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When medical costs threaten your financial stability

Many elderly individuals depend on Medicare to help them cover their expenses for medication, treatment, and examinations. Unfortunately, more and more of these people are getting hit with surprisingly high medical bills due to the Medicare Advantage program. In fact, many members of the baby boomer generation find themselves filing for bankruptcy as a direct result of Medicare Advantage.

The program is a mix of private and government-assisted insurance. How it works can be rather murky. Namely, a private insurer - such as Blue Cross or Aetna - can enroll a member into Medicare Advantage when that member becomes eligible for Medicare. It's intended to allow individuals to keep the insurance plans to which they're accustomed, while receiving a good deal of assistance for the costs. Yet many are finding that the assistance ends up being paltry, and that medical conditions that were once covered no longer are.

Getting caught in the program with no way out

Those enrolled in Medicare Advantage have 60 days to opt out. Yet many are unaware they've been included into the program. After signing up for Medicare, it is common to ignore mail from one's previous insurers - a lot of it is junk. However, this means that individuals frequently miss letters informing them that their previous insurer has taken action to keep their business. As such, they miss the opt-out period, and often don't even know what their coverage is - or isn't.

As a result, many face staggering medical bills; fees in excess of $10,000 are not uncommon. This can threaten one's financial security. And indeed, many report selling off assets and dipping into their retirement accounts simply to pay off their premiums and other health care costs.

How to protect your assets and retirement accounts

For retirees, there is one potent means of financial protection. Although it may be counter-intuitive, declaring bankruptcy is in many cases the surest way to save one's assets and retirement funds. As detailed in the New York Times, "For some older Americans, bankruptcy can bring much-needed relief from debt brought on by medical expenses...[because] retirement income and savings are usually untouchable during bankruptcies under federal law."

Declaring bankruptcy is never ideal. But many overlook its advantages. And while it may not be one's first choice, it is often the only choice when one faces unexpectedly steep medical bills.

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