Rising medical costs may leave many consumers with unmanageable debt

Medical expenses in the U.S. are rising, with consumers bearing an increasing share of the cost; this may leave many people with overwhelming medical debt.

Medical debt is an issue that many people in Jackson have struggled with or currently face. According to CNBC, one study indicates that medical bills were the top cause of bankruptcy in 2013. Since more people have access to health insurance now, it may seem reasonable to think that medical expenses have become less burdensome. However, data indicates that medical costs are still rising, leaving many consumers to deal with steep bills and significant medical debt.

High cost of care

According to The Los Angeles Times, healthcare costs are currently increasing at a disproportionately high rate. From 2003 to 2013, costs associated with employer health insurance plans increased at three times the rate that employee wages did. During the same period, the cost of deductibles increased almost 150 percent.

Experts note that, overall, American healthcare expenses have been increasing less sharply than usual lately. However, more healthcare costs are being passed on to consumers through rising premiums and high mandatory deductibles. To accommodate these costs, many people have been forced to reduce their savings or increase their reliance on credit cards.

Projected price increases

Unfortunately, consumers will likely face even steeper healthcare costs in 2015, according to U.S. News & World Report. One report indicates that overall costs will rise by 6.8 percent. The full financial burden of this increase may not be passed on to consumers. However, even small changes in insurance costs may prove overwhelming for people who are already struggling to cover medical expenses.

High-deductible healthcare plans may also become an unavoidable expense for more people this year. Since 2009, the number of employees enrolled in these plans has increased threefold. Furthermore, out of the employers who still offer regular plans, 44 percent are reportedly considering switching to high-deductible plans.

Given these growing expenses, it would not be surprising if medical debt contributes to many bankruptcies this year. For many people, filing bankruptcy may be the most feasible way to find relief from rising medical debt.

Managing medical debt

During bankruptcy, medical debt is classified as an unsecured debt. This type of debt may be eligible for discharge through Chapter 7 bankruptcy, which is a liquidation bankruptcy. Consumers who file this chapter of bankruptcy sell their assets, with an exception for exempt assets, to pay off existing debt. Liabilities that remain after the liquidation is complete may qualify for full discharge.

Medical debt may also be repaid or discharged through Chapter 13 bankruptcy. During Chapter 13 bankruptcy, debtors enter into payment plans that prioritize secured debt and certain types of unsecured debt. Medical debt can be paid off after these other liabilities are addressed. At the end of the payment plan, which may last for up to five years, any remaining medical debt may be discharged.

Consumers who are considering filing bankruptcy in response to medical debt may benefit from consulting with a bankruptcy attorney first. Based on a person's existing assets and liabilities, an attorney may be able to offer advice on choosing the right chapter of bankruptcy. Additionally, an attorney may be able to provide assistance during the filing process and the rest of the bankruptcy proceedings.

Keywords: bankruptcy, medical expenses, debt, Chapter 7