Paul Horton: Bankrupt Medical Bills

I think that if you’re looking at filing for bankruptcy because of medical bills, you should always speak with a bankruptcy attorney. A Harvard University revealed about 60% of the 1.5 million people who filed bankruptcy annually did so for unexpected medical bills. Surprisingly, 75% of those bankruptcies were filed by people who had medical insurance before the illness or injury. This demonstrates that insurance does not protect personal assets from the collection rights of medical businesses. So, how do you protect assets from medical collections?

Unexpected and unpredictable medical events pose a high level of risk. This could stem from an unexpected illness, car crash or other injury. Your child could suffer an injury. This has caused many concerned individuals to create legal asset protection strategies. Today’s medical costs are so high it seems that only an insurance company can afford them. There are many treatments and procedures that insurance doesn’t cover. The resultant bills can leave the patient’s personal assets at risk to satisfy the collections agents.

Bankruptcy on Medical Bills

Carrying insurance is not enough. There is an increasing concern about how one’s financial life would survive unexpected medical expenses. Even a short stay in a hospital could amount to tens of thousands of dollars of care costs. A major illness or injury could last weeks or months and has the potential to wipe out a lifetime of savings and home equity.

What can you do to protect yourself from unexpected medical bills? What happens if you incur medical expenses you cannot afford and insurance won’t cover?

A lawsuit happens. The hospital or its collection office/agency hits you with a judgment. They file liens against the home. They can generally levy your bank accounts. In most states they can garnish your wages on your employment income. Patients in this situation often have to file bankruptcy. Doing so will requires the individual or family to forfeit all of their unprotected wealth. This means that bank accounts, some or all real estate equity and other valuable non-exempt assets are gone. The courts utilize them to satisfy creditors.

Insurance Companies Deny Claims

The tragic truth is, even those of us with excellent insurance coverage are still at risk. What happens when an insurance provider denies a claim? A recent study by the California Nurses Association showed that California’s biggest insurers denied over 25% of all claims submitted in the first three quarters of 2010. PacifiCare denied over 43%, Cigna over 39% and Anthem Blue Cross, more than 27% of claims denied. Hospitals will pursue the balance of the care costs an insurance company denies.

Even if the medical care costs exceeds hundreds of thousands of dollars, your insurer could still deny the claim. Then what? You could have the forethought to pre-negotiate an agreement in advance. Otherwise your medical provider will want you to guarantee the full amount of care costs incurred; those that your insurer does not reimburse. Simply put, you are financially responsible for anything your insurance company doesn’t pay for. What this does is force you to sue your insurance company. This is a long and expensive process against a deep-pocketed opponent that not many individuals can afford to pursue. Insurance companies are in the business of making money. In some cases, it’s simply less expensive for the insurer to deny a claim and litigate. Some insurers take that approach as part of the company business model.

Free Consultation with a Bankruptcy Lawyer

When you need bankruptcy help for medical bills, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free consultation.