It’s quite difficult for the family members to pay off the debts of the deceased person. Family members couldn’t collect the funds to pay off the debts as they do not have the funds left in their bank accounts.
If you are concerned about the medical debt after death, then this guide will help you to understand the basic procedure to pay off or forgive the medical debt after the person dies.
What is Medical Debt After Death?
Medical Debt After Death is the pending medical bill of the person who died in the hospital. A lot of people think about what happens to their medical debt when they die. This is natural and we all wonder about the same once in a life.
Besides medical debt, other debts can also be included in the list such as credit card debts, student loans, bank loans, car loans, house loans, etc. According to a recent study, an average American has around $30,000 in personal debt.
Many people believe that all of their debts will also die along with them. But it is not true in most cases. Your family members could inherit the debts borrowed by you. This is what makes everyone worried to know more about what happens when they die!
So who is responsible for the medical debt after death?
Your medical debt will be paid off by your estate. Once a person dies, his assets will become estate. The estate includes everything you owned at the time of your death. It could be your house, your property, your car, or any other investments that you have made in the past.
The person who inherits your estate will take care of everything. The responsible person i.e. the person whom you have given the permission to complete the inheritance of property and assets to family members as per the will and pay off all the debts including medical debt.
How to pay off Medical Debt after Death?
Many people believe that they don’t have to pay off the medical debt once they die. However, that’s baseless. The finance department or the recovery agency will decide how to recover the medical debt from the deceased person.
If the hospital is kind enough, they will cut down the billing amount after knowing about the financial condition of the person’s family who just died. If the medical debt amount is small, then the recovery department might call off the bill and close down the account of the deceased.
If the medical debt after your death is high, then the recovery commission has to recover the money from your estate. This is the only way with which your medical debt can be recovered.
Unlike other types of debts, medical debt does not have a co-owner. If we talk about the responsible person, then the patient himself is responsible for all this. Other debts such as student loans, car loans, house loans, credit card bills can have the co-owners. But medical debt has not such co-owners, but the deceased person himself is responsible.
For that reason, the medical debt after death will be recovered from the estate through the person whom the deceased person appointed in his will. This entire process of recovery is called probate.
Eg. If your medical debt is $200,000 at the time of your death and your estate stands at $400,000 with your house worth $200,000. Then the executor will sell out your house and pay the medical debt to the concerned authority.
Steps to Take If Your Loved One Dies
Death is the harsh reality of life which is completely uncertain. Nobody knows when they will die and for that reason, all of us need to know about the things to do when our loved one dies. Here, we have tried to list down some points that are crucial after the death of a loved one.
- Reach out to the finance department of the hospital to know about the medical debt.
- Ask for an active life insurance policy of the deceased person. Most people cover their life with a life insurance policy. This policy helps the person’s family to pay off the debts after their death.
- Collect the information about the assets owned by the deceased person if there is no life insurance policy or Medicaid coverage.
- If the person has active Medicaid, then you can file the claim to pay off the medical debt or the medical bills with no hassle. You can even get additional funds from the policy.
- Check if the person had prepared his will and whose name is listed to inherit his assets.
- If the financial condition of the family is not good, you can be a helping hand to reduce the debts by reaching out to the debtors or the finance department of the hospital.
After determining the assets owned by the deceased person, the estate will be generated. Medical Debt would be on the priority at the time of the probate. Medical debt is very complex as it involves a lot of things.
The process to pay off the medical debt after the death of a person takes longer than usual to complete the paperwork. The family should consult an attorney who will take care of all the paperwork and other help that may be needed to pay off the medical debts and other debts.
How do you protect your family after death?
The process of sorting out the estate after the death of a person is very complicated. To keep yourself and your family members safe from creditors’ debt after your death, you need to take a life insurance policy.
A life insurance policy taken in the name of the deceased person would fulfill all the financial needs after the death. The fund received from the life insurance company would be utilized to pay off the medical debt and other debts on behalf of the deceased person.
If you are worried about your family and don’t want to put an extra burden on their shoulders after you die, then you should cover your life now. There are many policy providers present in the market to avail of the life insurance policy. You can also make a wise investment and keep a nominee who will receive the funds invested by you after your death.