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How Individuals Can Be Buried by Medical Debts in California
By most measures, access to healthcare and health insurance has generally improved over the past several years. However, despite increasing coverage levels, medical bankruptcies continue to occur. Part of the reason for the continuing prevalence of medical bankruptcies can be attributed to the fact that many of the plans Americans have selected contain high deductibles A high-deductible plan may sound like a good idea if you are relatively healthy because these types of plans usually have lower premiums. However, in many cases, the coverage does not kick in until the individuals has incurred tens-of-thousands of dollars in medical expenses.
For many families and individuals, these medical expenses can be ruinous. This is especially true if the individual or family finances are already overextended. This is particularly true in California where high home prices often means that a significant amount of one’s wealth and savings are tied up in home equity. Many people simply do not have ten thousand dollars, twenty thousand dollars, or more available to cover unexpected medical debts. People who are able to put these debts on credit cards then face high-interest rates on the amounts charged.
Medical Bankruptcy Affects All Age Groups
While one might expect medical bankruptcies to only affect seniors and older individuals. Medical bankruptcy affects all age groups. Admittedly, “young invincibles” aged from 18 to 24 years are least affected but nearly all other groups are significantly impacted by medical bankruptcy. According to an analysis performed by NerdWallet, 18.7 percent of all medical bankruptcies affected individuals aged from 25 to 34 years. Individuals aged from 35 years to 44 years accounted for the most significant portion of medical bankruptcies at 28.9 percent. Individuals from 45 to 54 years accounted for a nearly equivalently significant share of medical bankruptcies at 26.4 percent. Individuals from 55 to 64 years accounted for 15.8 percent of medical bankruptcies. Senior citizens aged 65 years or older accounted for just 8 percent of all bankruptcies.
In all, there were roughly 1.7 million medical bankruptcies in the year studied by NerdWallet. Furthermore, over 56 million Americans had difficulties paying their medical bills. Also of note is the fact that for all age groups except senior citizens, the average household size was greater than two. This means that children and families are frequently affected by significant medical bills.
Medical Issues Can Also Result in the Loss of One’s Job
While medical bills and issues are the single largest causes of bankruptcies, the loss of a job can also contribute. However, in many circumstances, a serious illness can force a person to stop working. When the affected individual is the main breadwinner through whom health insurance coverage is obtained, this can further exacerbate the situation. While COBRA can provide coverage, a recently unemployed individual who may already be struggling with mounting medical debt often does not have the resources to maintain coverage in this fashion.
The combined loss of a job plus piling medical bills often necessitates a bankruptcy to wipe away the debts. Individuals who attempt to use credit cards and other lines of credit to forestall a bankruptcy end up in disastrous situations,spending months or years directing resources to pay off interest on major debts without making a dent in the principle.
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