Medical debt is consistently a leading cause of bankruptcy in the United States. Even someone who has a substantial amount of money in savings may not have enough to cover costs in a medical emergency.
To reduce the financial risk, many people purchase health insurance. In theory, the insurance policy that they pay for every month will, in turn, pay for their medical bills if something unexpected occurs. Does this mean that a person with health insurance is not at risk for a medical-related bankruptcy?
Bankruptcy can certainly still happen
There are a few reasons why just having health insurance does not guarantee that someone will not face outstanding medical debt that contributes to a bankruptcy filing.
- Most insurance policies do not cover every cost. People may be obligated to make copays for certain services. They may also have to pay thousands of dollars until they meet their deductible before the insurance even starts covering their costs.
- Insurance also does not pay for everything. Insurance companies typically have a network of approved medical centers and physicians. If a person receives in-network care, those costs are covered. But if they receive out-of-network care, even if they have insurance, their claim may be denied.
In that situation, they would be responsible for paying those medical bills on their own, which may be financially impossible, especially for procedures that cost tens or even hundreds of thousands of dollars.
Your bankruptcy options
No one chooses to have a medical emergency, but it can and does happen, and it often leads to bankruptcy. If you are facing substantial debt, be sure you know what legal options you have and what steps to take.
