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Even with insurance, medical debt can cause Chapter 7 bankruptcy

Maintaining health insurance coverage is important for covering the high costs associated with seeking medical treatment. Unfortunately, insurance does not cover everything, and in many instances it may cover even less than what most people in California expect. This is why even those who have health insurance sometimes still turn to Chapter 7 bankruptcy to handle overwhelming medical debts. 

A survey by Consumer Reports found that over 25 percent of U.S. patients who have health insurance have been hit with surprise medical bills. The costs are often staggeringly high, too. In 2016, a 59-year-old man spent 10 days in the hospital to receive care for his heart condition. His medical bills topped out at around $130,000, and his insurance only paid about $54,000. He was ultimately turned over to collections after being unable to come up with the other $76,000. 

New rules are aimed at trying to help the average person struggling with medical debt. The three largest credit agencies must now wait for 180 days to pass before listing an overdue medical bill on a person's credit report. This gives patients the time to come up with the necessary funds and even gives protections to people who are in the process of disputing certain claims. Another new rule also requires an unpaid medical bill to be removed from a person's report if the insurance company ends up paying for it. 

No one should avoid seeking necessary medical care out of fear from resulting medical bills, but the reality is that even those who are covered by insurance still face overwhelming costs. For the average person in California, shelling out tens of thousands of dollars to bridge the gap left by the insurance company is simply not possible. Chapter 7 bankruptcy can provide a proven path toward debt relief, giving patients freedom from medical bills and other debts through the discharge process. 

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