For many people in Columbia, medical debt represents an unavoidable and often unmanageable expense. According to USA Today, in 2014, around 64 million Americans, half of whom were insured, struggled to pay their medical bills. As CNBC reports, the year before that, medical debt was identified as the top cause of bankruptcy in the U.S.
Unfortunately, many of the factors that make medical costs so burdensome may only become worse in the coming months or years. This ongoing rise in costs may leave many consumers facing overwhelming debt.
Potentially crippling costs
The availability of health insurance coverage has reduced overall medical costs for many consumers. Still, the costs associated with maintaining and using this coverage may exceed what many people can afford. USA Today reports the following troubling findings on deductibles and out-of-pocket health insurance costs:
- Deductibles are growing. Deductibles for employer-sponsored insurance plans reached an average of $1,200 in 2014. Silver and bronze plans sold through healthcare exchanges respectively have average deductibles of $3,500 and $5,300.
- Some plans establish separate deductibles for prescriptions, and costs for uncovered medications or physician visits don’t count toward these limits. Consequently, many people may have out-of-pocket costs that exceed these official amounts.
- The average American has less than $3,000 readily available to cover all of these expenses.
As a result, even with insurance, many people may struggle to keep up with everything from routine care to emergency medical costs.
To avoid incurring costs that they cannot handle, many consumers may choose to avoid pursuing needed medical attention, procedures or prescriptions. Unfortunately, this approach often ultimately results in health complications that prove even more expensive. As a result, people with chronic or worsening conditions may essentially be caught in a cycle of escalating debt.
Options for relief
Bankruptcy is one potential solution for people who are dealing with overwhelming medical expenses. Filing Chapter 7 or Chapter 13 bankruptcy can give a consumer the opportunity to repay or discharge medical debt. The most reasonable chapter of bankruptcy may depend on each person’s circumstances.
People who file Chapter 13 bankruptcy have the opportunity to keep their assets, such as homes and personal vehicles, while repaying their debts. Consumers can only file Chapter 13 bankruptcy if they have enough expendable income to complete an approved repayment plan. This chapter may be a reasonable option for people who have significant assets or other debts, including secured debts.
In Chapter 7 bankruptcy, in contrast, consumers liquidate all of their property except certain exempt assets. The debt that remains after this liquidation is complete may be eligible for discharge. This chapter may be a suitable option for people who have significant medical debt or lack the means to enter a repayment plan.
Moving forward
To understand the potential benefits of filing bankruptcy, people who are dealing with severe medical debt may benefit from seeking legal advice. An attorney may be able to help a person understand the full range of available options and identify the most favorable one. For consumers who elect to file bankruptcy, an attorney may also be able to provide any assistance needed during the filing process.
