In the United States, the high costs of medical care, even with health insurance offsetting some of the charges, can leave unfortunate individuals and their families mired in medical debt. As sad as it is to discuss, you may wonder what happens to medical debt when you die. Are heirs responsible for paying off the debt?
Often, a sudden unanticipated medical emergency, such as a major car accident or a diagnosis of a major illness like cancer, will cause individuals and their families to confront the fact that their insurance and savings are wholly inadequate. When someone faces a serious illness, a chronic health disorder, or a long-term rehabilitative condition that is degenerative or terminal, they could accumulate thousands of dollars worth of bills and liability.
This article explores what happens to debt when you die.
Solvent vs. Insolvent Estates
When you pass away, your estate may be responsible for paying the debt. In a solvent estate, meaning estates that have sufficient money and assets to pay off debts, the estate executor will use assets on hand to pay off any legally determined debts of the decedent. In an insolvent estate, when there isn’t enough money to pay off all debts, then obligations can be prioritized. Medical debts are often paid out first. It is sometimes possible for the executor to negotiate with creditors to pay a lesser amount of overall medical debt, given the limitations of the decedent’s estate.
In most situations, heirs are not individually responsible for paying any outstanding medical debt. This is usually the responsibility of the deceased person’s estate. However, there are some special circumstances where heirs may need to pay for medical debt for their loved ones after they die.
If an heir were the co-signer on any debt, they would still be held responsible for the debt individually, even if the other co-signer passed away. Additionally, surviving spouses could be held liable for certain medical debts, especially if they live in a community property state. Minnesota is not a community property state.
In some states, children of the decedent can be held responsible for paying nursing home bills under filial responsibility laws. This means that if the estate cannot pay the nursing home debt, the nursing home can pursue compensation from the resident’s children. This is not an easy type of lawsuit or claim, and most nursing home facilities will only follow it if there is a cost-effective and reasonable likelihood that they will recover the debt.
Currently, Minnesota does not have filial responsibility laws. However, you could be held responsible if your parents live in another state. While rarely enforced, this could be one way that children may be responsible for a parent’s nursing home expenses upon their parent’s death.
If you are worried about medical debt or any debt that is causing serious concerns, please consider talking with us. Kain + Henehan is a well-respected and compassionate bankruptcy law practice where we understand the hardships individuals and their families can face. We will lay out your options and ensure you understand so you can make an informed choice about filing bankruptcy.
Contact Kain + Henehan at (612) 438-8006 or complete the online form to learn more.