Study: People with health insurance may still face serious medical debt

Research shows that the rising cost of receiving medical care may leave even insured individuals vulnerable to medical debt.

Handling medical expenses can be a challenge for many people in Florence, including those who have health insurance coverage. In 2015, more than one-quarter of insured individuals in Kentucky reported that they had difficulty paying their medical bills, according to WEKU. One-fifth of adults in the state delayed or went without care as a result.

Unfortunately, this problem is not isolated or uncommon. New research suggests that modern medical costs can be incredibly burdensome even for people who carry health insurance. When avoiding or postponing care isn't an option, these individuals may be at risk for developing significant and even unmanageable medical debt.

A growing burden

According to a new study from Kaiser Family Foundation and The New York Times, about one-fifth of insured individuals under age 65 struggle to pay their medical bills. Overall, insured adults are less likely to have difficulty paying these bills than people who lack insurance coverage. Still, according to this research, 60 percent of people who cannot cover their medical expenses possess some form of health insurance.

The rise in out-of-pocket healthcare costs may be one reason for this issue. The amount of medical expenses that are paid by consumers, rather than insurers, has increased since the late 1990s, and under the Affordable Care Act, insurers were allowed to further raise deductibles. Many plans may now require participants to make thousands of dollars of out-of-pocket payments toward co-pays or deductibles.

The reduced availability of in-network providers is another factor that can make medical costs burdensome for people who have insurance. Even consumers who make a conscious effort to seek in-network care can still face steep expenses. The New York Times and Kaiser Family Foundation found that over two-thirds of surveyed patients who received bills for out-of-network care didn't realize they were receiving out-of-network care to begin with.

Severe financial hardship

The study also suggests that a significant number of insured adults may have to take financially harmful measures to pay for their medical bills. For example, the individuals who were polled during this study reported taking the following actions:

  • Taking on greater credit card debt
  • Depleting their savings accounts
  • Turning to payday lenders
  • Borrowing money from relatives or friends

Unfortunately, for some people, these measures still might not be enough to address medical expenses. Over one-third of the insured individuals reported that after paying their medical bills, they were unable to pay for food, utilities or housing.

Options for relief

For individuals in this position, filing bankruptcy may offer an effective means of addressing medical debt. As an unsecured liability, medical debt may be eligible for full discharge in Chapter 7 bankruptcy, which is a liquidation bankruptcy. People who don't qualify for Chapter 7 bankruptcy or have significant assets may also be able to seek relief by filing Chapter 13 bankruptcy. This chapter allows consumers to complete a repayment plan and potentially qualify for debt discharge afterward.

Determining whether to file bankruptcy can be a difficult decision, and evaluating the most suitable chapter to file can also be challenging. Consequently, people who are considering seeking relief from medical debt by filing bankruptcy may benefit from consulting with an attorney to better understand their options.