Expert: Regan Shinski - 11/9/2010

Question
Hi,
My father (63yo) got himself into a world of trouble recently and I'd like some advice on what to do.

About a month ago my father fell from a ladder at his house and fractured a vertebrae in his spinal column. He called 911, got to the hospital and was put in a cast. Luckily, there was no nerve damage.

He was sent back home after 1 day at the hospital. The total of all bills is over $150k. He has no medical insurance of any kind.

He is getting medical care from some sort of a free clinic, but he is unable to work.

He never made much money (his income was around $27k/year); however, he managed to save about $50k through a 401k in a retirement account. In addition, I bought him a house last year and put his name as a joint owner. The house was bought all-cash with 80% coming from my pocket and 20% out of his retirement account. On top of all that, I bought some land solely in his name about 10 years ago. All these assets are either in danger or disqualify him government programs.

I'd like to know what to do. The $150k is the "fantasy billing" the medical providers engage in. Normally an insurance plan would adjust these charges to a tiny fraction. For 1 day at the hospital I'd expect $4k max total. If I could get these bills adjusted I would consider just paying them out of my pocket to resolve this. Is it possible to get the bills adjusted and how would I do that?

Also, I do not know if it's possible to sign him up for Medicare and whether this can be done in a way for it to cover this.

Lastly, a bankrupcy is an option. His credit is ruined to the point where there is nothing to lose. However, it may not help with liens against assets.

What would be the right strategy to deal with this? I am in California.

Appreciate your response.

Answer
Hello:

You have to explore all options.  To reduce the debt, you negotiate.  There is no magic trick.  You start by calling or sending a letter making an offer.  Make sure the offer has a firm expiration date.  State that he has limited assets, is elderly, and will likely file bankruptcy if a settlement cannot be reached.  

However, since you are in California, you should start here:

http://www.hospitalbillhelp.org/have_bill

This website shows many of the laws in California that are designed to help persons in positions like this.  It includes guaranteed discounts in many cases.

Other things I would consider if you cannot get the bill reduced is speaking to a lawyer or financial planner about hiding the assets or setting them up in a trust.  Really any options to protect or rename the ownership of his high-value assets to protect them from a judgement for the bill.

Bankruptcy is also an option but you may need reassign some the assets as described above.  Speak with a bankruptcy attorney to see what options are to hide his assets.

Again, the best options appears to start with that website listed above and try to get the balance reduced or paid by the state.

Good luck, I hope this helps.

Regan

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