What Is Medical Bankruptcy

The first misconception which needs clarification is that there is no such legal term as medical bankruptcy. Medical bankruptcy is one of the most commonly misunderstood things in medical field. What it actually means is that there is bankruptcy which a person had to file due to his inability to pay his medical bills. Elizabeth Warren, a Harvard professor, wrote recently that a study had shown that medical costs were a major factor in bankruptcy filings in the United States.

Most people believe that medical bankruptcy can be avoided simply by taking a medical insurance policy. But it is not always the case. Studies have shown that out of those who filed for medical bankruptcy, 78% of those cases have some kind of medical insurance when the illness began. This clearly goes on to prove that medical insurance or health insurance policy is not enough to protect you from bankruptcy due to medical bills.

Therefore, it is imperative that individuals do whatever they can to prevent themselves falling into this situation. Here are a few steps which one can take to avoid this situation.

The easiest and first thing which they can do it to take comprehensive health insurance coverage for themselves and their family. It is mentioned above that medical insurance may not be effective in all cases but if the coverage is comprehensive, it should be a great help in such emergencies. Even if the coverage is costly and you have to reduce spending somewhere else in your monthly budget, this is probably worth it.