Medicaid problems related to garnishment and bankruptcy

Mississippians are probably familiar with the term "Obamacare," which is a coined phrase referring to the recent healthcare bill signed into law by President Barack Obama. What may not be as obvious is how the current healthcare system relates to issues of garnishment and bankruptcy in Mississippi.

Medicaid is a problem in Mississippi. Medicaid eligibility may be forcing the working poor into situations of garnishment and bankruptcy. Currently, only those who are truly destitute and impoverished in Mississippi are eligible for Medicaid. The practical implications of this eligibility cut-off rule are that those who work, but do not make a significant salary. are expected to pay full rates for medical care. However, they likely do not have the savings to cover such expenses like expensive visits to the emergency room. What happens? Hospitals may work out long-term payment options, but, more likely, the hospitals will garnish the low-income patient's wages in order to be reimbursed for the healthcare costs.

Anyone, including a hospital, can file a wage garnishment proceeding in order to recover an unpaid debt. At a hearing, the hospital will need to show that a debt is owed and that the patient has failed to pay it. If the hospital meets its burden, the court may then issue an order garnishing the patient's wages.

This means that a portion of the patient's wages will be withheld and directed to the hospital to cover the healthcare debt. There are a few protective measures in place to help the debtor, including that the hospital cannot garnish the entire paycheck.

Advocates for low-income workers in Mississippi seek alternative protections. They want the Medicaid system to be restructured so that such workers are eligible for Medicaid benefits, and will not need to worry about having to cover high healthcare costs. They argue that without such protections, low-income workers have no incentive to keep working. Unemployment is more appealing because when unemployed such workers may ironically be eligible for more aid and benefits.

As the push for such benefits continues, Mississippi workers must be cognizant of the current interplay between medical care and garnishment. However, for those facing garnishments and repossessions, building a strong defense immediately can help stave off creditors.

Source: Hattiesburg American, "Medicaid funding is not real issue in Mississippi," Bill Crawford, June 11, 2013.

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