Personal bankruptcy often conjures the image of the over-shopper who spent more than he or she had on frivolous items.
However, new research from NerdWallet Health reveals that another major expense is driving Americans to declare bankruptcy—and it could happen to anyone.
Medical bills are expected to force 1.7 million U.S. families into bankruptcy this year alone, more than credit card debt or delinquent mortgage payments. 56 million of those under age 65 will struggle to pay for medical care, and nearly 10 million will have to let necessary expenses like rent, food and heat go by the wayside in order to cover medical expenses.
The scary part is that a medical emergency or accident can befall anyone, and being insured just isn’t enough to protect your finances. NerdWallet estimates that about 10 million Americans with year-round insurance coverage will still receive medical bills that they are unable to pay, TODAY reports.
Protecting Yourself from Medical Bankruptcy
For those hoping that full implementation of the Affordable Care Act next year will provide relief from rising costs, think again: Although it will lead to more widespread coverage, it won’t change the fact that millions will still be faced with medical bills they can’t afford.
The study also found that Americans are taking risks in order to shrink the short-term costs of medical care: 25 million people don’t take their medications as prescribed and wait longer for refills in order to cut down on expenses. This, however, “can lead to even worse financial outcomes as preventative treatments are not rendered and patients end up using expensive ambulance and E.R. care as their health worsens,” Christina LaMontagne, NerdWallet’s vice president of health, said in the report.
If you’re afraid that an unexpected medical emergency could take you to the cleaners, make building up an emergency fund a priority in your budget.