My neighbors are responsible people. He retired from Army Special Forces. She was pursuing her life-long dream to become a nurse. They had scrimped and saved to buy their dream house, and even managed to pay it off five years after they moved in.
And then everything went down the toilet because of insurance denials.
These folks were responsible people. Imagine what is involved in saving over $200,000 from the paycheck of an Army enlisted man who after he retired went to work for the state as a counselor to abused children. All the while raising three kids and paying for the wife to pursue her education in nursing.
Very responsible by any measure.
She got her degree. She got a job as a nurse, and finally he retired from the stressful job of counseling, to begin life doing something else he loved as a remodeling contractor.
Then, she was at work one night in an emergency room, a patient thrashing in terrible pain knocked a metal tray over. Something hit her foot. She didn't have time to look or tend to it because she was saving a life.
A week later what had originally looked like a small cut proved to be infected with the so-called flesh-eating bacteria.
Then the fun began. She had multiple surgeries, she couldn't work for months because she could barely walk, and she found herself caught in a battle between her health insurance and workman's compensation. Each said the other was responsible for her care. She had to hire a lawyer.
Bills started arriving, including from the lawyer. And while this was all going on, her 18 yr old daughter decided to quit college and stop paying for the car her parents had co-signed for, and stop paying on the credit card they had cosigned for. And she didn't bother to tell them.
In the end, between attorney's fees, the little that workman's comp agreed to pay, the huge denials from the health insurance company for much of what she needed, and the fact that her employer fired her because she was disabled for so long... They had to file bankruptcy. As Fred said to me at the time, "What the hell. My daughter's already ruined our credit rating, and there's no way we can pay these bills while Anne doesn't work."
But the saga didn't end there. My neighbor was eventually able to return to work as a nurse. Life seemed to be brightening. And then she had a heart attack.
Again the medical bills started rolling in, along with denials from the insurance company. Being responsible, the husband decided to re-mortgage their fully-paid-for house to pay the medical bills. After all, his wife would be going back to work eventually, as soon as the doctor cleared her, and they could pay that new mortgage off fast. They didn't even get a mortgage for the full value of the house. Just enough to cover her medical care and bills. They were responsible people.
But then her cardiologist determined that she could never work again. Ever. And their income was permanently halved.
They struggled along for a few years until the balloon hit. (Remember, they'd had to file bankruptcy because of the medical bills from her previous illness. At this point they couldn't get any other type of loan). All of a sudden they were facing a 19% interest rate. And no amount of arguing, no amount of explaining, no amount of looking for an alternative, changed it.
They lost the house.
You see, you're damned if you do, and damned if you don't. When that medical crisis hits and the insurance starts refusing to cover necessary care, what can you do? If you file bankruptcy, you'll save your primary dwelling. But once you've done that, what happens next time?