Over the past few years, medical debt as become one of the largest contributors to bankruptcy filings in the United States. It is reported that over 60 percent of bankruptcy filings are due to medical debt. Fortunately, medical debt is one of the easiest debts to have discharged in bankruptcy. However, this doesn’t make the statistics any less frightening. So, what Is going on?
As the baby boomer generation begins to age, more people are finding themselves in need of medical care. This in itself isn’t problematic, but when the aging population also experiencing financial hardships, medical expenses become overwhelming. It is estimated that half of all persons over the age of 65 receive some financial assistance by way of Medicare or Supplemental Security Income. This means that not only is our elderly population growing, but that population is in financial need.
Poor Healthcare Options
The United States has long fought for better healthcare for our citizens. With the majority of Americans paying high premiums for privatized healthcare, many people are struggling to cover the costs for basic care. If an unforeseen medical issue arises, or they experience a medical emergency, the out of pocket costs not covered by insurance can be thousands of dollars. It is estimated that a one night stay in the emergency room costs approximately $5,000, which doesn’t include any tests or medications. The out of pocket cost for a patient whose insurance company pays 80% after the $2000 deductible is met would be around $2600, assuming the patient had a zero deductible balance at the time.
Lack Of Emergency Fund
The quickest way into debt is unexpected expenses, especially those of high cost like medical bills. Most people have minimal savings, if any. For the average American who ended up with a $20,000 medical bill for a week stay in the hospital, that is almost an entire year’s salary. It is impossible to predict the future, but everyone should be saving for unexpected medical expenses in addition to a regular savings account.