Two out of every three bankruptcies in America are a result of medical costs. Because medical costs are expensive, unpredictable, untimely, and people generally do not plan ahead for them, they are the biggest cause of bankruptcy in America, bigger than credit card debt and bad mortgages combined. Among seniors and retirees, medical costs will come from long-term care.
What About Health Insurance?
Even people with health insurance can face financial ruin because basic health insurance does not cover long-term care. Of all the medical bankruptcy cases, more than 75% of families had health insurance. Having health insurance can actually give you a false sense of financial security.
You may wonder if the Affordable Care Act (ACA), also known as Obamacare, will help pay for all your long-term care costs. The ACA was enacted to make health insurance more affordable and accessible, but it does not change what basic health insurance will and will not cover. Therefore, expanding coverage without fundamentally changing the coverage benefits will do little to prevent future medical bankruptcies.
Some Sobering Statistics:
Here is a summary of a study done by the National Institutes of Health:
- 62% of bankruptcies are caused by medical costs
- 90% of medical debts are higher than $5,000
- 75% of the bankrupt families had health insurance that did not cover the medical costs
- Most of the people with medical debts are well educated and own a home
- From 2001 to 2007, the chances that a bankruptcy will be caused by medical costs have gone up by 49%
This study was done in 2007. With a larger aging population today that will continue to get larger, the situation for us moving forward is actually worse than these numbers indicate.
Prevent Medical Bankruptcy
Struggling with medical costs is bad enough, but often overlooked is the hardship it places on your family and loved ones. It’s important to plan ahead and protect yourself and your family from the risk of medical bankruptcy.