People file for bankruptcy for many different reasons. In some cases, a professional loses their job and cannot continue meeting their financial obligations. Other times, slowly growing credit card balances leave people unable to meet all of their financial obligations. Medical issues can also be the underlying cause of an individual’s financial stress. Many people who pursue personal bankruptcy do so specifically because of medical debts.
Why does the cost of medical care force people into bankruptcy so frequently?
A lack of insurance
Despite numerous attempts at reform, health insurance is still far from universal in the United States. Many people with decent jobs do not have insurance provided by their employers and may not be able to afford to purchase a policy privately. Being uninsured quickly becomes an issue if an individual experiences a medical emergency. They may have to pay shockingly high prices for the care that they receive as an uninsured patient.
Out-of-network care
Someone with a good insurance policy could need treatment at a location where their insurance doesn’t apply. People who travel for work and those who enjoy vacations in other states or countries may end up hurt or sick while far from home. In those situations, they may require tens of thousands of dollars in out-of-network medical care. Their insurance policy may not apply at all, or it may only cover a small fraction of their total care costs. Hospitals and other medical creditors can be very aggressive people to pay for their treatment.
Patient costs
Even those with health insurance who need care locally may go home from the hospital with a huge bill. Most modern insurance policies include high annual deductibles. The patient has to pay thousands of dollars before their policy covers anything. As if that weren’t bad enough, they may also be subject to a coinsurance requirement. People have to pay a flat percentage of their total care costs even when they have met their deductible. Coinsurance, in particular, can lead to individuals developing major medical debt when they require expensive care, like treatment for cancer.
Filing for personal bankruptcy could be the best option available for someone facing a lawsuit by a medical creditor that could put their future wages or their home at risk. Understanding that insurance does not eliminate the risk of medical debt can help remove some of the shame people may feel when they contemplate filing for personal bankruptcy.
