At McElroy & Associates, We Understand That Bad Things Can Happen To Good People

Get A Fresh Start Through Bankruptcy

Does health insurance prevent medical bankruptcy? 

On Behalf of | Oct 15, 2024 | Consumer bankruptcy |

Among the many reasons for bankruptcy, one of the most common is just that people are facing overwhelming medical bills. It does not take very long for the debt to become too much for one person to pay back. With some serious illnesses and injuries, they could find themselves facing hundreds of thousands of dollars in debt, as healthcare is very expensive in America.

In order to counter this, of course, many people buy health insurance. They either buy a plan themselves or they get health insurance through their employer. They may believe that this prevents them from overwhelming medical debt and that they will never need to use bankruptcy. But that’s not necessarily the case.

Are the services in the network?

The problem here is that insurance companies often have a specific network of service providers that they use. When you buy the insurance policy, they tell you that they will cover a certain percentage of costs in this network. But if you go outside of the network, then the costs may not be covered at all.

Some patients can plan for this, such as selecting the correct doctor when going in for a check-up. But in an emergency situation – such as a car accident or a heart attack – the person is likely to just get the quickest medical care that they can. They’re not in any condition to consider the network. But if they end up at an out-of-network facility – or even just working with an out-of-network doctor – they may be fully responsible for the costs. 

This can create an incredible amount of debt very quickly, and people need to know about bankruptcy and all of their other legal options.