Medical Debt and Bankruptcy in Kansas City

Medical debt is classified as unsecured, non-priority debt -- the same category as credit card debt and personal loans. This means it is completely dischargeable in bankruptcy.

In Chapter 7

All medical debt is eliminated when you receive your discharge, typically 3-4 months after filing. You owe nothing further on discharged medical bills. The hospital, doctor, collection agency, or any other medical creditor is permanently prohibited from trying to collect.

In Chapter 13

Medical debt is included in the pool of unsecured creditors who receive whatever percentage your plan pays (often 10-25% of total unsecured debt, sometimes 0%). Any remaining balance is discharged when you complete your 3-5 year plan.

There is no limit on the amount of medical debt that can be discharged. Whether you owe $5,000 or $500,000 in medical bills, it is all eligible for discharge.

Bankruptcy should be a last resort for medical debt alone. Try these steps first:

1. Request an itemized bill. Medical billing errors are extremely common (some studies suggest 80% of bills contain errors). Request a detailed, line-by-line bill and review every charge.
2. Apply for charity care / financial assistance. Most hospitals are required to offer financial assistance programs. See the KC-specific resources below.
3. Negotiate directly. Many hospitals offer discounts of 20-50% for cash payment or lump-sum settlement. Ask for the "self-pay" or "uninsured" rate even if you have insurance.
4. Request a payment plan. Most medical providers will accept interest-free monthly payments. There is no legal requirement to pay in full immediately.
5. Check the No Surprises Act. If you received an unexpected bill from an out-of-network provider at an in-network facility, you may be protected.
6. Wait before paying with credit cards. Converting medical debt to credit card debt loses certain protections. Medical debt has special credit reporting rules that credit card debt does not.

The No Surprises Act (effective January 1, 2022) provides important protections against unexpected medical bills:

• Emergency services: You cannot be billed at out-of-network rates for emergency care at any hospital, even if the provider is out of network.
• Non-emergency at in-network facilities: If you go to an in-network hospital but are treated by an out-of-network provider (anesthesiologist, radiologist, etc.), you can only be charged your in-network cost-sharing amount.
• Air ambulance: Out-of-network air ambulance charges are limited to in-network cost-sharing.
• Advance notice required: Providers must give you a good faith estimate of costs before scheduled services.

If you have a surprise medical bill, file a complaint with the Centers for Medicare and Medicaid Services (CMS) or your state insurance department. You may also be able to use the federal independent dispute resolution process.

If you are uninsured or underinsured, these Kansas City resources can help with ongoing medical care:

• Swope Health -- Federally Qualified Health Center (FQHC) with multiple KC locations. Sliding scale fees based on income. Primary care, dental, behavioral health, and pharmacy services.
• Samuel U. Rodgers Community Health Center -- FQHC serving the KC metro. Primary care, dental, pharmacy. Sliding scale fees. No one turned away for inability to pay.
• KC CARE Health Center -- FQHC offering primary care, dental, behavioral health, and pharmacy on a sliding scale.
• Health Care Coalition of Lafayette County -- Free health clinic for uninsured residents of the eastern KC metro.
• Kansas City Free Eye Clinic -- Free vision screenings and glasses for qualifying patients.
• Guadalupe Centers -- Health services for the Hispanic community in KC, sliding scale fees.

Call 2-1-1 (United Way) for a referral to the nearest free or low-cost health care provider in your area.