Health insurance is often ineffective at protecting people in Kentucky from financial hardship when serious injuries or illnesses strike. A study that examined a random sample of 910 bankruptcies filed between 2013 and 2016 attributed 58.5 percent of filings to unpaid medical bills. Another 44.3 percent of bankruptcies blamed income loss due to sickness as the source of overwhelming debt. Often, both factors drove people to bankruptcy court.

The university professor who led the research project explained the inadequacy of employer-based health care coverage. Medical problems that last a long time can cause people to lose their jobs, which then leaves them without coverage. He called private health insurance a “defective product.” Furthermore, even people with insurance face high expenses from copays and deductibles that can sink their finances.

The Affordable Care Act had been in effect during the years analyzed by the study, but the expanded coverage did not appear to influence bankruptcy filings. Prior to passage of the ACA, 65.5 percent of debtors reported that medical bills undermined their finances. Three years after the law took effect, 67.5 percent of people sought bankruptcy protection because of medical bills. The authors of the study concluded that flaws in the health insurance system made it impossible for many people, even those in the middle class, to pay for medical care.

When a person’s debts far exceed their ability to pay, bankruptcy could provide a solution. Medical debt may qualify for a discharge in some bankruptcy cases. An attorney could determine how the law applies to a person’s specific situation. To prepare for court, an attorney could help a client disclose all sources of income and debt, identify exempt assets and halt creditors’ collection actions.