Overwhelming debt levels that lead to bankruptcy are not just issues for people who can’t keep a job or control their spending habits. Debt can happen to anyone, even those with good jobs and what they perceive as good insurance benefits.
Serious injuries or major medical events could mean that you aren’t able to work for some time. You will also have to worry about medical costs for the treatment that saves your life. Even if you have insurance, the gaps in your coverage might result in unsustainable levels of debt at the same time that your budget has much less flexibility.
If you don’t take action to regain balance when medical debt starts to spiral out of control, it’s possible that you could face the garnishment of your wages or even a lien against your house because of those debts.
Patients have more financial responsibility than in the past
The privatization of insurance and the push for profit in an industry that provides payment for patient care has meant that many people who need the protection of insurance wind up shouldering more of their medical expenses than they anticipate.
It is common for modern policies to have very high requirements for patient contributions. For example, you may have to pay a co-pay every time you pick up a prescription or see a medical professional. There could also be a deductible that might be thousands of dollars that you have to pay out-of-pocket before your insurance will cover even a cent of your treatment.
Beyond that, you may have coinsurance that requires you to pay a flat percentage of your medical costs, which could be as much as 30% of your total bills. That could mean that you have tens of thousands of dollars in medical responsibilities at the same time when you don’t have any income.
Hospitals will take drastic measures to get payment from people
While hospitals have a duty to provide life-saving care even if someone can’t pay, that certainly doesn’t mean that medical facilities don’t want money for the procedures they perform and the drugs they dispense.
Many hospitals have their own collection department that will aggressively pursue someone unable to pay. They can also turn over unpaid medical debts to a third-party collection agency. In some cases, hospitals may try to get a lien against your home for unpaid medical debt or even garnish your wages when you return to work. Hospitals can also make claims against your estate for care that you received while you were still alive.
Filing for bankruptcy can allow you to discharge unsecured medical debt and will make it easier to balance your budget, especially if you have to live on a fixed income.