When an Arizona couple in their 60s decides to take the plunge and remarry, they might wonder how that will affect their retirement accounts. One party might bring debt, such as credit cards or medical bills, to the union while the other is debt-free with retirement monies in place. Retirement accounts are generally safe from creditors even if someone has medical bills that are not covered by insurance. Even if the debt forces one party to later declare bankruptcy, creditors will not be able to access the funds in employer-provided retirement accounts.
One expert recommends that addressing possible financial problems due to medical bills is wise since unpaid medical bills are often a major factor when a person files bankruptcy. In fact, a Harvard University study reported that most of those who filed bankruptcy because of medical bills actually had health insurance coverage.
A person with extremely high medical bills is no longer subject to a yearly or a lifetime maximum due to the Affordable Care Act. However, even someone who is on Medicare is potentially at risk for medical bankruptcy due to out-of-pocket costs. The Employee Benefit Research Institute found that a 65-year-old woman in 2013 needs to have saved $86,000 in order to have a 50 percent chance of covering future health care costs. Savings of $139,000 will increase the chance to 90 percent. For men of the same age, the numbers are $65,000 and $122,000, respectively.
Medical expenses, even for those with insurance, can become overwhelming. A bankruptcy attorney can analyze a client's financial situation in order to determine what alternative forms of debt relief may be appropriate.
Source: FOX Business, "Can Future Hubby's Creditors Filch My Nest Egg?", Liz Weston, April 04, 2014