Approximately 60% of all bankruptcies filed in the United States relate to medical debt. That amounts to about 530,000 filings every year. Many people assume that the problem is a lack of insurance, but that is not the case.

While one in 12 Americans has no health insurance coverage at all, one in six has a credit report with at least one unpaid medical bill. The majority of Americans who file for bankruptcy because of medical debt have health insurance. There are several reasons why they incur medical debt.

Unaffordable premiums

In theory, people who get health insurance through their jobs do not have to pay as much in premiums. In practice, however, even coverage from employment can sometimes cost hundreds of dollars per month.

People who prioritize their health insurance premium sometimes have to leave other bills unpaid, and those who do not receive health insurance through their jobs sometimes cannot afford the premium at all. An affordable premium often means a high deductible, so people who do get sick or hurt often have unaffordable out-of-pocket expenses.

Coverage limitations

Insurance policies have limitations on the services they will cover. Sometimes a patient needs a test or procedure that requires authorization from an insurance company. If the company denies the authorization, the patient gets stuck with the bill, which can be significant.

Lost income

People with serious illnesses or injuries may need time off work to recover fully. During this time, the medical bills can pile up. Due to the loss of income during the recovery, people cannot pay medical expenses and may fall behind on other bills as well.

Sometimes the illness or injury is severe enough that the individual cannot return to work at all, or has to change jobs or work reduced hours. Even people who qualify for disability income may have to wait several months for a hearing. In the meantime, the medical bills keep coming, and providers demand payment.