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You’re One Medical Crisis Away from Bankruptcy: Read the Fine Print in Your Family Medical Insurance Plan

Medical debt is a contributed factor in more than half of all bankruptcies filed in the United States. Many family medical insurance policies prove to be safety nets with gaping holes.

When an individual obtains family medical insurance, they believe they are protecting themselves and their family both medically and financially. The cold hard numbers, however, cannot be ignored. Not every family medical insurance policy is adequate to provide true peace of mind – or to provide sufficient coverage in the event of a serious illness.

A recent Harvard study shows that family medical insurance plans aren’t necessarily protection from financial ruin. Of all the bankruptcies filed in the United States in 2007, the study concludes, medical debt contributed to 62% of them.

The study was a joint research project carried out by Harvard Medical School and Harvard Law School. It encompasses an in-depth study of bankruptcies brought on by medical bills. Questionnaires answered by bankruptcy filers, along with their court records, made up the data used to reach the study’s conclusions.

Contrary to common thinking, medical bankruptcy isn’t limited to those without individual medical insurance. For the under-insured, thousands of dollars of out-of-pockets costs can lead to bankruptcy. In fact, of those who faced medical bankruptcy, nearly 80% actually had family medical insurance at the start of their illness but were nonetheless buried in medical bills.

The initial Harvard study was conducted in 2001. Since then, medical bankruptcies have increased by 50%. The lead author of the study makes the bold statement that “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy.”

An outcry over private medical insurance policies with meager coverage for serious illnesses was sparked by the results of the study. The obvious question that arises from the spotlight on the wide scale problem of inadequate insurance is whether government-mandated healthcare reform is the answer. It’s a question that continues to raise heated debate.

One thing is for sure: the problem of woefully inadequate family medical insurance won’t be remedied solely by any government-run healthcare program. What the Harvard study and others like it make clear is that the root cause isn’t whether or not you have insurance. The real issue lies in the extent of the coverage.

Patient advocates are urging lawmakers to include provisions in the final legislation that would guarantee a base level of coverage to health insurance policy holders. Solutions being considered by the House and the Senate include minimum standards for family medical insurance and other health insurance coverage as well as a cap on out-of-pocket expenses.

Many argue that government-run healthcare is an extreme solution to a problem that could be handled through specific legislation that targets limited benefit health insurance. They point to the obvious conclusion presented by the study that health insurance in and of itself is not the answer. Having medical health insurance did not save hundreds of thousands of individuals from bankruptcy.

Those shopping for health insurance coverage insurance should also be aware of the fine print in their policies. The overall quality of family medical insurance should be considered. Premium costs are only one factor that should go into the equation. If and until any minimum coverage standards are implemented, medical insurance plan shoppers should take the time to educate themselves. Careful research and scrutiny of police limitations is key to securing family medical insurance that truly protects you and your family.

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