Health Insurance Does Not Mean Bankruptcy Will Be Averted
For millions of Americans, one unexpected diagnosis of a serious illness can mean the difference between bankruptcy and financial solvency. Although the Affordable Care Act is expected to reduce the number of bankruptcies due to medical debts, millions of Americans are expected to file for bankruptcy during 2014 due to medical bills.
The reason for this is because having insurance does not necessarily guarantee that bankruptcy can be averted. It is estimated that about 75 percent of individuals filing for bankruptcy because of medical debt were insured. According to a study published in the American Journal of Medicine, most of the insured were forced to file for bankruptcy, because they were still responsible for out-of-pocket and other costs that were not covered by their insurance such as:
- Medical tests
- Visits to specialists
- Long-term hospitalization
- Ambulance services
- Medical equipment
- Uncovered treatments or out-of-network costs
In other cases, insured Americans were forced into bankruptcy because they purchased coverage with high deductibles. Although such plans keep premiums low, they do little to shield the insured from the high cost of medical care, if he or she develops a serious illness or requires emergency services.
Bankruptcy can help
When faced with overwhelming medical debt many Americans turn to drastic measures such as maxing out their credit cards, taking less medication or delaying prescription refills or treatment. In the end, this often puts a person in a much worse situation, both health wise and financially.
Although filing bankruptcy is much more common than it used to be, many people, still believe that there is a stigma attached to not being able to pay their bills. As a result, they wait until they have financially hit rock bottom before seeking help.
Fortunately, bankruptcy can help well before the problem reaches that stage. Most consumers have a choice between Chapter 7 and Chapter 13 bankruptcy. As both types of bankruptcies ultimately lead to a discharge of most types of unsecured debt, such as medical bills and credit card debt, those struggling with medical debts can significantly benefit from either type. Once the bankruptcy process has been completed, the filer emerges free of medical debt, allowing him or her to start over financially. Contrary to age-old bankruptcy myths still held by some, the majority of filers do not lose any assets or property during the process.
If medical bills are overtaxing your finances, it is wise to learn about your options before the problem worsens. An experienced bankruptcy attorney can inform you of the bankruptcy and non-bankruptcy solutions available to you and recommend one that would be best for your individual situation.