Cited: CNN.com

Did you know that over 1 million Americans will declare bankruptcy this year? Unbelievably, these bankruptcies will not be because of overspending or a lavish lifestyle but because of medical bills. Medical bills have caused bankruptcies to increase 50% in just six years. In 2001, it was only 46% and that went up to 62% in 2007. In addition, those who have been filing bankruptcy are middle-class, well-educated homeowners according to a report will be published in August in an issue of The American Journal of Medicine.

“Unless you’re a Warren Buffett or Bill Gates, you’re one illness away from financial ruin in this country,” says lead author Steffie Woolhandler, M.D., of the Harvard Medical School, in Cambridge, Mass. “If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that’s the major finding in our study.”

Woolhandler and her colleagues surveyed a random sample of 2,314 people who filed for bankruptcy in early 2007, looked at their court records, and then interviewed more than 1,000 of them. Health.com: Expert advice on getting health insurance and affordable care for chronic pain

They concluded that 62.1% of the bankruptcies were medically related because the individuals either had more than $5,000 (or 10% of their pretax income) in medical bills, mortgaged their home to pay for medical bills, or lost significant income due to an illness. On average, medically bankrupt families had $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 who had insurance at some point. Overall, three-quarters of the people with a medically related bankruptcy had health insurance, they say.

“That was actually the predominant problem in patients in our study — 78% of them had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services,” says Woolhandler. “Other people had private insurance but got so sick that they lost their job and lost their insurance.”

However, Peter Cunningham, Ph.D., a senior fellow at the Center for Studying Health System Change, a nonpartisan policy research organization in Washington, D.C., isn’t completely convinced. He says it is often hard to tell in which cases medical bills add to the bleak financial picture without being directly responsible for the bankruptcies.

“I’m not sure that it is correct to say that medical problems were the direct cause of all of these bankruptcies,” he says. “In most of these cases, it’s going to be medical expenses and other things, other debt that is accumulating.” Either way, he agrees that medical bills are an increasing problem for many people.

“I think medical bills are something that a lot of families are having a lot of difficulty with. Whether it’s the direct cause of bankruptcy or whether it helps to push them over the edge because they already were in a precarious financial situation, it’s a big concern and hopefully that’s what medical reform will try to address,” he says.

The study may overestimate the number of bankruptcies caused by medical bills yet underestimate the financial burden of health care on American families, because most people struggle along but do not end up declaring bankruptcy, according to Cunningham.

“Bankruptcy is the most extreme or final step for people who are having problems paying medical bills,” he says. “Medical bills and medical costs are an issue that can very easily and in pretty short order overwhelm a lot families who are on otherwise solid financial ground, including those with private insurance.” His group’s research found that medical bills unduly stress 1 in 5 families.

The economic atmosphere became worse a year after the study was conducted. However, the problem is still getting worse for people in the United States because of the high cost of medical care. Bankruptcy numbers are soaring and are expected to get even worse than they were in 2005 when Congress changed the bankruptcy laws. In fact, in 2005 bankruptcy peaked at 2 million filings.

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My Take: I really do not believe that medical bills are the main reason people are filing for bankruptcy. I believe it has everything to do with credit cards. Credit cards make buying anything too easy! Of course, carrying plastic is a lot safer than carrying cash. Nevertheless, there is always a check!

I went bankrupt in 2000 and was because of credit cards. Yes, I do have one credit card now with a zero balance. It is only meant for emergencies. Those emergencies are not for clothes or Christmas presents. An emergency is a flat tire on a rainy night and no money in your pocket and they will not accept a check. You can easily pay this off before the end of the month with this type of small emergency. A big emergency might be a family illness in another state and you do not have the cash to get there.

I highly recommend if you have credit cards, at them all in half and pay them off before you get to a bankruptcy situation. Moreover, go by the rule of “if you don’t have the money, you don’t need it.” If you want something bad enough, stick the money aside and buy it when you have the cash. If you live by this rule financially, you will avoid a whole lot of migraines.

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Credit Card Financing

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Cited: Dolan Media Newswires Colorado Springs Business Journal

If you do not have disability insurance and get injured or disabled on the job or off, it can be a very big financial impact. In fact, the cost of not having disability insurance can be 20 times your annual salary. Life Foundation and America’s Health Insurance Plans did a study that stated just that. The study looked at various types of income protection that reduce the financial risks of disability as well as the consequences facing people who cannot work because of a disability or injury.

In the absence of insurance, a majority of Americans would have to make “drastic lifestyle changes” in order to cover the costs associated with disabilities, regardless of whether the disability is short- or long-term. The study found that the financial impact - equal to lost income plus expenses - can be as high as nearly $1 million for a 40-year-old single man earning $50,000 annually who suffers a long-term disability lasting until 65. The costs associated with short-term disabilities also can be significant - equaling one to two times income in some cases for a disability lasting two years.

Those hardest hit by the costs are single individuals who do not have a second income to rely on; lower income people, because added expenses are greater relative to the lost income; and those who suffer longer-term disabilities.

More than a quarter of Americans admit they would have difficulty supporting themselves financially immediately after a disability, while 49% would reach that point within a month, according to Life.

“Our experience tells us that if you become disabled and don’t have disability insurance, you’re going to have a very rough go of it. This study quantifies the impact of a disability so working Americans can get a better understanding of financial difficulties they’ll likely face without proper insurance coverage,” said Marvin H. Feldman, president and CEO of the foundation. “Disability insurance provides a financial safety net that can be counted on to replace lost income if you were suddenly out of work due to illness or injury.”

The study also shows that various sources of disability insurance provide valuable income replacement to help cover the high costs of disability. Private disability insurance plans, such as employer-sponsored or individual coverage, can reduce the cost of a disability by 70% to 80% Individual disability coverage, in combination with employer- or government-sponsored insurance programs, can reduce the financial cost of disability by 80% to 95%.

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The study also makes clear that while government-sponsored disability insurance - either through Workers’ Compensation or Social Security - is available to many working Americans, it can be difficult to qualify for. Workers’ Compensation insurance is limited to disabilities that occur on the job, but a vast majority (90%) of injuries happen outside the workplace, and are therefore not covered by Workers’ Compensation programs. During recent years, only about 45% of initial applications for Social Security benefits have been approved, and the average monthly benefit, $1,062, is barely above the poverty level.

“The Social Security Disability Insurance program can be one source of disability income for many Americans, but this is no guarantee that disabled individuals will be eligible for SSDI,” said Karen Ignagni, President and CEO of AHIP. “Working Americans and their families can benefit from the value that private disability income insurance provides.”

According to the study, it is not just the financial stress that can cause problems when a disabled person is overwhelmed by the expense of medical costs. A person’s self-worth and overall happiness can be directly tied to their financial status. That financial status can possibly cause problems with a person’s disability simply because of the stress. This makes it difficult for a person to get back on their feet to any degree.

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My Take: Every employer is required by law to provide Worker’s Compensation. However, this does not cover the complete costs if the disability or injury is permanent. It may cover equipment such as wheelchairs and walkers if those are needed permanently and it will give you a percentage of your weekly paycheck as compensation.

I think the best thing anybody should do is ask their employer to offer disability insurance that can be deducted from their paychecks on a weekly or biweekly basis. Depending on the insurance, this should not be too much of a burden financially. A person should think of the benefits they will get if they are injured or disabled permanently and cannot work.

Becoming permanently disabled is not something people anticipate. There is always a possibility of becoming permanently injured or disabled. It could happen on the job, on your way to work, on your way home from work or even in your home.

Many young people today have realized that they need to prepare for retirement now. However, they are not anticipating disability in the future. They need to realize that we live in a 50-50 world. There is always that chance that something could go drastically wrong. If they do not have disability insurance for that reason, they may be in a financial crisis.

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Had a Traffic Accident?

Minor traffic violations can have big consequences if not handled properly including a simple speeding ticket. Depending on the circumstances a person’s license could be suspended for a certain period of time as well as insurance premiums can go up significantly. However, if you have an accident you could be talking to Texas injury attorneys about alternatives to pleading guilty to specific charges on a citation. You will need to carefully consider the alternatives available to determine what is right for you. With an attorney handling the case, you may be able to keep your insurance premiums low and protect your driving record.

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Healthcare Inventory Standards

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