An operation upsets retirement plans and leads to bankruptcy

Sherrie Foy63, Moneta, Virginia

Approximate medical debt: $850,000

Medical problem: Colon surgery

What happened: Sherrie and Michael Foy thought they had made all the right preparations when they moved to rural southwestern Virginia after Michael retired from Consolidated Edison, New York’s largest utility.

Sherrie Foy loved horses and had started rescuing unwanted animals. The couple had diligently saved. And they had retiree health insurance through Con Edison.

“We were never rich,” Sherrie said. “But we had what we wanted.”

Then, in 2016, Sherrie, who had lived with persistent intestinal irritation for years, had her colon removed. After the operation, she contracted a dangerous infection and barely survived.

The complications produced nearly $800,000 in University of Virginia Health System bills for services that were not covered by the Foys’ health insurance.

When the couple couldn’t pay, the state sued Sherrie. The only way out, the Foys concluded, was to declare bankruptcy.

The nest egg they had carefully built so that her husband could retire early was wiped out. They cashed in a life insurance policy to pay for a lawyer and liquidated savings accounts they had opened for their grandchildren.

“They took everything we had,” Foy said. “Now we have nothing.”

What is broken: Foy fell victim to a loophole in her husband’s retiree health insurance plan that capped lifetime coverage at $1 million.

These caps were more common before the Affordable Care Act of 2010, although some plans with these caps were grandfathered.

Relatively few patients with medical debt are sued, and some medical centers have been forced to scale back the practice in recent years after news reports of the lawsuits. (The University of Virginia Health System changed its policies as a result a 2019 KHN survey.)

But hospitals and other medical providers still rely on the courts to collect from patients.

More broadly, bankruptcy caused directly or partially by medical debt remains a significant problem.

A KFF national survey conducted for this project found that approximately 1 in 8 adults with health care debt were forced into bankruptcy.

What’s left: Sherrie said her health has improved.

After complications from her surgery in Virginia, she returned to New York for treatment at a hospital that she says saved her life. This hospital never billed her, she says. She doesn’t know why, but she thinks she might qualify for charity care.

The bankruptcy was devastating. The Foys make do with Michael’s pension and their Social Security checks.

The same year they declared bankruptcy, Michael also had a heart attack, and their daughter was diagnosed with breast cancer.

“It was a one-year disaster,” Sherrie said. “No one should have to go through this.”

Sherrie does not have health insurance. She hopes there won’t be any major medical bills until she turns 65 and qualifies for Medicare.

About this project

“Diagnosis: Debt” is a reporting partnership between KHN and NPR exploring the scale, impact and causes of medical debt in America.

The series builds on the “KFF Healthcare Debt Survey“, a survey designed and analyzed by KFF public opinion pollsters in collaboration with journalists and KHN editors. The survey was conducted from February 25 to March 20, 2022, online and by telephone, in English and Spanish, from a nationally representative sample of 2,375 U.S. adults, including 1,292 adults who currently have health care debt and 382 adults who have had health care debt in the past five years. sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current health care debt For results based on subgroups, the margin sampling error may be higher.

Further research has been conducted by the Urban Institutewhich analyzed credit bureau and other poverty, race, and health status demographics to explore where medical debt is concentrated in the United States and what factors are associated with high debt levels.

The JPMorgan Chase Institute records analyzed from a sample of Chase credit cardholders to examine how customer balances can be affected by large medical expenses.

Reporters from KHN and NPR also conducted hundreds of interviews with patients across the country; spoke with doctors, healthcare industry leaders, consumer advocates, debt lawyers and researchers; and reviewed dozens of studies and surveys on medical debt.

This article was taken from Courtesy of the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health policy research organization not affiliated with Kaiser Permanente.

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