Health Care: Your Money or Your Life
A few years ago, one of my good friends was seriously injured in a car accident and spent several months in the ICU and recovery.
He underwent emergency surgery, during which his doctor took an out-of-network doctor for help, without his knowledge or consent. With this, his insurance refused to cover the surgeon's $ 85,000 bill.
With copayes, deductibles and expenses but not the network, which was left on the $ 245,000 hook had not done so. His friends tried to raise funds and a boot pedal campaign, but it was not enough.
Ultimately, the bankruptcy of being alive ... my friend and was one of the lucky ones
.
Health Insurance: Better Dead Than Deadbeat?
What happens if you can't pay a medical bill?
Typically, the hospital or doctor - or a vulture collection agency that's bought your debt - will sue you and obtain a judgment lien filed against your home and bank accounts. They'll also garnish a percentage of your employment earnings.
Of course, before it gets to that, most people file for personal bankruptcy, which stops the wage garnishment and wipes out the medical bills. But that still means giving up all of your assets, including financial accounts, real estate and any equity in your home. It also means you are financially "dead" for at least seven years.
A study by Harvard University a few years back found that half of the 1.5 million annual U.S. bankruptcy filings are caused by medical bills.
But here's the shocking thing... three-fourths of those bankrupt folks had health insurance when they fell ill or were injured.
The brutal fact is that even if you have health insurance, you and your family are at significant financial risk.
One reason is simple refusal to pay by your insurer. This happened routinely before the Affordable Care Act, aka Obamacare. According to one study by the California Nurses Association, for example, California's largest insurers denied 13.1 million claims in just the first three quarters of 2010. That amounted to 26% of all claims submitted.
Other culprits are huge copays, large deductibles and treatments that aren't covered under the tiny print in your insurance contract. One of the most common scenarios is what happened to my friend: an out-of-network doctor is brought in during a procedure without the patient's knowledge or approval.
Government Giveth, Government Taketh Away
For all its faults, Obamacare largely put a stop to most of that - except for the large health insurance deductibles, which are one of its main flaws. It also abolished lifetime coverage caps... which often used to be so low that they could easily be eaten up in the first week of a hospital stay.
According to Congress and the White House, all that's set to end. Obamacare will be repealed, and whatever replaces it won't include those protections (or so says the Senate).
There's another area in which government can strip you of your assets, however.
Many states require that people who require nursing or home care under Medicare exhaust a certain proportion of their net worth before the benefit kicks in. With the average cost of nursing home care exceeding $8,000 per month, many people have no choice but to liquidate their family's assets to obtain the necessary care.
Say goodbye to your kids' inheritance.
A Trustworthy Solution
Asset protection trusts are irrevocable trusts specifically tailored to protect your personal and business assets... even from medical creditors. The beneficiaries of an APT can include your living family, and even their descendants.
For example, an APT may hold your home, business and financial accounts. Or the trust can own an entity such as an LLC that in turns owns your personal residence. The APT can be structured to preserve your home's tax benefits - the mortgage interest deduction, property taxes and avoidance of capital gains taxes. And of course, it includes appropriate estate-planning strategies as well.
Depending on how and where you set up your trust - Nevada is my favorite domestic jurisdiction - you can even make your APT portable, so that it can migrate offshore.
That forces any future plaintiff to sue it in a potentially unfriendly foreign jurisdiction, which is often
enough to stop a lawsuit in its tracks.
Avoid the Red Zone
For many of us, proposed changes to insurance and other laws mean that our personal financial "risk meter" has jumped into the red zone.
Fortunately, asset protection solutions aren't just for the very wealthy.
They're for you, too. But you must make the first move by setting one up.
Because once tragedy strikes... it's too late.
.
Health Insurance: Better Dead Than Deadbeat?
What happens if you can't pay a medical bill?
Typically, the hospital or doctor - or a vulture collection agency that's bought your debt - will sue you and obtain a judgment lien filed against your home and bank accounts. They'll also garnish a percentage of your employment earnings.
Of course, before it gets to that, most people file for personal bankruptcy, which stops the wage garnishment and wipes out the medical bills. But that still means giving up all of your assets, including financial accounts, real estate and any equity in your home. It also means you are financially "dead" for at least seven years.
A study by Harvard University a few years back found that half of the 1.5 million annual U.S. bankruptcy filings are caused by medical bills.
But here's the shocking thing... three-fourths of those bankrupt folks had health insurance when they fell ill or were injured.
The brutal fact is that even if you have health insurance, you and your family are at significant financial risk.
One reason is simple refusal to pay by your insurer. This happened routinely before the Affordable Care Act, aka Obamacare. According to one study by the California Nurses Association, for example, California's largest insurers denied 13.1 million claims in just the first three quarters of 2010. That amounted to 26% of all claims submitted.
Other culprits are huge copays, large deductibles and treatments that aren't covered under the tiny print in your insurance contract. One of the most common scenarios is what happened to my friend: an out-of-network doctor is brought in during a procedure without the patient's knowledge or approval.
Government Giveth, Government Taketh Away
For all its faults, Obamacare largely put a stop to most of that - except for the large health insurance deductibles, which are one of its main flaws. It also abolished lifetime coverage caps... which often used to be so low that they could easily be eaten up in the first week of a hospital stay.
According to Congress and the White House, all that's set to end. Obamacare will be repealed, and whatever replaces it won't include those protections (or so says the Senate).
There's another area in which government can strip you of your assets, however.
Many states require that people who require nursing or home care under Medicare exhaust a certain proportion of their net worth before the benefit kicks in. With the average cost of nursing home care exceeding $8,000 per month, many people have no choice but to liquidate their family's assets to obtain the necessary care.
Say goodbye to your kids' inheritance.
A Trustworthy Solution
Asset protection trusts are irrevocable trusts specifically tailored to protect your personal and business assets... even from medical creditors. The beneficiaries of an APT can include your living family, and even their descendants.
For example, an APT may hold your home, business and financial accounts. Or the trust can own an entity such as an LLC that in turns owns your personal residence. The APT can be structured to preserve your home's tax benefits - the mortgage interest deduction, property taxes and avoidance of capital gains taxes. And of course, it includes appropriate estate-planning strategies as well.
Depending on how and where you set up your trust - Nevada is my favorite domestic jurisdiction - you can even make your APT portable, so that it can migrate offshore.
That forces any future plaintiff to sue it in a potentially unfriendly foreign jurisdiction, which is often
enough to stop a lawsuit in its tracks.
Avoid the Red Zone
For many of us, proposed changes to insurance and other laws mean that our personal financial "risk meter" has jumped into the red zone.
Fortunately, asset protection solutions aren't just for the very wealthy.
They're for you, too. But you must make the first move by setting one up.
Because once tragedy strikes... it's too late.
Ted Baumann joined The Sovereign Investor Daily in 2013.
As an expat who lived in South Africa for 25 years, Ted specializes in
asset protection and international migration. Read more of what he has
to say about offshore living here.
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