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With or without insurance coverage, medical debt is growing

A sudden illness or injury is often the catalyst to file bankruptcy. As medical costs continue to rack up during recovery, savings shrink and credit cards max out. Second, third and fourth jobs are necessary to manage seemingly unmanageable bills.

The statistics alone on this burdensome debt is staggering, particularly one that cites one in 20 Americans carrying balances equal to the other 19 combined.

A lack of insurance coverage may not always be the culprit of out-of-control medical debts. While insurance is meant to protect finances from onerous medical costs, out-of-pocket spending has increased by more than 50 percent since 2010.

What may be most surprising is that the percentage includes those with employer-covered health benefits.

According to the Kaiser Family Foundation, fifty percent of all insurance policy-holders have a deductible of at least $1,000. Almost 90 percent of those who purchased from an Affordable Care Act’s exchange have deductibles (the amount needed to be paid before insurance kicks in) of $1,300 for an individual and $2,600 for a family.

Even so-called gold-plated insurance plans that offer low deductibles and generous reimbursements have their share of pitfalls, specifically in-network and out-of-network deductibles. Many plans lack out-of-network coverage completely. Costly pharmaceuticals sometimes require higher co-pays or receive no coverage whatsoever.

The cap for out-of-pocket spending alone has grown. In 2017, family plans purchased on the ACA exchanges were capped at $14,300.

Additional startling stats include:

  • Twenty-six percent claimed that medical bills caused severe damage to their household’s bottom line (Robert Wood Johnson Foundation/The Harvard T.H. Chan School of Public Health)
  • Fifty-five percent claimed that they have received a medical bill that they could not afford (Amino/Ipsos Public Affairs)
  • Medical debts are the most common reason for a debt collection call (The Consumer Financial Protection Bureau)

For far too many consumers dealing with medical debts, there is only so much money and so many hours in the day to work for multiple employers. Bankruptcy is often the best option towards alleviating severe financial stress.

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