Many people face major problems if they have unpaid medical bills. These expenses can become a threat to your home, savings or income. Without medical insurance, an extended stay in a hospital can become a financial burden amounting to tens of thousands or even hundreds of thousands of dollars. If a reasonable payment plan is not initiated before processing begins, unpaid invoices will become a major collection action shortly after the processing period ends. Depending on the state you live in, your home, savings, or other personal assets may be tied up to offset unpaid medical bills.
Even if you have insurance, the financial risk of copayments, large deductibles, and uncovered salaries can be significant. There are instances where out-of-network physicians are brought in during a procedure without the patient’s knowledge or approval. Some policies only cover a small portion of these costs. Although the Affordable Care Act requires insurers to pay these fees, there have been instances where parts of what should have been covered were not covered.
What if you get medical treatment that costs tens or hundreds of thousands of dollars and your insurer rejects the claim because of an unmet deductible, co-payment, out of network doctor or for treatment or medication that is not approved? Who pays the doctor and the hospital? If there is no insurance or if the amount is limited, your doctor, hospital or other medical institution will require you to guarantee full payment of the charges invoiced, less any amount actually reimbursed by your insurer. Whatever amount your insurance company does not pay will be the responsibility of the patient.
What happens when a patient cannot pay?
What happens when a large medical bill cannot be paid? Usually the result is a lawsuit brought by the hospital or collection agency with a judgment and lien filed against the patient’s home and accounts. In most states, a portion of the debtor’s employment income can be garnished. Many times before this point is reached, the patient files personal bankruptcy to stop wage garnishment and eliminate medical bills and other debts. This requires the confiscation of all assets, including savings, real estate and real estate equity. Some of these assets that are exempt in bankruptcy will be turned over to court and distributed among creditors.
How patients protect themselves against these events
Family savings trust
Protecting assets with a specifically designed family savings trust can often protect savings from these events. A family savings trust is exceptionally flexible in its form and can incorporate provisions that merge the features of many household arrangements into the language of the plan documents. All of your assets can be contained in the trust, but be administered by special conditions appropriate for that asset.
For those concerned with protection against unexpected medical bills, a trust can be customized specifically to address the issue of medical bills. The trust can be provided to hold your home, savings and brokerage accounts for the purpose of protecting these assets from unforeseen medical expenses. It is often designed to protect the tax benefits associated with the home (including the deduction of mortgage interest, property taxes, and the avoidance of gains on a future sale), while also achieving estate planning and asset protection goals. appropriate for family patrimony.