One key component of a bankruptcy filing may be medical debt. In some cases, people are facing hundreds of thousands of dollars in debt, so it is the main reason that they are filing. But in other cases, medical debt is just one component, along with things like credit card debt, financial issues caused by job loss and other such factors.
Medical care is often expensive, and a significant surgery or another procedure could cost more than a person earns in a year. It is unaffordable for them unless they are already very wealthy.
To mitigate this risk, many people simply carry health insurance. They pay a monthly premium, and the insurance should then cover these costs. But this does not guarantee that medical bills will not contribute to a bankruptcy filing.
Some costs may still apply
For one thing, people still often have to pay for a portion of their services, which may only be partially covered by insurance. They may also have to pay until they meet their deductible, which can lead to thousands of dollars in debt. A person who has many other types of debt to go along with these medical bills may still file for bankruptcy.
Out-of-network services
Additionally, health insurance often only works with a certain hospital or medical service network. A person may inadvertently get out-of-network services, especially if they are out of state or even out of the country at the time of an emergency. Their insurance may then deny them coverage, meaning that they still incur significant debt, even though they have an insurance policy.
This helps to show how medical costs contribute to bankruptcy filings in the United States. Those facing overwhelming debt need to know what legal steps to take.