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Medical debt: Best to expect the unexpected

There are not too many incontrovertible truths. Death and taxes, perhaps. Experienced bankruptcy law practitioners in Illinois and elsewhere would likely agree that another - one that can lead to serious financial difficulty - is unexpected medical debt.

As noted several years ago, the struggle with paying medical bills is neither new nor rare. Back in 2014, we observed that estimates put the number of Americans facing money problems because of medical debt at about 33 percent. More recent research suggests that number is at least holding steady if not rising.

The causes of medical debt can be many. For some, bankruptcy may be a viable means for recovering physically and financially. Shy of that, some experts say expecting the unexpected may be an appropriate alternative. Suggested actions might include:

  • Establishing an emergency fund.Saving money isn't something at which Americans generally excel. However, financial advisers emphasize creating a realistic budget that includes savings covering at least six months of life's expenses. Once in place, the money could be used for any sort of emergency, including medical bills.
  • Setting up an HSA. Health savings accounts are the government's tool to encourage us to anticipate the unanticipated. Not everyone is eligible to set up an HSA. If you are, it means you can put away savings and grow the account. When the funds are used for eligible medical costs, it's on a tax-free basis.
  • Starting a Roth IRA.These accounts are created with after-tax dollars. Their earnings from investments aren't taxable. While intended for retirement, certain circumstances allow the funds to be used for other things, such as meeting large medical expenses, without incurring penalties or tax liability.
  • Closing potential Medicare gaps with a supplemental plan. For seniors, Medicare can be a blessing and a curse. It's paid for, but the individual can be on the hook for out-of-pocket costs that might come as a surprise. Mitigating that possibility may require finding a supplemental plan or a Medicare Advantage plan.

Knowing what tools are available is important. Being willing to seek the help of those with debt relief experience can take willpower.

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