One of the most common misconceptions about bankruptcy is that everyone who files was irresponsible with money. Of course, there are people who file for bankruptcy because they mishandled credit cards, spent more than they earned, or failed to budget as needed. There are also those who are overwhelmed with medical bills.
The truth is most people who turn to bankruptcy due to circumstances entirely out of their control. Some of them lost their jobs and were out of work for an extended period. Some had to deal with a failed marriage that led them down a road of financial ruin. An even greater number faced an illness or injury that led to massive medical debt and no way to pay it off.
The real reason people are filing for bankruptcy, in most cases, is because of medical bills.
Statistics show approximately two-thirds of people filing for bankruptcy do so because a medical issue contributed to serious financial problems.
Their reason for needing bankruptcy was out of their hands and in some cases, was a life or death matter. In many cases, health insurance wasn’t enough to cover the cost of their care. More than half a million Americans turn to bankruptcy every year to help them deal with medical debt.
In addition to the high cost of medical care, many people with a serious illness or injury can’t work. Not only are they racking up debt related to their medical care, but they also have no income allowing them to keep up with their medical bills.
You might be wondering if the Affordable Care Act has done anything to help with the burden of medical care costs.
It seems not to be the case, at least according to most data.
One study published in the American Journal of Public Health showed there’s been no decrease in people filing for bankruptcy based on medical bills despite the access to coverage provided by the ACA. As a matter of fact, the number of people filing due to medical debt actually increased since the adoption of the law.
Many in the medical industry believe this is because there is still not enough adequate healthcare insurance. People have coverage, but it’s not enough coverage to help them with a catastrophic illness. Insurance coverage might be affordable, but what you’re paying for each month isn’t enough. This is especially true if you endure a catastrophic health problem. The same is true with employer-provided health insurance.
Most Americans just aren’t adequately covered and when they are faced with a serious and expensive health crisis, they’re going to be responsible for a significant amount of their healthcare costs. Making matters worse, the average American family doesn’t have enough saved. They can’t pay for a simple emergency, let alone tens of thousands of dollars in unexpected medical costs.
There are efforts underway to implement a Medicare for All program. This would result in broader insurance coverage for Americans, but it hasn’t happened yet.
In the meantime, people who want to avoid bankruptcy related to medical issues should understand that their health insurance is only partial coverage. They should think about a plan for how they’ll handle the unthinkable. That’s asking a lot, though, especially when so many families are living paycheck to paycheck.
If you’re concerned about mounting medical debt or you’ve reached the end of you’re facing ongoing financial issues related to the cost of medical care, bankruptcy might be able to help. Contact the Law Office of Robert M. Geller at 813-254-5696 to learn more.
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