Medical debt is a common cause of consumer bankruptcy filings. Losing one’s health insurance, also puts individuals and families at an increased financial risk. According to the American Bankruptcy Institute (ABI), when someone has an interruption in their health insurance coverage, this gap in coverage nearly doubles that person’s chances of filing for bankruptcy.
The ABI looked through figures from the Bureau of Labor Statistics for more than 12,500 individuals. Their findings revealed a “strong association” between losing insurance coverage and consumer bankruptcy filings. ABI narrowed down their research even further to look at 454 people between the years 2008 and 2014 with similar incomes and debt-to-income ratios, who all filed for bankruptcy in that span of time. While many of these bankruptcy filings were driven by health issues, job loss and divorce, a great majority of them had to do with the fact that the person or someone that depended on the insurance carrier did not have coverage at the time of their illness or injury.