Protecting Assets from Medical Bills
Harvard University published a study showing that approximately half of the 1.5 million annual bankruptcy filings were caused by unexpected medical expenses. Surprisingly, 75% of the these bankruptcies were filed by people who had medical insurance before the onset of illness or injury. This goes to show that even the insured or wealthy could be one illness or injury away from being faced with a "wealth-buster" scenario.
There is a high level of risk that is posed by unexpected and unpredictable medical events. That has caused many concerned individuals to seek legal asset protection planning. For example, a mature couple that has several hundred thousand dollars in home equity as well as several hundred thousand dollars in savings could lose their lifetime of accumulated wealth in one expensive medical bill.
Carrying insurance is not enough. There is an increasing importance for everyone to evaluate how your financial life would survive unexpected medical expenses. Even a short stay in a hospital could amount to tens of thousands of dollars of care costs. A major illness or injury could last weeks or months and has the potential to wipe out a lifetime of savings and home equity. What can you do to protect yourself from unexpected medical bills?
What happens if you incur medical expenses you cannot afford and insurance won't cover?
A lawsuit happens. The hospital or its collection office/agency hits you with a judgment, files a lien against the home, empties your bank accounts and in most states, garnishes your wages on your employment income. Patients in this situation often have to file bankruptcy, which will require the individual or family to forfeit all of their unprotected wealth. This means that bank accounts, some or all real estate equity and other valuable non-exempt assets are going to be utilized by the court satisfy creditors.
The tragic truth is, even those of us with excellent insurance coverage are still at risk. One example is a well-to-do man who was seriously injured on his friend's sailboat resulting in brain trauma. Medical expenses exceeded $1 million and what he found out was that his insurance policy had a lifetime cap of $500,000. The hospital initiated a lawsuit for the other $500,000. This turned out to be exactly how much home equity and savings he had unprotected, which put all of it at risk.
What happens when an insurance provider denies a claim? A recent study by the California Nurses Association showed that California's biggest insurers denied over 25% of all claims submitted in the first three quarters of 2010. PacifiCare denied over 43%, Cigna over 39% and Anthem Blue Cross, more than 27% of claims denied. These insurance claim rejection rates could be correlated with the number of personal bankruptcies from medical expenses. Hospitals will pursue the balance of whatever the insurance company denies.
Even if the medical care received costs hundreds of thousands of dollars, your insurer could still deny the claim. Then what? You could have the forethought to pre-negotiate an agreement in advance. Otherwise your medical provider will want you to guarantee the full amount of care costs incurred that were not reimbursed by your insurer. Simply put, you are financially responsible for anything your insurance company doesn't pay for. What this does is force you to sue your insurance company. This is a long and expensive process against a deep-pocketed opponent that scarcely anybody wants to or can afford to pursue. Insurance companies are in the business of making money. So, in some cases, it's simply less expensive for the insurer to deny a claim and litigate. It's a part of the insurance company business model.
The only way that YOU can guarantee that your life savings and accumulated wealth will remain yours. even in the event of unexpected medical expenses, is to take proactive steps and protect it. An asset protection plan put into place well in advance of the need is your peace of mind against future liability. There are many ways to shield your assets and protect your wealth. Many asset protection planners employ methods that work in and around the US legal system where assets are still subject to US court ruling. Our specialty is rock-solid asset protection planning that can assure the protection of your wealth through the liability tornadoes, thus, "storm-proofing" your family's financial future.