Protect your assets from unexpected medical expenses

Many people face big problems when they have unpaid medical expenses. These expenses can become a threat to your home, savings, or income. Without health insurance, prolonged hospitalization can become a financial burden in the tens or even hundreds of thousands of dollars. If an appropriate payment plan is not initiated before treatment begins, the unpaid bills become a major collection effort shortly after the end of the treatment period. Depending on the state you live in, your home, savings, or other personal belongings may be foreclosed to make up for unpaid medical bills.

Even if you have insurance, the financial risk of co-payments, high deductibles, and uninsured treatments can be significant. There are instances where doctors outside the network are called in during a procedure without the patient’s knowledge or consent. Some policies only cover a small portion of these fees. Although the Affordable Care Act requires insurers to pay these fees, there have been instances where portions of what should have been covered were not covered.

What happens if you receive medical treatment that costs tens or hundreds of thousands of dollars and your insurer denies the claim because of an unmet deductible, co-payment, an off-network doctor, or an unapproved treatment or medicine? Who pays for the doctor and the hospital? If there is no insurance or if the amount is limited, your doctor, hospital or other medical institution will oblige you to guarantee full payment of the costs charged, minus an amount that will actually be reimbursed by your insurer. The amount that your health insurance company does not pay is borne by the patient.

What happens if a patient cannot pay?

What happens if you can’t pay a large medical bill? The result is usually a lawsuit from the hospital or collection agency for a judgment and lien against the patient’s home and accounts. In most states, part of the debtor’s earned income can be garnished. Many times before this point is reached, the patient files for personal bankruptcy to stop the wage garnishment and eliminate medical bills and other debts. This requires the loss of all assets, including savings, real estate and interests in real estate. Some of these assets are exempt in bankruptcy, turned over to the court and divided among creditors.

How patients protect themselves from these events

Family Savings Trust

Asset protection with a specially designed Family Savings Trust can often protect savings from these events. A Family Savings Trust is exceptionally flexible in form and may contain provisions that bring together the characteristics of many domestic agreements in the language of the plan documents. All of your assets may be contained in the trust but managed by special terms appropriate to that asset.

For those concerned with protection against unforeseen medical bills, a trust can be tailored specifically to address the issue of medical expenses. The trust can be scheduled to hold your home, savings and brokerage accounts with the aim of protecting those assets from unexpected medical expenses. It is often used to secure the tax benefits associated with the home (including mortgage interest deductions, property taxes, and avoidance of gains on a future sale) while implementing proper estate planning and family wealth protection goals.