Health insurance helps protect people from the often staggering expenses associated with modern medical care. Insurance covers routine checkups and immunizations as well as emergency treatments after someone gets hurt.
There is often an expectation that having insurance coverage protects someone from massive medical debts. However, those facing significant medical challenges may find that they have overwhelming medical debts after they undergo treatment. Significant medical debt is one of the most common reasons that individuals eventually file for bankruptcy.
How can someone who has health insurance end up overwhelmed by outstanding medical debt?
Every policy has its limits
Health insurance can cover certain expenses, but the average policy passes some financial responsibility back to the patient. Many policies have large deductibles. A patient might need to pay $5,000 in care costs out of pocket before their policy covers anything.
Many insurance policies also impose coinsurance obligations, possibly with varying coinsurance rates in different circumstances. Someone receiving treatment via the emergency room might pay 30% or even 50% of the final costs in coinsurance charges. Finally, insurance policies typically only protect people within a limited network of providers. If someone has a medical emergency while traveling for business or pleasure, their out-of-network treatment may not be eligible for any coverage whatsoever.
Patients who need aggressive treatment or who have unexpected injuries while far from home could incur tens of thousands of dollars in medical debt in just a few days. Unfortunately for those patients, healthcare providers are notorious for engaging in aggressive collection efforts. They may file lawsuits against those who fall behind on their payments. They may also sell their debts to companies that aggressively attempt to collect by calling people and litigating.
One of the only ways to effectively resolve medical debt is to file a personal bankruptcy case and discharge what someone owes. Especially if someone has gone a substantial amount of time without gainful employment, other solutions to their medical debt may be impractical given their circumstances.
Those who understand that they may be at risk of substantial medical debt and aggressive collection activity may need to learn more about personal bankruptcy and how it helps resolve debt issues. Both the automatic stay granted when someone files and the eventual discharge of what they owe can prove seriously beneficial to those who have just experienced an expensive medical emergency.
