Written by Craig D. Robins, Esq. and Dean Weber, Esq.**
Too many consumers are insured but insufficiently protected resulting in an exodus to Chapter 7 bankruptcy to eliminate burdensome medical debt
It is well known that many consumers who have no health insurance are often forced to seek the protection that bankruptcy affords, as the result of huge medical bills. Hospital bills, not to mention doctor fees, can be catastrophic.
But, what about those who actually have health insurance? One might think that consumers who are covered would be pretty safe from large medical bills. Unfortunately, it turns out that this is often not the case according to a study recently highlighted by the New York Times that pointed out that too many people are underinsured: Insured, but Bankrupted by Health Crises .
Said the Times article: “Health insurance is supposed to offer protection — both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.”
One reason is that many health insurance policies do not cover all aspects of medical treatment. Often, coverage is so meager, that financial calamity is but one negative diagnosis away.
These “limited-coverage” policies are very common, and very often, the insured does not even realize that he or she is lacking decent coverage. Congress may soon pass legislation to make insurers issue much clearer-language policies – so that the insured is more aware of the policy’s serious limitations.
One health economist, from the New America Foundation, said that, “conceptually, insurance means normal people should not go bankrupt from serious medical conditions.” However, there is no doubt that this is exactly what is happening, and people are well advised to check their health insurance policies so that they might better understand their coverage and perhaps better protect their financial well being.
At our office, we have helped many debtors who were compelled to file Chapter 7 bankruptcy on Long Island because of their insurmountable medical debts. Just one serious operation can result in tens of thousands of dollars in bills.
Even to one with perfect credit, a large, unexpected medical debt can be impossible to handle. Fortunately, medical debt is fully dischargeable in a Chapter 7 case, and a bankruptcy filing can provide the ideal solution to an overwhelming medical debt problem.
**Dean Weber, Esq. is a full-time associate with our firm