Today, these words along with several others like “max out of pocket” are normal part of our nomenclature. Doesn’t it seem to you that health insurance costs are higher than ever and the coverage is less and less? At our office our Minneapolis Bankruptcy Attorneys see young and old folks alike with medical bills all the time. The shifting of medical costs onto American families has been a major shift in health insurance and health costs for the last several decades now. One of the reasons they tell us is to make Americans make better health care choices.
I remember when I was in college, and couldn’t afford health insurance, I gambled and didn’t have it. I got lucky, extremely lucky, and never incurred medical bills I could not pay. Looking back now, I realize just how lucky I was. Many people are not so lucky. All it takes is to have that broken leg or arm or other medical emergency to incur medical bills that easily break the bank.
Occasionally people call our Minneapolis Bankruptcy Lawyers and ask us this question: Is there such a thing as medical bankruptcy? The answer is yes and no. No, there is no specific title 11 bankruptcy section termed “medical bankruptcy.” There is chapter 7 bankruptcy and chapter 13 bankruptcy but not “medical bankruptcy.” So, it is fiction. There is no bankruptcy called “medical bankruptcy.” Yes, you can file bankruptcy on medical debt. But, when you do, it’s not called a “medical bankruptcy.” It’s called either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
But, medical debt is only a part of the equation. As those of you who have been through this can attest to, the medical bills are just one of the bills that you have to contend with. There are numerous other debts and costs associated with medical issues that people often forget.
The out of pocket medical costs for Chad and Felicia are high. It could be far worse though. Since Chad works for the State of Minnesota, he luckily has decent insurance with deductibles and max out of pocket deductibles that are not enormous. But, there are still out of pocket medical expenses for sure.
Working less, and with the income down, and the expenses up, this has placed a burden on the family finances. So, what do Chad and Felicia do to tie themselves over until sunnier days? They use credit cards to bridge the gap. This is human instinct folks. Thankfully, for most of us, we know that today is dark but we trust and hope tomorrow will be better. We tell ourselves that we will use credit cards and pay them back when things return to “normal.”
And things take a turn for the worse. Sud’s brain tumor is growing and the doctors are concerned. So, the family and the doctors decide that the only way to proceed is to get more aggressive with the treatment. This means stronger doses of chemo and radiation and longer stays at the Mayo Clinic and the Children’s Hospital.
In turn this means more trips from Minneapolis, Minnesota to Rochester and since the treatments will take longer and are stronger the doctors want her there for a week at a time. This means longer periods off of work (drop in pay), and a huge increase in expenses. The cost of transportation stays about the same but the cost of parking has gone up since the stay is longer and what about the costs of a hotel? And what about the cost of meals for a week? And what about the multiple trips to the twin cities? Folks, if having a sick child were not bad enough, the costs associated with it, are ATROCIOUS! Not just the medical bills- that is actually a small part of the over all costs.
When you do that much radiation and chemo therapy to a child you will need to do extra things to keep your child comfortable. Your child will want a wig, a different pillow, and maybe even different sheets to keep comfortable. Their body is more sensitive to stimuli than ever before. You do whatever it takes, and purchase whatever is needed to keep your child comfortable.
Relatives of Chad and Felicia held a benefit to defray the costs for Chad and Felicia. It was a huge morale booster to Suds and mom and dad. Having people show they cared was bigger than the money support itself. The truth is the benefit produces money that helps defray a small fraction of the overall cost but Chad and Felicia are very appreciative.
As you can see, much of the time, the actual medical costs are not the real problem, although they are certainly part of the problem. The much bigger problem often times is the drop in income, the expenses of travel to and from, and the costs of hotels/motels and food and other expenses while being at the care facility.
These expenses are enough to shake the most sturdy financial family into financial ruin. It will not be long before most of us would need to lean on credit cards to help defray the added expenses with less income. Before you know it, you have overwhelming debt and it becomes a real nightmare. How fast can this happen to you or a loved one? Literally within days or weeks. We have seen it many times before. The humility of being alive!
I think the reason some folks believe there is a medical bankruptcy is because of the correct assertion that ones’ health is so far beyond ones control. How can you help getting sick or having a child with a significant medical problem? You absolutely cannot. Unfortunately, the social safety net does not extend to medical catastrophe’s you might endure. If you are a loved one have catastrophic medical problems, you are on your own. I don’t mean that there are not some organizations to help you and some government assistance available to low income families- there are.
But what about those middle income families? If you think about it, if you are low income, you shouldn’t need a lot of financial assistance if your income is so low that creditors can do nothing to you. We call those people judgment proof. That means while a judgment can be taken against you, it will be impossible for the creditor to collect because everything the debtor owns and his/her income is untouchable.
But, this is not true for a middle class family. They have it even worse. They don’t qualify for any assistance because they make too much and yet when a medical catastrophe occurs, it completely wipes them out. In the end, the debtor(s) file bankruptcy and the creditors lose anyway. Why do we make middle class families go through this? Why should your financial world fall into chaos when your child is gravely ill? I think it is terrible to have families go through the emotional crisis of a sick child and not have something in place so it does not mean a family has to fall immediately into financial chaos over a medical problem no one can control. After all, this is not a family funding trips on credit cards for Disney vacations. It’s a family in emotional, medical, and financial turmoil.
The reality is there is no such thing as a medical bankruptcy. I understand the spirit in which the questions is asked. The questioner is really asking why we don’t have some system in place to protect those families who fall into medical emergencies through no fault of their own. The underpinning of that question assumes that “other people” who file bankruptcy where careless and intentionally incurred the debt. That is most often not the case at all. The vast majority of debtors never incurred the debt assuming they would file bankruptcy in the end.
That is a myth that is as old as the beginning of time. People want to pay their bills. People don’t want to file bankruptcy. The five most common reasons someone files for bankruptcy will never change: business failure, income drop, relationship break-ups, medical problems, and bad financial decisions, we have all made them. Like the waves of the ocean, you will not stop these events from happening as long as humans occupy this planet.
Thank goodness our fore fathers had the sense to put the power to enact laws concerning bankruptcy throughout the state with Congress. Bankruptcy is a wonderful gift. It is a reset button on your life, a new beginning for your family. If you have read this far, please know that I am humbled by the courage and anxiety it took for you to read this far. The other side of this is so beautiful. Take care of your family and yourself. For further information please contact us at our Minneapolis Bankruptcy Law Firm at: