Medical Bankruptcy: A Crisis That Affects Millions of Americans

Today's post is less about my personal experience but I believe this is critical to talk about an issue of high cost of healthcare that thousands of Americans just can't afford.

Providing quality care to their patients is a priority for all healthcare professionals. However, many patients in the US struggle to pay for their medical bills, which often leads to bankruptcy. A 2022 study showed that medical debt was one of the main causes of financial distress in the country. 66.5% of all bankruptcies were tied to medical issues. One in ten Americans has outstanding medical debt, and every year, 530,000 American families file for bankruptcy due to medical bills.

Why is this happening? The main reason is the high cost of healthcare in the US, which is much higher than in most other developed countries. Many people don't have enough or any insurance coverage and even those who do may face unexpected charges or denials from their insurance companies and large copays.

Most people get their health insurance through their employer, and the employer usually pays part or all of the premium. However, some employers may offer limited or no coverage or may require employees to pay a large share of the premium. Those who don't get insurance through their employer can buy it from the marketplace or private insurers, but they may have to pay it themselves. One in five Americans may qualify for public health insurance programs, such as Medicare and Medicaid, which are funded by the government and offer low or no-cost coverage. However, not everyone is eligible for these programs, and they may have limited benefits or providers.

Medical bankruptcy is not an official category in the US Bankruptcy Code, but most people who file for it choose Chapter 7 bankruptcy, which can wipe out their medical debts. However, this also means they have to declare all their current debts, not just their medical ones. Filing for bankruptcy can have serious consequences for their credit score and future financial opportunities, as it can stay on their record for 7 to 10 years.

Medical bankruptcy is a serious problem that affects many patients, but it can be avoided or reduced with proper planning and action. Here are some tips to help you prevent or manage medical debt:

? Compare and choose the best health insurance plan for your needs and budget. Consider the premiums, deductibles, copays, coinsurance, network, and benefits of each plan. If you need help, you can consult an insurance broker or a navigator.

? Review your medical bills carefully and check for any errors or overcharges. If you find any, contact your provider or insurer and dispute them. You can also ask for an itemized bill or an explanation of benefits (EOB) to see the details of your charges and payments.

? Negotiate your medical bills with your provider or insurer. You can ask for a discount, a payment plan, or a hardship program. You can also compare the prices of different providers and services and choose the most affordable ones.

? Seek financial assistance from various sources, such as charities, foundations, or government programs. You can search for local, state, or national resources that can help you pay for your medical bills or offer free or low-cost care.

? Get professional help from a credit counselor, a financial planner, or a bankruptcy lawyer. They can help you manage your debt, improve your credit, and explore your options. You can find reputable and certified professionals from organizations such as the National Foundation for Credit Counseling or the American Bankruptcy Institute.

You may recall from one of my earlier posts that, on the way home, my host Grandma was worried about whether the insurance would cover all the bills when Grandpa was taken to the ER. It's a shame that people who worked hard all their lives face the possibility of bankruptcy at the age of 85. They aren't sure if their insurance company will cover all their medical expenses when they are retired. However, this is a common concern for thousands of Americans who face huge medical expenses after each hospital visit. In many cases, your medical bill can drain all your savings.

What are your thoughts on medical bankruptcy? Have you or someone you know experienced it? Please share your insights and experiences in the comments below. Thank you for reading!