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Affordable Care Act does little to prevent medical bankruptcy

Although a growing number of residents in the Washington, D.C., area now have access to affordable health care, the Affordable Care Act may not have a significant effect on medical bankruptcies in the region. Experts say that medical bankruptcy does not just affect those who go without insurance; in fact, about four in five medical bankruptcies are filed by those who are already covered. The problem often lies not with the cost of the medical treatment, but with the incidental expenses that quickly add up during the course of a major illness.

For example, a breast cancer patient will likely pay about $8,500 for co-pays and other medical costs, in addition to travel expenses to receive care. However, that figure is just the tip of the iceberg, as many patients must juggle loss of income, additional daycare and incidental costs that easily surpass their ability to pay. Further, patients who have chosen high-deductible plans may suffer more serious financial woes because their insurance does not activate until a specific amount of out-of-pocket payments have been collected.

Although it is promising to know that insurance is not tied as heavily to employment, Americans are not in the clear from medical bankruptcy yet. For those who are unlikely to qualify for a payment plan, Chapter 7 bankruptcy may be made available, allowing them to liquidate assets and erase debt. Chapter 7 can provide a fresh financial start after the accumulation of serious debts because of the high costs of medical treatment.

A Washington, D.C., bankruptcy attorney may be able to help clients choose among Chapter 7 bankruptcy and several other financial options. Those who are overwhelmed with medical debt should know that there is hope for their financial future. Although bankruptcy may have a lasting effect on your credit score -- affecting that number for up to a decade -- it can be beneficial by helping people experience financial relief after an unforeseen illness or injury.

Source: Fox Business, "Medical Bankruptcies are Still a Problem, Here's What to Expect" Donna Fuscaldo, Feb. 18, 2014

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