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Avoiding Medical and Credit Card Debt After Death

When a loved one is faced with a terminal illness such as a late-stage cancer, medical bills can accumulate and other debts such as credit card debt may be pushed out of focus as treatment becomes the number one priority. However, when loved ones pass, their medical and credit card debts do not disappear. Many families are left unprepared to manage debts left behind after the death of their loved one. Dealing with credit card debts after death is very common, but medical debt differs and can be especially confusing and detrimental if not dealt with swiftly and effectively.

Grieving and dealing with medical and credit card debts at the same time can be exceedingly challenging, but getting the right information can avoid unnecessary stress and surprises. When it comes to dealing with medical debt after death, here are the facts you and your family should know to avoid being saddled with significant amounts of medical debt after your loved one has passed.

Medicaid Reimbursement After Death

While State Medicaid programs can cover payments associated with medical treatment such as hospital visits, drug prescriptions, and even nursing services, states are required to recover these payments made from the patient’s estate if the patient was 55 or older. There are certain conditions in which Medicaid cannot come after payments made such as if the patient was survived by a spouse, a child under 21, or a child with a disability of any age. Sometimes the state is required to waive estate recovery if it can be proved that it would cause undue hardship on the family left behind.

If Medicaid benefit payments cannot be recovered, states may impose a lien on the estate (real estate property) to recover payment pursuant to a court judgement so if your loved one is receiving Medicaid benefits, be prepared to be held accountable for those payments.

Debt Collectors Can Call Certain Individuals

In some cases, debt collectors may come after any unpaid debts your loved one has accrued during his/her lifetime. Family members should be cautious as it’s not always illegal for these companies and debt collectors to come after any unpaid medical debts. Typically, the unpaid debts will be paid out of the estate and any outstanding debts will go unpaid. However, you may be legally responsible for the debt under certain circumstances such as if you co-signed the debt obligation. It’s important to know all of the nuances under the FDCPA concerning debt collectors and unpaid debts, whether they be medical or credit card debts.

Don’t Overlook “Filial Responsibility”

If you’re concerned that your terminally ill parent may leave medical bills that you’ll be responsible for, check if your state has a filial responsibility statute in place. Filial responsibility laws hold adult children accountable for the support of their parents who cannot afford to pay off their medical debts. This typically occurs in the event that the estate cannot pay for such bills, including those which are owed to nursing homes, hospitals and other types of medical facilities. Many adult children learn about filial responsibility after their parent has passed, but if you know of the statute and are aware of what to expect you may be able to avoid incurring significant medical debt by seeking legal counsel.

Does Your Terminally Ill Loved One Need Financial Assistance?

If you or a loved one has a terminal illness such as a late-stage cancer and has incurred expenses that threaten to drain your quality of life, know the Fifth Season Financial Funds For Living Program can help you access immediate and unrestricted funds from a patient’s life insurance policy. If eligible, you may be able to receive the funds you need now while still preserving future funds for beneficiaries.  Call Fifth Season Financial at 866-459-1271 to learn more and see if you qualify!

Disclaimer: Fifth Season Financial is not a financial advisor or consultant and recommends that you speak to an advisor or expert before making any significant financial decisions.

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