Law Office of Allan E. Dunaway, PLC

Medical debt factors significantly in bankruptcy rate

Kentucky residents may worry that rising medical costs are leading to unmanageable debt levels. Recent studies confirm this issue, indicating that medical debt is the leading cause of bankruptcy in the nation. Additionally, reports indicate that more than half of accounts sent to collections and showing up on personal credit reports are due to medical expenses. Prescription medication costs play a huge role in the increasing debt and delicate financial situations of Americans.

While the Affordable Care Act has been aimed at providing insurance to those who previously were limited in options for medical coverage, many of those now gaining access to these benefits are unfamiliar with how to manage the costs that accompany insurance plans. Monthly premiums must be paid, and deductibles must be met, issues that can be costly for those whose budgets are stretched. As expenses mount through the use of health care benefits, individuals may take varied approaches to handling the costs. Some rely on credit cards to cover these costs, and others go without their medications. According to recent reports, about 27 percent of Americans are thought to go without medicine because of finances. Unfortunately, this measure can lead to worsening health problems that may ultimately increase the burden on the health system.

Some find that unexpected situations lead to the decision to use credit for medical expenses. In the event of a job loss, for example, a family may turn to credit cards to cover necessities such as prescription medications. Others worry that not paying a medical bill might result in an inability to receive treatment, leading some to pay these bills and skip other payments.

Although debt can spiral out of control, an individual may be able to obtain relief through negotiation with creditors or through bankruptcy. Discussing the options with an attorney may help in determining the best solution.

Source: CNBC, "Medication costs fuel painful medical debt, bankruptcies", Dan Mangan, May 28, 2014

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