Many people face big problems if they have unpaid medical bills. These expenses can become a threat to your home, your savings, or your income. Without any health insurance, a prolonged hospital stay can become a financial burden of tens of thousands or even millions of thousands of dollars. If a reasonable payment plan is not initiated before treatment begins, unpaid bills will become a major collection action soon after the treatment period ends. Depending on the state you live in, your home, savings, or other personal property may be garnished to offset unpaid medical bills.
Even if you have insurance, the financial risk of copays, large deductibles, and uncovered treatment can be significant. There are instances where out-of-network physicians are brought in during any procedure without the patient’s knowledge or approval. Some policies cover only a small portion of these charges. Although the Affordable Care Act requires insurers to pay these charges, there have been cases where parts of what should have been covered were not.
What if you get a medical treatment costing tens or hundreds of thousands of dollars and your insurer denies the claim because of a missed deductible, copayment, out-of-network doctor, or unapproved drug or treatment? Who pays the doctor and the hospital? If there is no insurance or the amount is limited, your doctor, hospital or other medical facility will require you to guarantee payment in full of the costs billed, less any amount actually funded by your insurer. Any amount not paid by your insurance company will be the responsibility of the patient.
What happens when a patient cannot pay?
What happens when a large medical bill cannot be paid? Typically, the result is a lawsuit filed by the hospital or a collection agency with a judgment and lien against the patient’s home and bills. In most states, a portion of the debtor’s earnings can be garnished. Many times before this point is reached, the patient files for personal bankruptcy to stop wage garnishment and eliminate medical bills and other debts. This requires the forfeiture of all assets, including savings, real estate, and real estate equity. Some of these bankruptcy-exempt assets will be turned over to the court and divided among creditors.
How patients protect themselves against these events
Family Savings Trust
Asset protection with a purpose-built Family Savings Trust can often protect savings from these events. A Family Savings Trust is exceptionally flexible in its form and can incorporate provisions, which merge the features of many household arrangements within the language of the plan documents. All of your assets may be contained in the trust, but managed by special terms appropriate to that asset.
For those concerned about protection against unexpected medical bills, a trust can be customized to specifically address the issue of medical expenses. The trust can be planned to hold your home, savings and brokerage accounts with the goal of protecting these assets from unexpected medical expenses. It is often designed to safeguard the tax benefits associated with home ownership (including mortgage interest deduction, property taxes, and avoidance of gains on a future sale), while pursuing proper estate planning and asset protection goals. assets for the family estate.