If you’ve been following this blog for a while, you’re well aware that having good health insurance doesn’t necessarily mean that an injury, a chronic health condition or a sudden illness won’t cause you financial problems. Overwhelming medical debt has long been a common trigger for bankruptcy, and a recent study using 2013 data predicts that it will soon surpass both mortgage and credit card debt to become the No. 1 cause of bankruptcy in the near future.
Yet according to a Fox Business source, fully 78 percent of those who file bankruptcy due to medical debt have health insurance. “It’s not just the medical bills,” he explained. “It’s really everything around the bills that insurance won’t cover.”
As we’ve discussed before, the average cost of spending one day in a U.S. hospital is $4,000 or more, and the limits and exceptions built into many insurance plans can mean that cost will not be fully covered. And, the ever-rising cost of health insurance, in terms of premiums, deductibles and co-pays, can quickly eat away at your emergency fund. Considering that a serious or chronic medical condition can often keep you from working, the out-of-pocket cost of medical care continues to threaten the financial welfare of Texans, even those with high-quality insurance.
Won’t the Affordable Care Act help keep medical debt from becoming overwhelming? Unfortunately, it’s too soon to tell. The new law is expected to help millions of previously uninsured people get health insurance, of course, and it legally limits some of the tactics insurers have used in the past to deny coverage. Considering that having health insurance won’t necessarily keep medical bills from piling up, however, the ACA may not have a substantial impact on the medical bankruptcy rate.
As Fox Business points out, however, the ACA should have one major, positive effect: it will protect people who become unemployed. Now that health insurance is more affordable without being tied to employment, losing your job doesn’t have to mean a choice between paying for expensive COBRA coverage and having no insurance at all.
If you’re facing insurmountable medical debt, it’s important to know that filing for bankruptcy won’t interfere with your continuing treatment. Even if you’re not ready for bankruptcy, consider discussing your situation with a bankruptcy lawyer who can explain your rights and help you develop a pre-bankruptcy strategy to manage your debt.
Source: Fox Business, “Medical Bankruptcies are Still a Problem, Here’s What to Expect,” Donna Fuscaldo, Feb. 18, 2014