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Friday, February 19th, 2010

Medical Bills: Beware of Discount Health Coverage Scams

As healthcare costs continue to skyrocket in comparison to household earnings, many Americans are looking for ways to save on medical bills. However, not every deal is worth pursuing, and the Coalition Against Insurance Fraud reports some healthcare scams currently plaguing the nation.

Background

Because health insurance in the U.S. is most commonly linked to jobs, a high rate of unemployment means higher numbers of people are going without health coverage. And, thanks to lowered income for many households, affording healthcare can be a huge stumbling block.

According to sources, some companies are apparently taking advantage of vulnerable Americans by offering discount health products, which may not be a very good bargain.

Discount Plans vs. Health Insurance

Health insurance, as many people know, works like this: you pay a certain amount of money each month (called a premium) and when you need access to medical care, you only pay a portion of the price (called a deductible) because you’ve insured yourself against doing so.

Discount plans, on the other hand, offer discounts on the normal full price of medical services. They are usually restricted to specific caregivers and specific medical facilities. After receiving consumer complaints about some discount plans, investigators reportedly found that discount plans tended to:

  • Overstate benefits: Advertisements for some plans misled consumers with claims about potential savings. For example, a plan might advertise itself as offering savings up to 60 percent, but provide a 60 percent discount on only one service.
  • Offer insufficient savings: Those with chronic health problems or who make frequent doctor’s visits may see little or no financial benefits from these plans.
  • Provide incorrect information: Some plans apparently guaranteed access to medical professionals who were no longer affiliated with the plan.

Making the Decision

If you don’t have access to or cannot afford health insurance, you may benefit from signing up for a discount plan – the important thing to do is research the plan before committing to it.

These precautionary steps to anyone considering such a plan:

  • Read everything. Look at the forms you’d be required to fill out and scrutinize the fine print. Make sure you know exactly what the plan includes – and leaves out.
  • Don’t jump the gun. Before opting out of another insurance plan, make sure the new plan you’re looking into will offer the kind of protection you need.
  • Make some calls. Ask for the list of physicians that you’d have access to and call to make sure they’re still participating.

Remember: commercials tell you only what they want you to know so do a little digging before choosing any new medical product.

Additional Resources

Medical Bills and Bankruptcy

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Posted in Financial Literacy | 2 Comments »

Tuesday, January 12th, 2010

Medical Records in Bankruptcy Court

A recent report from the Milwaukee Journal-Sentinel Online describes a potential complication that might arise during a bankruptcy filing. Here’s a look at what happened and what it might mean for other filers.

Your Records in Chapter 13 Bankruptcy

When you file for Chapter 13 bankruptcy, you’re agreeing to the following:

  • Committing to a repayment plan that lasts three to five years and satisfies part or all of your secured debt
  • Completing two courses (the pre-filing credit counseling briefing and the pre-discharge debtor education course) designed to help you improve your relationship with money and credit
  • Making public your records of debts and payments

It’s the last item on this list that has proved problematic. In the case of some Wisconsin bankruptcy petitioners, it seems, debt and payment information in medical bills that became part of the public record included details about doctor’s visits, procedures and medicines they used.

Now, according to sources, several Wisconsin residents have filed class-action lawsuits in state and federal court against Aurora Health Care Inc., the company reportedly responsible for submitting the detailed medical information.

Beyond Embarrassment

Bankruptcy filers who see their medical history become part of public record may have reason for embarrassment, but, according to reports, that isn’t the only reason this lawsuit has gotten attention.

Certain information (for instance, about treatment for past injuries) could prevent a filer from getting hired at a job in the future or pave the way to medical identity theft. And privacy laws often protect the disclosure of such information.

Should You Be Worried?

The good news here is that, while medical records included as part of a bankruptcy filing may have the potential to hurt your career or cause you embarrassment, the odds of anyone besides your lawyer, your bankruptcy trustee and the judge on your case seeing them is slim.

After all, such information appears as part of the loads of paperwork involved with filing a bankruptcy petition – sifting through to find such details would be a daunting task.

Still, this story highlights one more reason why enlisting the help of an attorney when you decide to file for bankruptcy protection can be a crucial element of making sure you receive the protection and fresh financial start you’re seeking.

Additional Resources

2009 Medical Identity Theft Final Report (PDF)

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Posted in Bankruptcy Courts | 4 Comments »

Friday, December 4th, 2009

Health Insurance for the Unemployed: A Costly Concern

Thanks to the health care overhaul bills currently working their way through the U.S. Senate and House of Representatives, the high cost of health insurance in America is on the public’s mind. And now, with a key provision of the stimulus bill expiring this month, another aspect of the health care dilemma has come to the surface.

Job Loss and Health Insurance

Because many Americans get medical insurance through their employers, job loss can be a double blow, meaning the loss of income as well as coverage. To address this concern, lawmakers included provisions for health insurance in the stimulus bill passed in February:

  • Subsidized coverage: The stimulus provided funds to reduce COBRA payments by 65 percent for those who wanted to keep their company’s health coverage after losing their jobs.
  • Limited offer: Naturally, the government assistance came with boundaries: to be eligible, people must have been laid off between September 1, 2008 and December 31, 2009. Further, subsidized coverage only lasts for nine months.

Because the measure went into effect in March of this year, thousands of unemployed Americans are now facing huge jumps in the cost of their health coverage.

In fact, sources indicate that the average affected family will see their costs soar $722 per month – from $389 to $1,111. In many states, that amounts to the vast majority of unemployment payments; in some states, it exceeds possible unemployment payments.

Hope on the Horizon: Bills in Congress

Luckily, the situation is not completely without hope. In fact, the Associated Press reports that Congress is currently considering bills that would add an additional $100 billion to unemployment benefits (including the COBRA subsidy).

Here’s a numerical breakdown of the proposed legislation:

  • $85 billion would be funneled toward extending emergency unemployment payments
  • $15 billion would fund the expanded health care coverage

In 2007, when unemployment hovered around 4.8 percent, about $43 billion was reportedly spent on unemployment costs.

While some measures of the economy suggest we’re pulling out of the worst of the recession, many experts still expect unemployment levels to remain high for another year or so, which means these problems likely won’t disappear any time soon.

Additional Resources

Special Report: Expiration of COBRA Subsidy (PDF)

Unemployed and Uninsured (PDF)

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Posted in Unemployment | 15 Comments »

Wednesday, July 1st, 2009

Medical Bankruptcy: Devastating Effects of Medical Debt

DrSteveB over on Daily Kos has a sobering look at that dramatic ways in which uncontrollable medical bills can change a life.

DrSteve gives us the tale of a man in Texas who was living his dream - married, owned his own company, had health insurance - until a car accident radically altered his life and left him homeless.

The medical bills quickly blew past what his insurance would cover.  The owner and driver of the other truck did not have insurance, like 10-20% of vehicle owners despite the mandate to buy auto insurance, so Mr. Benson and his insurance company were unable to go after that source.

I've been doing some research on medical bankruptcy lately, and this story was heartbreaking. Sadly, it shares much in common with many of the people who run into serious financial problems following an illness or injury.

Medical bills can quickly become overwhelming, even for the insured. If you need serious health care, the financial fallout is often more than just another bill.

Many people lose significant work time because of illness or injury. The new bills and loss of income may put strains on their mortgage or lead to an increased reliance on credit cards, which can also get out of hand quickly.

Fortunately, DrSteve's story has a happy ending:

Eventually, he wound up in a shelter, and eventually he was able to put his professional chef skills to work in the "soup kitchen."  From that he has worked his way back to sobriety, fulltime employment and housing.

If you're facing severe medical debt, don't wait to take action. If you need to get your debt under control, know that help is available.

Learn about the filing bankruptcy choice.

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Posted in Setting the Record Straight about Bankruptcy | 126 Comments »

Thursday, June 4th, 2009

Medical Bills and Bankruptcy

The LA Times reports today on a Harvard study that shows medical bills played a role in 62 percent of all bankruptcies filed in 2007, a seven percent increase compared with 2001.

What's more, many of the people filing bankruptcy due to overwhelming medical bills had health insurance. From the LAT:

Medical insurance isn't much help, either. About 78% of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.

"Health insurance is not a guarantee that illness won't bankrupt you," said Steffie Woolhandler, one of the authors, a practicing physician and an associate medical professor at Harvard.

It's not just high medical bills that contribute to bankruptcy, but also the lost wages and work time that an injury or illness can cause.

There is sometimes a stigma assocaited with filing bankruptcy, the idea that bankruptcy filers are irresponsible with their money. But this study shows:

Most people who filed medical-related bankruptcies "were solidly middle class before financial disaster hit," the study says. Two-thirds were homeowners, and most had gone to college.

Even if you plan for the unexpected, a sudden injury or illness can hit hard. Lost work time can cause your income to dry up, while extremely high medical bills turn a small, manageable amount of debt into an out-of-control giant.

Filing Bankruptcy and Medical Bills

For bankruptcy purposes, medical bills are considered unsecured debt.

This type of debt may be entirely discharged in a Chapter 7 bankruptcy filing.

In a Chapter 13 filing, your medical bills could be ordered and combined with other debts, and possibly reduced, in a bankruptcy trust.

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Posted in Setting the Record Straight about Bankruptcy | No Comments »

Wednesday, January 17th, 2007

New Study Ties Credit Card Debt to Medical Bills

Recent studies of bankruptcy petitioners have shown that medical expenses and associated lost income were a major factor in their financial problems, and consumer credit information from the federal government has confirmed that medical expenses are a primary reason for consumer borrowing, so it should come as no surprise that those without medical insurance and those who have faced major medical expenses over the past few years tend to have higher credit card debt.

A study just released by Demos reveals some interesting numbers:

  • Low and middle income households with a major medical expense in the past three years carry an average of 45.9 percent more credit card debt than similarly situtated households without a recent major medical expense.
  • The average credit card debt for families without medical insurance is 32.2% higher than that of families with medical insurance.

Although the evidence has been clear from the beginning that the vast majority of bankrutpcy filings were triggered by unforeseen trauma like job loss, serious illness, uninsured medical expenses, divorce, and death in the family, this connection between medical bills and consumer debt puts a new perspective on even those bankruptcy petitioners who list primarily credit card debt.  Credit card debt incurred to pay medical expenses hardly correlates with the picture of the "deadbeat" bankruptcy petitioner "running up" credit card bills irresponsibly and then shirking his responsibility.

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Posted in Bankruptcy and the Economy | No Comments »

Friday, December 8th, 2006

Medical Problems Put Middle Class at Bankruptcy Risk

The fact that illness and injury present a significant economic risk to the middle class shouldn't come as a surprise to anyone; Ted Kennedy talked about it in his 1972 book, and medical expenses have multiplied dramatically since that time.

Studies of bankruptcy petitioners conducted in the late 1990s and early 2000s revealed that approximately half of all bankruptcy petitioners had been seriously impacted by illness / injury and medical expenses.  That alone might come as a surprise to the credit industry mouthpieces who would have us believe (and who managed to convince Congress) that bankruptcy petitioners are a bunch of deadbeats with high credit card bills and no sense of financial responsibility, but here's an even bigger surprise:  the vast majority of those bankruptcy petitioners knocked down by medical bills had medical insurance.

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Posted in Bankruptcy and the Economy | 1 Comment »