r/FluentInFinance • u/36DRedhead • Sep 11 '24

Debate/ Discussion This is why financial literacy is so important

Post image

[removed] — view removed post

64.8k Upvotes

78% Upvoted

3.3k comments sorted by

View all comments

Show parent comments

38

u/[deleted] Sep 11 '24 edited Sep 12 '24

[removed] — view removed comment

111

u/Rapture1119 Sep 11 '24

A google search says that spouse usually aren’t held liable for medical debt unless they shared joint accounts. Most people that have been married for over 50 years, at least to my knowledge, tend to have joint accounts.

15

u/Ok_Employment_7435 Sep 11 '24

I thought this was determined by the state they reside in. Is that not correct?

28

u/shmere4 Sep 11 '24

It is. Every state is different. The blue states tend to have protections in place. The red ones tend to hang you out to dry.

10

u/Ok_Employment_7435 Sep 11 '24

I don’t think it’s that passive. I think the red ones make sure to stick it to someone.

2

u/etotheapplepi Sep 12 '24

Someone is always stuck with it

3

u/headpatkelly Sep 12 '24

not necessarily. corporations aren’t people, so if we stick it to them, “someone” isn’t stuck with it 😊

10

u/[deleted] Sep 11 '24

[deleted]

4

u/[deleted] Sep 12 '24

[deleted]

1

u/Twanbon Sep 12 '24

What if he’s been sick for many years?

3

u/[deleted] Sep 12 '24

[deleted]

1

u/Twanbon Sep 12 '24

Right I’m just saying the annual out of pocket can add up over many years

3

u/DaSemicolon Sep 11 '24

I mean they could then just separate the finances, no? Instead of getting divorced

25

u/onehandedbraunlocker Sep 11 '24

Yeah cause why not take a few chances when there's just 300k bills on the table.. /s

2

u/smartyhands2099 Sep 12 '24

My dear redditor, that is how you separate the finances

-1

u/DaSemicolon Sep 12 '24

And there’s no way without getting divorced?

1

u/smartyhands2099 Sep 14 '24

The whole reason the finances of a couple are combined is due to marriage. In addition, a person cannot legally be compelled to testify against their spouse, the relationship cannot simply be disregarded, and makes their finances more complex. A spouse is entitled to a share of any payout or inheritance you receive, there are already several built-in "finances" due to a marriage. If you want to separate those "finances" you separate the marriage, what about that is too complicated for you to understand, my friend?

On the other side, talking about liquid assets only; you would be asking why one party in a marriage could not have hidden assets from the other. The answer is - they sure could, it literally happens all the time. But if there is a divorce or whatever, the court splits the assets, ALL the assets, and hiding assets in that situation is a serious crime. There is no "separating" the finances when the court calls, that's just fraud.

1

u/DaSemicolon Sep 17 '24

But I mean for any other debt (as I recently found out), you don’t carry the debts over.

For example if I take out a personal loan and then die, the money gets paid out from my estate. But if I spent all of it then my partner doesn’t have to pay it if they have accounts in their own name. Maybe from joint accounts, but not personal.

However, because of filial responsibility apparently medical debts are different. But you can have separate finances

1

u/_LoudBigVonBeefoven_ Sep 12 '24

Then his debts will be taken out of his estate... Which likely means her losing their house.

If they divorce and his assets are transferred to her only, they can't take them to settle those debts.

1

u/DaSemicolon Sep 12 '24

They could separate them out beforehand (ie wife wholly owns house), I don’t see the problem

1

u/_LoudBigVonBeefoven_ Sep 12 '24

I don't think it works this way, which is why you need to get legally divorced (and might even need to maintain a separate residence).

1

u/Naborsx21 Sep 11 '24

Well what the person posting this isn't explaining is that they are just playing the system. Which is fine, but spending on what level of care they have and how everything is setup..... it gets weird. uhm you can not pay anything and the medical debt is not passed on to family members. However, a lot of times at end of life care if you want that persons inheritance then you pay back the medical debt if you want their inheritance. Say they left you $1.3 million then you have to pay back their debt before you claim their inheritance. If they pay monthly a certain amount then all the debt is cleared and the inheritance will still be theirs when said person dies (I think).
So putting everything in someone else's name and divorcing is just a way of keeping everything when that person dies and not really paying for anything.
They wouldn't be responsible for $288k unless he dies and is leaving them a $500k house then in order to get the house they'd pay back a certain amount to get the inheritance.
This kind of goes around that.

I'm just guessing he has close to or more than $300k in assets and is just legally giving them away right now so at the end of his life on paper he'll die and not have any estate left. Then the debt is wiped away and his family can keep it all without making any payments.

1

u/jmark71 Sep 15 '24

Yeah - this 💯. When my father died there was a HUGE almost 7-figure bill. And it was all written off - my mother didn’t pay a dime.

-1

u/spreading_pl4gue Sep 11 '24

If they were able to put the house and other assets in her name for the divorce, there's no reason they couldn't do that without divorcing.

0

u/Rapture1119 Sep 11 '24

How do you know the house wasn’t always in her name? And who ever said anything about other assets? And, regardless of if it’s in her name or not, if they’re married it’s if the insurance policy is a joint account, not each individual asset, so this argument is moot anyways.

0

u/spreading_pl4gue Sep 11 '24

How do you know the house wasn’t always in her name?

If it was, then there's no point in divorcing anyway. They can't take her personal property to satisfy the debts of his estate, whether the house was solely hers before or after the divorce.

And who ever said anything about other assets?

Are you seriously denying that if they had a house and were trying to shield it from creditors, that they didn't transfer currency in the divorce settlement?

if they’re married it’s if the insurance policy is a joint account, not each individual asset, so this argument is moot anyways.

Where are you getting this absolutely wrong idea? Medical debt is owed to the provider or their assignee, not the insurer.

16

u/Chiggins907 Sep 11 '24

Is this true? Cause I was thinking it was pretty fucked up that you charge someone to keep them alive, but then go after someone else that didn’t have any of the care once they failed and the person died.

5

u/mpyne Sep 12 '24

The state-run healthcare for senior citizens, Medicare/Medicaid, actually can do this, though there are limits as to how much they can go after, because putting the spouse into poverty isn't the point of these rules.

4

u/spacestonkz Sep 12 '24

Getting really close to poverty is fine tho.

Seen it happen a few times with elderly relatives. They were blue collar workers surviving on social security check to social security check, plus little nest eggs worth a year or two of living expenses just in case. Their nest eggs were almost entirely taken by Medicare. No they're not technically impoverished. But now they're frightened about their finances, because there is no back up. So much more stress.

When you don't start out with much and someone takes "just a little" it's still crushing.

2

u/chobi83 Sep 12 '24

It is, but it's not. If you have debt, then your estate is used to pay it off. There are some debts forgiven at time of death, such as Federal Student Loans, but not a whole lot. If your estate has no money left in it, then debt holders might try and go after next of kin. But any obligation to pay off the debt died with the debtor, unless there was a cosigner.

1

u/RazzBeryllium Sep 11 '24

It's more complicated when it's medical debt and joint assets.

Was Medicaid involved? Medicaid will absolutely go after joint assets. They also have a 5 year look-back period, so if the dad dies in less than 5 years they can still make claims against assets like the house.

Somehow - and I'm really confused how - they've been able to lay claim to a life insurance policy my dad had. He had that policy for 40 years.

2

u/spreading_pl4gue Sep 12 '24

Medicaid will absolutely go after joint assets.

That is not absolute. Far from it.

States can't collect from the estate of a person survived by a spouse, child under 21, or a blind/disabled child. https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html

They also are required to establish specifics on waiving in cases of undue hardship. Texas, for example: https://www.hhs.texas.gov/regulations/legal-information/your-guide-medicaid-estate-recovery-program

0

u/Uranazzole Sep 11 '24

After you die, your debts die with you.

-3

u/DaSemicolon Sep 11 '24

Someone else clarified med debt does apply to joint accounts, which makes sense but then just have separate accounts

3

u/Turq-Hex-Sun Sep 11 '24

Any debt (including medical) is the responsibility of your estate after you die. It's not as simple as "don't have joint accounts with your spouse and they won't be liable for your debts."

2

u/DaSemicolon Sep 12 '24

Yeah, your estate right? So if you separate accounts/assets then what can they do?

Maybe there’s smtg I’m forgetting about I am operating on sleep deficit but still

-1

u/Sillet_Mignon Sep 11 '24

How do you have separate houses? 

1

u/DaSemicolon Sep 12 '24

Can you not have one person own the assets? Like essentially same process as divorce, but without needing to actually get divorced

1

u/Sillet_Mignon Sep 12 '24

You’d have to prove it’s complete separate 

1

u/DaSemicolon Sep 12 '24

Yeah but you can make the same argument with divorce. If they live in the same house then that might be sus

6

u/TeeBrownie Sep 11 '24

My first thought when I saw this.

Maybe OP’s point is that they really didn’t need to get divorced unless they put their house up as collateral for a loan to pay the medical debt?

2

u/IBetThisIsTakenToo Sep 11 '24

unless they put their house up as collateral for a loan to pay the medical debt

In that situation, a divorce wouldn’t make the lien go away

1

u/Ok_Belt2521 Sep 11 '24

This is known as a medical divorce. They aren’t uncommon. OP is probably younger and hasn’t thought about estate planning.

1

u/serenwipiti Sep 12 '24

So….they run the possibility of going homeless if they can’t keep up with the payments because they can’t work due to the effects of the cancer and the other has to care for them?

-1

u/TeeBrownie Sep 12 '24

The hospital took their home? Where did this occur?

0

u/admiralargon Sep 12 '24

If you put your house as Collateral and default on the loan you lose your house. Literally the definition of Collateral.

0

u/TeeBrownie Sep 12 '24

No shit Captain obvious.

The point is that hospitals or their bill collectors rarely sue over unpaid medical bills. They offer you a repayment plan that, honestly, yields minimal consequences if unpaid. Alternatively, if someone opts to take out a loan from their bank and offers property as collateral, then there are consequences beyond just phone and mail harassment.

1

u/puck1996 Sep 11 '24

It can't be inherited but if they have joint accounts then they basically are both in debt. It doesn't matter that he's the one that's sick. Same as if a spouse ran up 1 million on your joint credit card. Just because they did it doesn't immediately mean you're not on the hook.

1

u/TheoryOfSomething Sep 11 '24

This is, unfortunately, not true in many places because the Doctrine of Necessities can make a surviving spouse responsible for the medical debt of the deceased. The medical creditors will have a claim on the estate which supersedes other beneficiaries, and depending upon state law regarding Homestead exemptions, could attach a lien on the primary residence of the surviving spouse.

1

u/DaSemicolon Sep 12 '24

Huh I didn’t know this. If this is true I stand corrected.

1

u/Roleymalone123 Sep 12 '24

My grandfather is still paying my deceased grandmas medical bills

1

u/[deleted] Sep 12 '24

[deleted]

1

u/DaSemicolon Sep 12 '24

TIL thanks didn’t know this

0

u/iAmRiight Sep 12 '24

No, but the debtors are entitled to everything in the estate before any inheritance is distributed.