It’s no secret that medical bills pose a major threat to people living in the United States. Per the World Population Review, nearly two-thirds of all medical bankruptcies in the world take place within the United States.
To make matters worse, a Harvard University study identified that 75% of the medical bankruptcies filed in the United States are initiated by people who have medical insurance. These numbers clearly illustrate that medical debt is a threat to everyone, not just the uninsured.
So, if quality medical insurance isn’t enough to protect you from debt, how can you protect your assets from medical bills? Fortunately, tools like offshore asset protection trusts can keep your wealth intact even if you’re caught off guard by unexpected medical expenses.
In this guide, we’ll explain how to assemble an effective asset protection strategy for medical bills:
- The Threat of Medical Bills
- How Insurance Falls Short
- Effective Asset Protection Strategy for Medical Bills
- Asset Protection Strategies for Medical Bills FAQ
The Threat of Medical Bills
Medical bills are one of the most pressing threats to your wealth. Even those who do everything in their power to remain healthy can end up hospitalized through no fault of their own.
If you’re unable to pay, the hospital won’t forgive your debt. Instead, they’ll pass you onto a collections agency that will hound you until you either pay up, declare bankruptcy, or face them in court. If they file a lawsuit against you, they can then lay claim to almost anything you own.
How Insurance Falls Short of Providing Real Asset Protection
In an ideal scenario, insurance would cover most of your treatment costs, and an asset protection strategy for medical bills wouldn’t be necessary. Unfortunately, as millions of Americans discover each year, there are countless ways for insurance companies to deny your claims. Here are just a few medical insurance flaws:
- Coverage gaps: Many insurance plans penalize you for seeking out-of-network coverage. This is an easy mishap to avoid for routine procedures like annual physicals but not for medical emergencies. If you ever need to be transported by ambulance, you don’t get to decide which hospital you go to and could easily end up at an out-of-network hospital that your insurance won’t cover.
- Delays and denials: Even when your insurance policy claims to cover a procedure, it may still deny coverage or delay payment for weeks. The longer your insurance company reviews your claim, the more interest builds up on your unpaid bills.
- Unclear instructions: Insurance policy documents are dozens or even hundreds of pages long and are rarely digestible for anyone without a law degree. It’s easy to make the mistake of starting treatment without getting prior approval from your insurance and having your coverage denied as a result.
- Uncovered procedures: Even if you go to an in-network facility, certain procedures may not be covered by your standard insurance. Neither your insurance nor the care provider may let you know a procedure is uncovered unless you ask beforehand.
Effective Asset Protection Strategy for Medical Bills
As you can see, even high-quality medical insurance can’t guarantee your financial security against costly medical bills. If you want to keep your assets safe, you need to deploy a real asset protection strategy that keeps collection agencies from taking everything you’ve worked so hard to accumulate.
The most effective asset protection strategy for medical bills is one that involves setting up an offshore asset protection trust, or OAPT. These trusts are overseen by foreign trustees who are not obligated to listen to U.S. court decisions. Essentially, once you’ve established a trust and funded it, you can lose a lawsuit, and your creditor will still be unable to lay claim to your assets.
If you work with an asset protection planner to set up your strategy, you can even build in fail-safes that keep you financially afloat during your court case. This is often done through the use of limited liability companies (LLCs) established offshore and then placed under the trust umbrella. During your legal battle, your trustee can pay you a salary from the LLC, which you can use to pay for your living expenses without putting your other assets at risk.
Call Us to Establish an Asset Protection Strategy for Medical Bills
If you’re ready to start safeguarding your wealth, call the team at Asset Protection Planners. Our team of professionals knows how to protect assets from medical bills and will set up an OAPT that can keep your money out of creditors’ hands.
Don’t count on medical insurance plans to keep your hard-earned wealth safe. Schedule a free consultation with us to start setting up an effective asset protection strategy for medical bills.
Asset Protection Strategies for Medical Bills FAQ
How can I protect my family’s assets from high medical costs?
Protecting your family’s assets from high medical costs starts with planning before a health crisis. By setting up structures like offshore asset protection trusts and overseas LLCs long before you have to pay any costly medical bills, you can create a strong barrier against creditors.
Insurance is another element of protecting your assets from medical bills, but it is by no means your primary shield. Time and again, insurance companies have proven that their complex rules can leave people exposed to steep medical bills.
To start protecting your assets effectively, you need to reach out to an asset protection planner who has a history of establishing offshore trusts. They’ll speak with you and assess your risk profile to determine where your trust needs to be established. Many of the top asset protection planners will recommend setting up your trust in the Cook Islands.
Next, work with your planner to set up an LLC inside your OAPT. This LLC can then be used to manage your trust-held assets until you face legal trouble. When a lawsuit is on the horizon, the LLC is transferred to the trustee, who will keep it safe. At the same time, your trustee can use the LLC to pay you a salary, which can keep you afloat during your legal battle.
Here’s a step-by-step process explaining how to protect your assets from medical bills:
- Ask your planner to regularly review and update your asset protection strategy.
- Clarify your family’s risk of extreme medical bills by reviewing everyone’s health and anticipated medical needs.
- Review and strengthen health insurance to maximize the odds that any procedures will be covered by your policy.
- Build a dedicated emergency medical fund using an HSA or other structure that can help pay for unexpected expenses.
- Consult an experienced asset protection planner for help establishing other tools.
- With the help of your planner, determine whether an offshore trust makes sense for your needs.
- Select a suitable jurisdiction and trustee for your OAPT.
- Have your planner create the trust deed and establish the trust.
- Ask your planner to form an LLC under the trust.
- Fund the trust, following any special instructions from your planner.
- Set up a plan with your trustee and planner that accounts for what to do if you are ever sued.
- Document your transfers and have your planner keep the trust legally compliant with changing laws.
