Why can medical debt cause bankruptcy even with insurance?

One of the top causes of bankruptcy is simply that people have overwhelming medical debt. This is commonly cited along with issues like job loss or credit card debt. A common reason given for this issue is that people will prioritize their health, especially in an emergency. If someone is having a heart attack or suffering from serious injuries from a car accident, they’re not thinking about whether they can afford the hospital bills. They are simply getting the necessary medical treatment and deciding that they will deal with the financial side of it later. As such, carrying medical insurance can help to avoid significant amounts of debt. If the insurance covers the costs, the patient can focus on their care. So why is bankruptcy still possible even for someone who has a good insurance policy?

Out-of-network services

Often, the issue is that the insurance policy only applies to a certain network. This may include facilities, such as hospitals, or specific physicians and specialists. If someone gets treatment from a healthcare provider in their insurance company’s network, then the costs are covered, but they’re not if that person gets out-of-network services. If someone is scheduling their medical appointment, they may have time to consider the network. But in an emergency, they may just receive care at the closest medical facility, from whatever physicians are on duty at the moment. This could lead to the person accidentally getting out-of-network healthcare services, meaning they are still on the hook for the bill, even though they have insurance. If you find yourself facing overwhelming debt, it may be time to consider bankruptcy and your legal options.