It’s no secret that the cost of medical care is high, and keeps getting higher. Medical debt is the number one cause of bankruptcy in the United States, and many consumers are one car crash or major illness away from crushing medical debt. It’s true for everyone, including your parents. But what happens if your parent dies after incurring extensive medical debt. Losing a parent is hard enough. Do you really have to worry about their medical bills, too?
Does their medical debt follow you from the grave?
Well, the short answer is usually not. But the long answer is more complex. Read on to learn why.
First, let’s make this one thing clear:
You are not personally liable for your parents’ medical debt.
They can’t force you to pay your parent’s medical bills.
That doesn’t mean that it won’t affect you financially. But it does mean the hospital doesn’t have a legal basis to come after you personally for payment.
That doesn’t mean they won’t, though.
Here’s the thing.
The hospital can also choose to sell your deceased parent's medical debt to a collection agency. In that case, the debt collector may come to you for the money, instead of or in addition to attempting to collect from the estate.
Don’t pay them.
Why? Because of the first point we made, above: you are not personally liable for your parents’ medical debt.
So, who is then?
Like any other creditor, they can come after your deceased parent’s estate.
If your parents left a will, then the executor will use their estate’s assets to pay off all types of debts, including taxes, housing, rent, credit card debt, and medical bills.
Of course, not every estate has assets. Some estates are just insolvent.
If the executor determines that there aren’t enough assets to pay off all the debts, then they will liquidate whatever assets there are and use the proceeds to pay off as much of the debt as possible. When that happens, the estate is insolvent, and your beneficiaries will get nothing.
That usually means you, your siblings, any other surviving family members, and anyone else named in the will. This could be a significant problem for a surviving spouse who was planning on the money from the estate for their support. But there’s a silver lining: they will not be on the hook for the remaining debt.
On the other hand, if the executor determines that the estate’s assets are sufficient to pay its creditors, it will be considered solvent. The debts will be paid, and the remaining assets given to the will’s beneficiaries.
Unfortunately, some debt collectors pursue the debtor’s relatives for the money, which means you may get collection calls for your parent’s medical debts.
But remember what we said above?
You are not liable for your parent’s debts.
So the collectors can’t take any legal action against you. In fact, if they harass you in pursuit of the money, you can take action against them.
The Federal Trade Commission, the Consumer Financial Protection Bureau, and many state’s consumer protection agencies have rules against this kind of behavior, and provide for fines against the perpetrators. Fines you may be able to collect by filing a complaint.
All in all, losing a loved one is terrible, and the drudgery of navigating the probate process doesn’t make it better. But remember: while their estate is liable for paying your parent’s debts, medical and otherwise, you are not.
Still, if you find yourself in a situation like this, it’s always best to consult an attorney. OVLG would be a great place to look for one.