Bankruptcy Means Test: "I spent $95 at CVS."
Posted by Robert Weed / in The 2005 Bankruptcy Law / 3 comments
Yesterday I spent $95 at CVS. So? I’m a Virginia bankruptcy lawyer. Every day I talk about family budgets to three or four people who need to to file bankruptcy.
Most of those people estimate their health care expenses way too low. That hurts the chance of getting their bankruptcy approved.
The bankruptcy means test is the formula Congress set up for you to prove why you can’t afford to pay your debts. Under that bankruptcy means test, you get $60.00 per person for health care ($144.00 if you are over 65) or your actual health care spending. Whichever is more.
Most people’s first budget comes in way under the $60.00. Most people actually are spending a lot more.
That’s where my $95.00 comes in.
I’m in my early 60’s in good health and with good insurance. My wife is much younger, also in good health. Yesterday, I spent $95.00 at CVS. Of that $20.00 was on the one prescription I take–for my cholesterol. But all the rest also counts as as health care. (Here’s an article by the Bureau of Labor Statistics, that explains their definitions. The Bureau of Labor Statistics studies what people spend. Those studies are used by IRS collections–and the bankruptcy means test also uses the IRS figures.)
What else did I buy? Benadryl. I have allergy problems since I was little–and it seems to be getting worse. Cortisone cream. I got some kind of rash when I got my flue shot. Yuck!
Tylenol PM. Helps my wife sleep.
Calcium. WebMD says the average American diet gets only half the calcium needed to maintain strong bones.
Omega 3. Most Americans are “dangerously short” of Omega 3. We need to eat less eggs and more fish. Or take an omega pill. I try to do both.
Health care includes all non-prescription drugs and vitamins. I spend that $95.00 twice a month–around $200 total–on prescriptions, vitamins and over the counter meds every month. That already has me over the $120.00 bankruptcy means test allowance for a family of two.
That’s not all. My doctor wants to check my cholesterol every 4 months. With a $20.00 deductible and another $20.00 for the lab work. That’s $10.00 per month average.
Seeing the dentist every six months–or more often. For me that’s $120.00 per year after insurance–another $10.00 per month.
The pressure in my eyes is borderline for glaucoma. That’s another $8.00 a month average over the year to get that checked.
Health care includes first aid. People with children are spending a lot on cuts and scrapes. (Not to mention sprains and broken bones.)
Health care includes topical creams, like acne medication for teens.
Health care for the bankruptcy means test includes medical equipment–for a lot of people that’s glasses and contacts.
Then there’s the big stuff. I’ve been seeing the same dentist for 35 years. He’s warned me for 35 years that he’ll need to put crowns on my back teeth if I’m not more careful about grinding them. I guess I didn’t listen. That’s going to cost me $1200 next week! For just one! Ouch!
So, I’m spending $328 per month average on health care for a family of two–way over the $120 allowance. And that’s if nothing else goes wrong this year.
(Will another tooth start to split–maybe. Will I need new glasses–maybe. My wife travels a lot for business–will she catch something on those long airplane flights–almost for sure.)
But the point is you, not me. You and your family are probably spending a lot more that you first think, too. Accurately budgeting your health care cost is an important step to getting your bankruptcy approved.
(When I got home from yesterday’s CVS trip, I noticed that I didn’t buy any toothpaste. That was good for my point here. Toothpaste, shaving cream and deodorant are “personal care,” not health care. For your bankruptcy means test, they are part of your food budget. )
Where’s the line between “personal care” and health care? I think the line is mouthwash. Mouthwash is personal care. Anything that’s more like medicine than mouth wash is should go on the bankruptcy means test in the health care budget.
are HSA (Health Savings Account) accounts considered exempt?
Well, I don’t know. Never had anyone with enough in one to have to figure it out.
I don’t know. Never had someone who accumulated any money in their HSA where we needed to worry abut it.