A recent study performed by a team at Seattle's Hutchinson Institute for Cancer Outcomes Research and published in the industry journal Health Affairs reveals that cancer patients - even those with health insurance coverage - are more than twice as likely to file bankruptcy than similarly situated people without cancer.
Young women face exceptionally high financial struggles as a result of their cancer-related healthcare costs; they are 10 times as likely to need bankruptcy protection than elderly patients with similar diagnoses are. Interestingly, the study was even able to determine that thyroid cancer seems to cause the most financial upheaval, as those diagnosed with it were more likely to file than those suffering with other cancers.
The interplay of insurance and medical cost-related bankruptcy
The Hutchinson study reaffirmed prior studies showing that having health insurance does not make it less likely that medical expenses will result in a bankruptcy filing. In fact, the opposite is true; about 75 percent of people who file for bankruptcy because of unmanageable medical debt have coverage.
It seems counterintuitive that the insured have a higher chance of filing for bankruptcy because of medical expenses, but it happens with alarming frequency. There are several reasons why, including:
- High co-pays for doctor visits or medications
- Treatments considered to be "experimental" that are not covered
- Brand name medications that have little or no insurance coverage
- Visits to specialists or out-of-network providers
- High deductibles selected to save money on premium payments, leaving the patient on the hook for a much higher out-of-pocket amount
Some people, when facing massive medical debt, do anything in their power to get the bills paid. They might try to negotiate a lower, lump-sum payment directly with the provider or borrow money from family. Many of those same people will still end up in bankruptcy because the payments become unmanageable, particularly when they need long-term medical care and the bills keep piling up.
There are several bankruptcy options that can help, though. Unsecured debt (like medical expenses and credit cards) can be discharged by both a Chapter 7 bankruptcy filing and a Chapter 13, though the two approach the issue of debt differently.
Chapter 7 involves the sale of certain non-exempt personal property, the proceeds from which are used to pay creditors. Federal bankruptcy laws exempt a wide range of property from sale, including clothes, home furnishings, appliances, a reliable vehicle, work-related tools/equipment and, in some cases, the family home. After all sale proceeds have been used, remaining debt is discharged.
Chapter 13 essentially consolidates all eligible debts into one monthly payment that the filer will make for a set time decided by the bankruptcy court (usually between three and five years), after which time leftover debt is discharged. Chapter 13 is best-suited for filers who have a steady income, something that someone suffering from cancer or another potentially terminal condition might not have simply because they might be too sick to work.
Are you dealing with excess medical debt? Concerned about creditor harassment? Want to learn more about bankruptcy and other debt management methods that might be right for you? If so, speak with an experienced bankruptcy attorney in your area to learn more about legal options.