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With a major provision of ObamaCare coming to fruition in the coming days, I thought it would be interesting to see how this new law regulating the health insurance industry will affect medical bankruptcies.
Back in April 2013, President Obama, in defending ObamaCare, said, “nobody should go bankrupt if they get sick...”
While it’s true that people do file bankruptcy because of medical bills, and there is a variety of research and surveys that state nearly 60% of all bankruptcies were due to medical bills, the research is flawed. (One case study indicated a bankruptcy was a medical bankruptcy if the debtor had more than $5,000 in medical bills. It didn’t matter if the debtor had $100,000 in credit card or other debt.) I can certainly say that 60% of my clients didn’t file bankruptcy because of medical bills. In fact, very few have medical bills that are greater than things like student loans, mortgage debt, or even credit card debt.
The Effect of ObamaCare on Medical Bankruptcy
The research suggests, even the research that states 60% of bankruptcies are due to medical bills, that those who filed bankruptcy for medical bills had insurance.
ObamaCare mandates that all people purchase health insurance and there are a variety of plans (bronze, silver, gold, and platinum). The better the metal, the better the coverage, the more you pay, the less you pay out of pocket. Oh yes, you still get to pay out of pocket.
And that is where most people get into trouble. Those being forced to purchase a bronze plan that covers 60% of costs, according to the Nebraska Department of Insurance, will have to pay 40% out of pocket. While they may get subsidies from the federal government to pay for the premiums for these plans, where are cash strapped Nebraskans going to come up with 40% for the costs of an expensive procedure?
Medical Bankruptcy Conclusion
ObamaCare does nothing toward President Obama’s goal that no one should go broke and have to file bankruptcy due the medical bills.
If you are suffering from medical bills and don’t see a way out, contact me and we can discuss if a medical bankruptcy is right for you.