Increased access to insurance may not prevent medical bankruptcy filings
Even though Obamacare will expand insurance coverage, many will remain underinsured and may still need bankruptcy prootection as medical costs continue to increase.
May 10, 2013
Increased access to insurance may not prevent medical bankruptcy filingsArticle provided by Eveland & Associates PLLC
Visit us at http://www.evelandlawfirm.com
The increase in medical costs has outstripped increases in wages for many years. Recently, the Obama administration released data on hospital prices that showed huge differences in prices that hospitals charge. For example, the uninsured official price for a procedure often far exceeds what an insurance company actually pays for the same care.
With medical costs growing so quickly, medical bills have often been cited as a factor in bankruptcyfilings. Some have wondered if the Affordable Care Act also known as Obamacare will put an end to medical bankruptcies.
When the new law goes into effect the number of uninsured will decrease. Thirty million more Americans are likely to obtain health insurance in the next ten years, according to estimates from the Congressional Budget Office. Several studies have recently looked at whether insurance coverage will in fact make care affordable.
Utah currently has a state run small-business insurance marketplace, called Avenue H. The state will not incorporate the existing exchange into the health care reform, because it does not provide some of the necessary functions required by the ACA. This means that uninsured individuals will be able to purchase health insurance through a federal exchange.
Health insurance options may be leave many underinsured
The cheapest of the plans, a "bronze" plan will cover on average 60 percent of an individual's medical costs. This may result in many who are underinsured. Bronze plans that come with smaller premiums are expected to attract the largest numbers of enrollees.
One researcher, Stephanie Woolhandler, looked at the rates of medical bankruptcy in Massachusetts before and after an expansion in health insurance access. She found that several years after the expansion, 52 percent of those filing for bankruptcy cited medical bills in part as the reason they needed to file. Prior to the expansion, the number was at 59 percent. The most basic insurance plan in Massachusetts was slightly different and covered a lower portion of costs - on average 40 to 50 percent.
Bankruptcy options
Chapter 7 bankruptcy is an option for those underinsured or currently uninsured with medical bills they cannot afford to pay. An individual can file for either Chapter 7 or Chapter 13 bankruptcy protection.
Either bankruptcy option provides a stay where creditors must stop all collection efforts. In a Chapter 7 bankruptcy, a trustee will sell all non-exempt property. An individual's remaining non-secured debts, such as medical bills and credit card debts are discharged following the sale. An individual does not lose all his or her property in a Chapter 7 and often can keep a certain amount of exempt property.
Those with a home and steady stream of income may find that Chapter 13 is a better fit, which includes a three to five year payment plan. An experienced Utah bankruptcy attorney can explain the details or each bankruptcy filing type. If there is no way that you will be able to pay off medical bills, bankruptcy provides a fresh start and stops creditor harassment.