Over 175,000 individuals file for bankruptcy in the first quarter of 2020 many as the result of medical expenses.
“Every adult over 40 is one serious illness away from significant financial stress.”
Jesse Slome, director of the American Association of Critical Illness Insurance
Individual bankruptcy 2020 filings in first quarter
Bankruptcy 2020 First Quarter Statistics. Some 175,146 individuals filed for bankruptcy in the first quarter of 2020. The vast majority (138,045) were Chapter 7 bankruptcy.
A total of 757,628 bankruptcies were filed in 2019 according to the American Banking Institute. A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills shares Jesse Slome, director of the American Association for Critical Illness Insurance.
An earlier study published in early 2005 reported that 46 percent of bankruptcies were related to outstanding medical conditions. The major cited reasons in this category included injury or illness, medical expenses not covered by insurance or losing at least two weeks’ worth of work because of illness.
States with highest number of bankruptcies 2020 first quarter
- California 18,764
- Illinois 13,607
- Florida 13,208
- Georgia 12,400
- Texas 10,608
- Tennessee 9,324
- Michigan 8,971
- New York 8,852
- Alabama 7,882
- Virginia 6,922
Other reasons for bankruptcy include unaffordable mortgages or foreclosure, spending or living beyond one’s means, student loans, or divorce or separation.
Critical illness insurance is affordable planning option
“Every adult over 40 is one serious illness away from significant financial stress,” explains Slome, AACII’s head. “Millions of Americans will be diagnosed with cancer, have a heart attack or stroke, three of the most serious illnesses. Many falsely believe that everything will be fine because they have health insurance.”
Health insurance today has significant gaps. These include high deductibles, co-insurance requirements and treatments and medications that may not be covered. “In addition, time off from work means no income at a time when bills just pile up,” Slome points out. “We are going to do everything possible to teach people that an affordable option exists.”
Critical illness insurance costs anywhere from under $100 a year to around $500 a year. Costs depend on age and whether one smokes as well as health conditions. Many companies today offer employer critical illness insurance on a voluntary basis. It’s always worth comparing this option to individual coverage available directly from insurance companies.
Source of data: American Banking Institute
Photo credit: Image by Andrew Khoroshavin from Pixabay
