Protecting Your Assets Against Medical Debt

Medical debt can be one of the most difficult debts for people to pay off. If you are living in the United States, then this article will provide information on how to protect your assets against medical debt. This includes what to do before you get sick, as well as what steps you should take if you are already having trouble paying it back. When you are sick, the treatment can get expensive and may result in unprepared medical bills that could sweep away all your future savings and assets at once. Many unsure people are uncertain about saving their assets from unprepared medical bills. The truth is that without medical insurance, it is nearly impossible to repay your medical debts.

So, the question is whether asset protection from medical debts is possible or not. In this article, we are going to discuss how to shield your financial future from medical debts.

Can I lose my home because of medical bills? 

Yes, medical debts can cost you your home. A medical creditor indeed may not have any mortgage attached to your home. However, through a legal track, they can consider this possibility without hassles. When a medical creditor files a court case, the only parameter that the court looks for is whether you owe them money or not. The affordability of the bill is out of the question. One can place a lien on any of your bank assets or your home. It means the medical creditor can file a foreclose on any property with a lien. Even though it is preferable for the medical creditor to wait than to foreclose the asset, they can proceed with it in certain situations. In that case, asset protection from medical debts can become a daunting task.

But what if you do not have a lien attached to your tangible properties?

The answer is still the same! You can still lose your home and any other property like a domino effect. One event can untangle another and ultimately will end in losing your home. Complications happen when you adhere to maintain your prior lifestyle even though your boat is already sinking.


What assets are protected from medical debts?

Comparatively, the US is a country with high medical costs. The medical debt plague in the country is burdening ordinary citizens beyond predictability. As per estimates, about 43% of families who have legal debts also battle with medical debts. Thus, a proactive step is required for asset protection from medical debts. 

In theory, if you owe someone something through legal measures, they can claim their value by seizing any of your assets. Let’s say you owe a medical bill of $10,000, and you are unable to pay back the debt. The medical creditor can file a suit to claim any of your bank savings or properties. However, asset protection from medical debts is possible. For this, you can save some of your property and bank savings under irrevocable trust.


What happens if you never pay your medical bills? 

Did you know that health care is not considered an ordinary consumer good? When you come back from a medical facility, you will be muddled with all the equipment, facility and insurance costs that you incur but have no idea. The complexity of the health care and insurance sector makes it impossible for any Americans to even navigate through their bills. Without proper counsellor support, you may find lost in this medical puzzle. The situation aggravates when the responsibility of paying the bills fall solely on you.

Unpaid bills make you vulnerable and limit your opportunities to advocate alternatives. The result is that the heavy medical bills can become overdue and affect your household’s credit to the extent that you may end up bankrupt. Many studies show that medical debts cause about 60% of personal bankruptcies. In 2007, three-fourth of bankruptcy filers had health insurance and, 90% had medical financial liabilities of more than $5000. Hence, asset protection from medical debts is essential to save your family from the cycle of medical bill insecurities.


If you do not pay hospital bills, will it affect your credit score?

Pending medical bills may not have an immediate impact on your credit score. As long as you pay your medical debts, it cannot hurt your credit score. But, debts from medical bills are different from any other debts that you owe. Most creditors sell the debts to collection agencies before reporting to credit agencies. Despite this, collection agencies will not take the next step until you pay the debt within 60, 90 or 120 days.

Suppose that your debts went to collection agencies. It will still take time to reach the credit bureaus. In the US, agencies such as Experian, TransUnion, Equifax give 180 days to repay and settle your medical bills. In this way, you can get asset protection from the medical bills to a certain degree.

Even though unpaid medical bills can take time to appear on your credit history, it can have long-lasting damage on your credit score once it is there. A bad credit score takes almost seven or more years to disappear its trace from your record. To mitigate risks, ensure that all inaccuracies are identified and covered by your healthcare provider or insurance company.


How can I get out of paying medical bills?

Upon completing your treatment, the treatment facility provides a medical bill that often lacks pricing transparency and insurance clarity. In the past, most people were overpriced or received a large amount than their expectations. It is estimated that 30% to 80% of overpriced medical bills has an error in them. If this is your situation, consult for help immediately for asset protection from medical bills. To get around unpredicted expenses, take the following steps:


  • Irrevocable trust

To avoid losing your properties, review your current assets and evaluate their value. For certainty, create irrevocable assets that can remain untouched by any debt claimers. You can also make this trust to safeguard your properties for your children and grandchildren. For diverting any inaccuracies or mistakes, seek the help of a professional attorney.


  • Negotiations

Asset protection from medical bills is also possible by bargaining beyond the sticker price. For initiating negotiations, you need to get access to the healthcare facilitator’s medical bill manager, who garnishes the role of reducing medical bill expenses. However, the medical bill manager should be timely approached to safeguard any severe blow to your credit history.

If the reason behind your inability to clear the debt is due to low income or financial liabilities, then you can file hardship assistance. When you lack other opportunities, this can open a new window of charity funds or state law medical benefits. You can also figure out how much other providers are billing the debts and bargain your price accordingly.

  • Discounts

You can also save your assets by claiming a discount on your medical expenses. If you make a high initial payment, medical debt collectors may allocate a 25% discount on your forthcoming costs. However, the more delay it gets, the more difficult it is to get a less aggressive Medicare bill. You can also try for a zero-interest payment process to hike your chances.

  • Inaccurate bills

One of the most common problems US debtors face today is the errors and high prevalence of their medical billing. Over one-third of the American population is paying medical bills that they are not sure they owed. Thereupon errors were concealed under the complexity of your medical bills. If you have an overpriced bill in your possession, look for services you have not received and charges that your insurance company may have covered. You can even call your insurance agent to assure and clarify any uncertainties about the payment. These precautions will aid in asset protection from medical bills.


Still need assurance? Take copies of your bill and submit them before your financial councillor for expert assistance. Remember that getting out of the payment is not an option the key is in warranting the accuracy of your bills.


Health Saving Account Qualified (HSA)

Get an HSA plan that covers 100% of medical expenses after deductions. Healthcare plans like this will minimize your liability exposure and will leave you with a maximum of only $2,650 per person. The overall spending of a nuclear family in the US is $13,382 per year. You can substantially cut this cost to $5,250 per year. To reduce the burden of income tax, you can fund the tax-deductible HSA amount to the maximum allowed by the law. In addition to this step, you can also purchase a critical illness product to get tax free expensive products. A medical product that costs $100,000 can save a huge sum of money in severe scenarios, like heart attack, blindness, cancer and so on.

For asset protection from medical debts, purchase a Long Term Care (LTC) policy if you cannot engage in two adult regular living activities. Inability to perform these activities indicates you or one of your family members suffer a cognitive-related illness or disease like Alzheimer’s.  These diseases make it impossible to handle all the paperwork by yourself. Even if you qualify or not, claims like this can revoke benefits that will eventually support you financially. By satisfying the tax guidelines on time, the State will deduct LTC premiums for you. Most probably, State will allow time to meet tax guidelines for citizens who apply for LTC policy. To achieve this goal, you can invest in life insurance, property that is easily purchased, ROTH IRA contributions and so on.


Is 401k protected from medical bills?

401k refers to a retirement saving account that US employees use

Despite increasing medical debts, you can protect the money saved in 401k. As we said earlier, medical bills are the root cause of bankruptcies in America. The people who file for the 401K coincides with the middle-class population who file for bankruptcies. Hence, it can affect the 401K as many exchanges this benefit to save their back from the pending medical bills. CPB has identified about 910 bankruptcy cases filed between 2013 and 2016. Among these, about 60% are the direct result of exasperated medical expenses. Senior citizens suffered the worst financial bleeding, as their bankruptcy rate tripled since 1991. The social safety net that promised their protection has eventually weakened over time. Furthermore, the policies exasperated their tragic conditions, stripping off their last resort, the 401k money.


Can a trust protect assets from Medical aid?

Out-of-pocket medical expenses place an irreversible burden on American households. Most often, medical expenses are unplanned expenses for a family. The unpredictable nature of this expense results in unanticipated medical bills. In such cases, asset protection from medical debts can be difficult. It not only cripples you with financial liabilities but also closes your alternative paths to achieve financial security. In such cases, trust can give you some support.

A trust is an effective way to save your family properties.


A trust is an estate planning tool used to pass down the property to an entitled trustee. It is usually administered on behalf of a group of people (beneficiaries). The document that states the regulations of the trustee and beneficiaries are called a trust agreement or trust instrument. If you have a living trust, you do not need court approval to pass on your inheritance. However, a living trust cannot save your assets from creditors. Your hospital facility can file a claim on your trust, and you may end up losing your assets.

A living trust makes you the sole owner of the trust. Since you can sell or buy it, one cannot use such type of trust to save themselves from a pending catastrophic medical bill. On the flip side, an irrevocable trust takes away your money ownership from you. Hence, if the medical facility files a lawsuit against you, they cannot claim these assets. But, keep in mind that a catastrophic medical bill is too expensive for an average middle-class family. Do you have a gigantic bill on your hand? Contact a professional lawyer now for asset protection from medical bills!


What type of trust protects assets from Medicaid?

The trust that has the capacity to protect your assets is called irrevocable trust. The nature of this trust makes it impossible for you to control or distribute the asset. Nevertheless, you can indirectly benefit from the trust by planning it with your attorney. An irrevocable trust helps in asset protection from medical bills, as it takes away your opportunity of control and grand later modifications.

This trust is entitled to the State protection laws. Hence, the court can prevent you from transferring if the court finds the intention of defrauding creditors. If there are fraudulent, you may end up receiving penalties and fines. Therefore, it is advisable to plan your asset transfer with an expert planning attorney.

 But, it is true that not always an irrevocable trust can benefit you. If a discretionary clause is attached to you or your spouse, where the beneficiary is you or your spouse, then the medical creditors can claim your assets. Medicaid only counts the resources that come under the trustee discretionary powers. Medicaid cannot use any other assets that are beyond the discretion powers. You need a medical care attorney to preserve the assets of a lifetime from medical reimbursement.

Take necessary measures to safeguard your assets from the ill-effects of Medical Debts in the US

Today, medical debt is also calculated as a social determinant of health. Any person with a gigantic medical bill not only suffers financial pressure but also delays getting medical care in future, affecting your health and health outcomes. About 60% of families spend their savings on medical help during emergencies. In America, medical debts are among the top concerns of an average citizen, along with student loans, house rents and retirement. This clearly indicates the interconnectivity between health and wealth. If you need asset protection from medical bills, you need to foster a system that could prevent the debts in the first place. Any person with a catastrophic bill needs full legal assistance and protection. Only through a prepared path you can survive a debt lawsuit. Even though medical debts cannot be eliminated, be braced to the fullest when the time comes!



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