Medical Debt: The Next Personal Finance Crisis?

Medical Debt: The Next Personal Finance Crisis?

Imagine: One day you’re healthy, the next you find out you have a serious condition that requires immediate treatment. On top of that stress, you now owe thousands of dollars in medical expenses.

If this nightmare scenario is something you fear, you’re not alone. According to a new Bankrate survey, more than half of Americans say they’re worried medical bills may one day overwhelm their finances.

Perhaps they have good reason to be anxious. As many as one-quarter of people say their current medical debt is larger than their emergency savings. Among parents with kids under 18, that number increases to 34%.

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Meanwhile, other research suggests that, in 2013, medical expenses were the top cause of personal bankruptcy. Nearly two million Americans live in households that will declare bankruptcy because they can’t pay their medical bills.

Even months after the Obamacare exchanges opened, 55% of survey respondents said they were still either very or somewhat worried that they might not have health insurance in the future. Women and those in their prime earning years (between ages 30 and 64) were especially concerned about losing their health coverage.

While Obamacare does make it mandatory for all Americans to have health insurance, some experts contend that it won’t prevent medical bankruptcies—and will in fact increase the number of people who have insurance but still can’t afford medical care.

For many Americans, part of the problem is the fact that simply signing up for Obamacare is intimidating, between all the new concepts and jargon they have to learn.

“I think we do have a health literacy gap,” David Cusano, a senior research fellow at Georgetown University’s Health Policy Institute, told Bankrate.com. “Health insurance is complicated … and it’s a big change for most people. There may be some worry associated with that.”

Confused about how to purchase health insurance—and about whether it will actually help lower your medical bills? Get the scoop straight from an Obamacare expert.

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