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Are medical bills a common reason to file for bankruptcy?

| Nov 1, 2020 | Bankruptcy

If you currently feel overwhelmed by medical debt, you may wonder how many other people struggle with the same problem. Unfortunately, many people simply do not have adequate health insurance to cover all medical issues that may arise. Because of this, medical debt can quickly spiral out of control. 

In fact, CNBC reports that when people file for bankruptcy, two-thirds of them report medical bills as one big contributing factor to their decisions. Roughly 530,000 families rely on bankruptcy to resolve medical debts, each year. 

What causes high medical debts?

The Affordable Care Act made health insurance more accessible to people of lower-income backgrounds. However, it did not necessarily make it more affordable for middle-income families. Some states subsidized the plan to make up for this, but many Americans still remained with no health insurance. 

Those with insurance policies may have chosen cheaper plans with higher deductibles. Some health insurance policies feature deductibles as high as $12,500. Few Americans have that kind of money set aside to pay for unexpected medical expenses. Insurance policies may also not cover all medical bills, such as hospitalization. 

How can I avoid medical debt?

No one receives a solid promise of perfect health for the rest of their natural lives. Because of this, high medical debt may happen to anyone. People with pre-existing conditions should try to make special preparations for the possibility. Here are some options: 

  • Invest time and effort in your health, such as exercising and eating better. 
  • Try to get affordable health insurance through work, the government or your spouse. 
  • Consider purchasing supplemental insurance, such as hospitalization benefits. 
  • If you have a health insurance policy with a high deductible, consider saving money in an HSA. 
  • Negotiate with medical doctors or the hospital and ask about payment plans. 
  • Seek assistance from crowdfunding or local charities, if you feel comfortable doing so. 

No foolproof way exists to avoid medical debt. Fortunately, if all else fails, bankruptcy still provides a viable option for many.