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Most Americans consider filing for bankruptcy a last-ditch effort to overcome financial hardship. However, when faced with rising health care costs, even those employed can find it more and more difficult to make ends meet. Medical issues are the number one cause of bankruptcy in America. According to research, 66.5 percent of all bankruptcies were caused due to medical reasons whether it was the costs to cover medical bills or due to lost wages.
Health care insurance does not provide adequate medical coverage for most people. Making matters worse, close to 3 in 10 Americans fail to save enough money to provide an emergency fund to cover unexpected costs such as medical bills. Only 40 percent of Americans save enough money to cover such expenses.
Close to a third of Americans owe money for medical debt with 28 percent owing over $10,000. For those in debt for medical bills, around 54 percent have defaulted on the money owing. And all these people are currently employed with health insurance. As deductibles rise and more people require health care, the odds of going into debt due to illness are also rising.
Meanwhile, the average American spends around $5,000 each year on medical costs. This includes payments towards their health insurance, supplies and medicine. This is twice as much as what was spent in 1984. Medical care costs continue to rise, last year increasing by 4.6 percent from the year prior. This represents the largest increase in 13 years. Adding to costs are skyrocketing prescription drugs in hand with less impactful physician fee increases.
It is difficult to estimate costs for medical care since there are so many types of visits, health care facilities, health care providers, medicines, and treatments. However, when you consider the total health care spend for 2017 was approximately $3.5 trillion you get an idea of how expensive health care is in America. As well, hospital care accounts for about $1.1 trillion with an average cost of $3,949 per day.
An average hospital stay averages $15,734. Surgery is a major expense ranging from $16,000 for a gastric sleeve to a staggering $170,000 for heart valve replacement. While Medicare covers 90 percent of the costs at hospitals for about 42 percent of patients over 65, this represents just 20 percent of all hospital care costs.
Filing for Chapter 7 bankruptcy can provide a solution for those drowning in debt related to medical bills because it allows you to discharge (no longer legally requiring you to pay any debts) your medical bills. To qualify for Chapter 7, your disposable income must be low enough to pass what’s called the Chapter 7 Means Test.