Medical debt is now one of the primary reasons Americans file for bankruptcy protection. Because of the astronomical cost of medical treatment these days, all it takes is one serious illness or condition to rack up medical bills that you will never be able to pay back, especially if you became ill without insurance coverage.

The Affordable Care Act is aimed at preventing Americans from getting in over their heads with medical debt by requiring them to purchase health insurance coverage. But for those who have already encountered significant financial challenges, the Affordable Care Act may not seem affordable at all.

As we discussed in a recent article on our website, the ACA has been criticized by many people who say that the costs associated with health insurance coverage options under the ACA are far too expensive. For that reason, some individuals with limited funds might choose to forgo health insurance.

Under most circumstances, this would result in an expensive tax penalty for those who get caught without adequate health insurance coverage; however, the ACA does have 14 hardship exemptions that could prevent a person from being penalized.

One of the hardship exemptions applies to individuals who have filed for bankruptcy protection within the past six months. The bankruptcy may have been needed to deal with out of control medical debt, or it could have been used to handle other forms of debt.

However, even with this hardship exemption it’s important to consider the benefits of purchasing health insurance coverage.

As you probably already know, serious illnesses and accidents can happen out of nowhere, and they can cause your finances to quickly spiral out of control. Health insurance sometimes helps to prevent that from happening.