It is no secret that medical costs across the U.S. have skyrocketed or that it affects people of all ages.
Even those who have health care insurance struggle. Sometimes, it comes down to a choice between paying medical bills and buying groceries. This is when many people opt for bankruptcy protection.
A little background
A 2013 study undertaken by NerdWallet Health revealed that the inability to keep up with payments for medical bills was the number one reason that 2 million people filed bankruptcy that year. A 2019 academic study shows that medical problems and the associated costs are still alive and well and responsible for 66.5% of all bankruptcy filings.
Inadequate protection
The recent study from the advocacy group Physicians for a National Health Program produced findings indicating that the inability to pay medical bills stems from inadequate health coverage. The researchers found that the coverage available either to individuals or through employers is simply not sufficient protection for illness or injury. Medical issues often come with high costs and result in time out of work. While the goal of the Affordable Care Act was to reduce medical costs for subscribers, the study suggests that the ACA did not change the proportion of bankruptcies related to unpaid medical bills. In fact, the number of bankruptcy petitions due to medical costs increased slightly after the implementation of the ACA.
High deductibles
Most insurance plans come with high deductibles, so patients struggle with having to pay out-of-pocket costs. An average family with a yearly income of $50,000 will find it difficult to deal with an out-of-pocket maximum of $5,000 or even $10,000.
Next step
To pay medical bills, people often deplete their savings or max out their credit cards. Once out of options, many turn to bankruptcy as a last resort. Although Chapter 7 and 13 address different circumstances, each presents an effective legal solution to get out from under the burden of medical debt and keep the wolf from the door.