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How
to avoid medical bankruptcy?
Use
simple personal finance planning techniques and take good care of
your health
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As
I have been saying all along, Americans must exhaust all other options before filing for bankruptcy. While many Americans are confused and think that bankruptcy is the easiest
alternative to get out of debt and start
over, the consequences are lifelong and can be devastating. But what happens when bankruptcy is caused by something that is beyond one's control? In other words, a medical bankruptcy. About 2 million Americans a year are in families that experience a bankruptcy following illness or injury, representing about half of all bankruptcies in the United States. Most of those filings were middle-class workers who had health insurance at the onset of their medical difficulties, according to
Health Affairs
medical journal. |
 David U. Himmelstein, associate professor of medicine at
Harvard Medical
School, and three colleagues reviewed 1,771 personal bankruptcy documents in five federal judicial districts in 2001, and conducted follow-up surveys with 931 of those debtors to determine how illness contributes to bankruptcy in America. Himmelstein’s coauthors are Elizabeth Warren, a professor at Harvard Law School in Boston; Deborah Thorne, assistant professor in the department of sociology and anthropology at Ohio University in Athens; and Steffie Woolhandler, associate professor of medicine at Harvard. (Related:
How to avoid foreclosure)
While the number of overall bankruptcies was 3.6 times higher in 2001 than in 1980, the number of health-related bankruptcies increased 23-fold over the same period, which suggests that high medical bills were a major contributor to the growth in the number of individuals seeking federal bankruptcy protection. As everyone knows, healthcare costs have been skyrocketing and it is still illegal to
import prescription drugs from
Canada.
Among the survey’s findings:
- Between 1.9 million and 2.2 million Americans (filers plus dependents) were affected by medical bankruptcies in 2001
(Related:
How to deal with rising prices?)
- Three-quarters of the debtors had insurance at the onset of the bankrupting illness
- Out-of-pocket costs for those bankruptcy filers since the onset of illness or injury averaged $11,854
- Medical debtors were 42 percent more likely than other debtors to experience a lapse in
health insurance coverage
- As they experienced financial trouble, 61 percent of the filers failed to seek medical treatments they needed
How to avoid medical bankruptcies?
- If you do not have health insurance for any reason, you must create a
personal health savings account of your own. While you can contribute as much as you can, a good number to start with is the amount you will pay for health insurance if you were self-employed. If it sounds like a lot, then at least start with the amount that would be deducted from your paycheck by your employer if it provided you with insurance coverage.
- And do not ever touch this money. If you get sick, you have a
pool of money to tap into. If not, it just builds up over time and counts as your retirement saving, particularly when we all know that with the
privatization of Social
Security, for vast majority of Americans, the retirement incomes will go down.
- Try to get regular health checkups. Sometimes you can get a lot of these services for free - many hospitals have basic programs for uninsured Americans. Charity events also feature free health checkups.
(Related article:
Health and fitness tips for senior citizens)
- Join a pharmacy discount program. For example, you can get a
Together Rx Access
Card. Many pharmaceutical companies have patient assistance programs that allow you to buy drugs at a discount. Also ask your doctor to help you out. Often they have samples of drugs and you should be able to get them at no charge.
- Finally, it is very important that if you do not have health coverage, you take extra care of your health.
Eat
right, exercise
regularly, and attend promptly to any signs of illness. Many common illnesses can be taken care of by simple tips and a trip to a local drugstore.
(Related link: Health,
fitness, and beauty tips)
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