§ 30.3 — Health and Health Insurance
Revised: April 1, 2009
The health of the debtor, the debtor’s spouse and the debtor’s dependents can make or break a Chapter 13 case.
Counsel must ask medical questions to determine the debtor’s ability to work and the likelihood and magnitude of medical expenses during the case. Chapter 13 can be used effectively to manage the financial problems of a chronically ill individual, but complete information must be collected to permit design of a special-purpose plan. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 increased the information debtors’ counsel must collect with respect to health care and, in particular, with respect to health care expenses for the debtor, the spouse of the debtor and dependents of the debtor.2 The health care net in a Chapter 13 case now extends to the care and support of elderly, chronically ill or disabled household members or members of the debtor’s immediate family—including parents, grandparents, siblings, children and grandchildren of the debtor.3 Without careful questions before the petition, debtor’s counsel can’t correctly determine a Chapter 13 debtor’s health care expenses to calculate projected disposable income at confirmation.
If the debtor or the debtor’s spouse is pregnant, counsel must budget for an interruption in wages and additional expenses.
In some jurisdictions, health insurance is required, and everywhere it must be budgeted in Schedule J to Official Bankruptcy Form 6,4 and in several places on Official Form B22C.5 Some Chapter 13 trustees have successfully negotiated group health insurance coverage for uninsured Chapter 13 debtors in a district.
1 Pub. L. No. 109-8, 119 Stat. 23 (2005).
2 See §§ 475.1 [ National Standards ] § 95.2 National Standards, 477.6 [ Other [Necessary] Expenses—Dependent Care ] § 95.9 Other [Necessary] Expenses—Dependent Care, 477.8 [ Other [Necessary] Expenses—Health Care ] § 95.11 Other [Necessary] Expenses—Health Care, 478.1 [ Health and Disability Insurance ] § 95.21 Health and Disability Insurance and 481.1 [ Elderly, Ill or Disabled ] § 95.24 Elderly, Ill or Disabled.
3 11 U.S.C. § 707(b)(2)(A)(ii)(II), discussed in § 481.1 [ Elderly, Ill or Disabled ] § 95.24 Elderly, Ill or Disabled.
4 See § 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16 Schedules I and J—Income and Expenditures.
5 See §§ 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21 Form 122C-2: Disposable Income Calculation, 477.8 [ Other [Necessary] Expenses—Health Care ] § 95.11 Other [Necessary] Expenses—Health Care, 478.1 [ Health and Disability Insurance ] § 95.21 Health and Disability Insurance and 481.1 [ Elderly, Ill or Disabled ] § 95.24 Elderly, Ill or Disabled.