NEW YORK (MainStreet) When Sandra Miles was diagnosed with blocked arteries at 49-years-old, her doctor's appointments, lab tests and surgery were fortunately covered by her health insurance policy. What wasn't covered, Miles paid for out of pocket.
"There are expenses you don't think about when you're healthy like the cost of getting to and from medical appointments and child care," said Miles, who charged the unexpected ancillary expenses on multiple credit cards. "I went through $5,000 in savings and it still wasn't enough."
After racking up an additional $18,000 in debt and resigning from her high pressure job as an advertising executive, Miles filed for bankruptcy.
"I couldn't pay," Miles told MainStreet. "I had no choice."
Miles is among the 62% of Americans who've declared bankruptcy due to runaway medical costs and 3/4 of them have health insurance, according to Dr. Robert Pokorski, vice president and medical director of Prudential Individual Life Insurance. About 1 in 5 of American men compared to 1 in 5 women will be diagnosed with coronary heart disease and 1 in 12 men will be diagnosed with cancer compared to 1 in 9 women.
From 2011 to 2020, medical expenses are expected to outpace inflation at an annual rate of 5.3% versus 2.1% for general inflation, according to the Department of Labor.
As a result, most Americans will be unprepared financially to cope with an illness without significant savings.
"There is a gap and it's growing as out of pocket health care costs continue to grow and as individuals continue to incur non-medical costs related to a critical illness," said Bob Patience, vice president of voluntary benefits with Prudential Group Insurance.
Half of all U.S. households have savings less than $10,000, according to Prudential data.