms like GoFundMe. You create a campaign, share your story, and people can donate money to help you cover your medical bills. It’s become a popular method for people facing large healthcare costs, especially for treatments not covered by insurance. 

Pros: 

• Can raise significant funds, sometimes covering entire medical bills. 
• Allows the community, friends, and family to support you directly. 
• No repayment required; funds are donations. 

Cons: 

• Success is not guaranteed; depends on the ability to share and promote your campaign. 
• Can be emotionally challenging to share personal health struggles publicly. 
• Platforms may take a percentage of the funds raised as fees. 

7. Discounts 

Discounts on medical services can be a practical way to reduce healthcare costs. You can ask your provider directly for discounts. Many offer lower rates if you don’t have insurance or are willing to pay in full. You can also look into prescription drug discount cards to save on medication. 

Pros: 

• Can help reduce the total cost of medical care. 
• Beneficial for uninsured patients or those with high out-of-pocket expenses. 

Cons: 

• Requires negotiation skills and understanding of healthcare billing. 
• Not all providers may offer discounts. 
• Might need upfront cash to take advantage of full payment discounts. 

8. Charity care and financial assistance programs 

Charity care and financial assistance programs are designed to help people who can’t afford their medical bills. These programs typically provide reduced-cost or free care based on your income, financial need, and other factors. To access these programs, you usually need to apply and provide proof of your financial situation. 

Pros: 

• Can significantly reduce or even eliminate healthcare costs. 
• Helps those in financial hardship access necessary medical care. 
• Often available for a wide range of medical services. 

Cons: 

• Not all hospitals or clinics offer these programs. 
• Eligibility criteria can be strict, focusing on low-income individuals and families. 

How to choose the right healthcare financing option 

There are many approaches to financing healthcare costs, from tax-advantaged savings accounts to low-cost loans and credit cards.  

The best approach depends on your income, coverage, and medical needs. With some planning, you may find more affordable options to help obtain the medical treatment you need. 

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This information is not intended to be financial or tax advice. Prosper does not provide financial or tax advice. Please consult a financial advisor for financial or tax guidance.  

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