Problems in Bankruptcy caused by high medical bills

With Health Reform, mandates, tax penalties  and Subsidies, tax credits – This shouldn’t happen anymore!
Please note that a lot of the information is Pre-Health Care Reform

The percentage of U.S. residents who have difficulty paying medical bills declined from about 22% in September 2013, before the Affordable Care Act fully took effect, to about 17% in March 2015

In 2001, 1.458 million American families filed for bankruptcy.  About half of debtors cited medical causes,… Among individuals whose illness led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7% had insurance at the onset of illness. Medical debtors were 42% more likely than other debtors to experience lapses in medical coverage. Even middle class, insured families often fall prey to financial catastrophe when sick.

The average debtor was a 41 year old woman with children, and at least some college education. Most debtors owned homes; their occupational prestige scores place them predominantly in the middle or working classes.

Medical debt was also associated with mortgage problems.

Medical Debt Survivor Guide
Medical Debt Survivor Guide

Nolo – Bankruptcy

2007 Six Page Study American Journal of Medicine

Medical debtors reported particular problems paying mortgages/rent and utilities (Exhibit 4). Although our interviews occurred soon after the bankruptcy filings (7 months, on average) many debtors had already been turned down for jobs (3.1% of debtors), mortgages (5.8%), apartment rentals (4.9%) or car loans (9.3%) because of the bankruptcy on their credit reports.

Illness begot financial problems both directly – due to medical costs – and through lost income. 59.9% of families bankrupted by medical problems indicated that medical bills (i.e. from medical providers) contributed to bankruptcy; 47.6% cited drug costs; 35.3% had curtailed employment due to illness – often (52.8%) to care for someone else. Many families had problems with both medical bills and income loss. Click on link for Disability and Supplemental plans Families bankrupted by medical problems cited varied, and sometimes multiple, diagnoses. Cardiovascular disorders were reported by 26.6%; trauma/orthopedic/back problems by nearly one-third; and cancer, diabetes, pulmonary or mental disorders, and childbirth-related and congenital disorders by about 10% each. 51.7% of the medical problems involved ongoing chronic illnesses.

The co-occurrence of medical and job problems was a common theme. For instance one debtor underwent lung surgery and suffered a heart attack. Both hospitalizations were covered by his employer-paid insurance, but he was unable to return to his physically-demanding job. He found new employment, but was denied coverage due to his pre-existing conditions

(I don’t think this is correct click and view our COBRA page – Also see our Pre-X page and check out the guarantees on Employer Provided coverage.

which required costly ongoing care. Similarly, a school-teacher who suffered a heart attack was unable to return to work for many months, and hence her coverage lapsed. A hospital wrote off her $20,000 debt, but she was nonetheless bankrupted by doctor bills and the cost of medications. even brief lapses in insurance coverage may be ruinous and should not be viewed as benign.

Steve’s Note – This would be a reason to have your premiums paid AUTOMATICALLY from your checking account or credit card  automatic payments even good employment-based coverage sometimes fails to protect families because illness may lead to job loss and the consequent loss of coverage.

Check COBRA, Cal COBRA 36 Months,  HIPAA (pre health Care Reform), Temporary Plans and of course Private Coverage

Lost jobs, of course, also leave families without health coverage when they are at their financially most vulnerable. View entire article PNHP Study Summary page – I don’t agree with them though

Five Mistakes that Will Land You in Medical Debt, written by Elizabeth Cohen, CNN’s Medical News correspondent. Highlights of the story include:

  • A 2007 report stating that 28 percent of the population is paying off medical debt.

  • How medical debt usually happens quickly and is a surprise to many.

  • How agencies can help you negotiate with providers and insurance companies.

Furthermore, Cohen highlights the FHCE’s tools and services eligibility quiz, state-by-state guide of health care choices and 24-hour helpline as resources to those who currently do not have insurance. To take advantage of our online tools and services we provide, please visit our Web site, www.Coverage For It is a rich and educational resource designed for consumers, agents and organizations alike.

Illness often leads to financial catastrophe through loss of income, as well as high medical bills. Hence, disability insurance and paid sick leave are also critical to financial survival of a serious illness.

WebMD on Medical Bankruptcy

Posting on another agent’s website about repairing Medical Debt insure me

Get Subsidy Quotes & Programs for the Uninsured Guaranteed Issue!

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