‘We have no health insurance’: My wife died, leaving behind a lot of medical debt. Am I responsible?

“My wife passed away after an extended hospital stay.” (Photo subject is a model.)
“My wife passed away after an extended hospital stay.” (Photo subject is a model.) - iStockphoto
Dear Quentin,

My wife passed away after an extended hospital stay. She had absolutely no assets, but our home is in both our names. Am I responsible for her medical debt? Can they take our house? (We have no health insurance.)

Left Behind

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U.S. states take a variety of approaches to whether such bills are shared between spouses.
U.S. states take a variety of approaches to whether such bills are shared between spouses. - MarketWatch illustration
Dear Left Behind,

I’m sorry that you lost your wife after such a long stay in the hospital. Having this debt hanging over you only makes a traumatic situation worse. You and your wife are not alone in being uninsured; approximately 26 million Americans, or 7.7% of the population, have no health insurance.

What happens with her medical debt will depend on your state and, to a lesser degree, your negotiation skills. Medical bills are a peculiar beast: Unpaid medical bills only affect your credit score if they are over $500, and U.S. states take various approaches to whether such bills are shared between spouses.

“Most states (33) do not limit hospitals, collections agencies, or debt buyers from placing a lien or foreclosing on a patient’s home to recover on unpaid medical bills,” according to the Commonwealth Fund, a private U.S. foundation focused on the healthcare system.

Homestead exemption

Almost all states, however, have a homestead exemption, which protects some equity in a debtor’s home from being seized by creditors. “The amount of homestead exemption available to debtors varies from state to state, ranging from just $5,000 to the entire value of the home,” the Commonwealth Fund states.

“Seven states have unlimited homestead exemptions, allowing debtors to fully shield their primary homes from creditors,” it says. “Additionally, Louisiana offers an unlimited homestead exemption for certain uninsured, low-income patients with at least $10,000 in medical bills.”

It adds: “Eleven states prohibit or set limits on liens or foreclosures for medical debt. For example, New York and Maryland fully prohibit both liens and foreclosures because of medical debt, while California and New Mexico only prohibit them for certain low-income populations.”