Medical bills

You are here:
< Back

L1: Medical billsI have had a 72T since 2004. I’m now 58 and recently have gone through a number of medical procedures recently. All of my money is in this plan and the amounts I owe are enormous. Is there any way I can take a distabution to pay these bills. There is no way I can pay what is owed even with a monthly plan.2010-04-01 23:04, By: john, IP: []
L2: Medical billsVery tough situation.Best option: Try your best to get them to agree that you will pay the bill in full within a week after your 72t modification date. That date is the exact date you turn 59.5 plus a couple days for a safety margin. Perhaps if you show them you have the assets and agree to a reasonable interest rate from now till then, they will agree. You might feed them a small monthly amount to show good faith as well. That would preserve your plan and prevent retroactive penalties and interest back to 2004. And if you are in a state that protects IRAs from creditors and all your assets are in the IRA, it would seem that they don’t have a choice. In addition, you might use that creditor protection to at least get the amounts negotiated down to no higher than a large insurer would pay under their contracts with those providers.Other option: If there is enough at risk here, you might request a private letter ruling based on the Benz decision (look that up under PLRs of interest on this site). While Benz shook things up by preserving the 72t plan for extra higher education expenses, the precedent is there for medical expense exceptions also. They are even less discretionery that education costs. The Benz decsision authorized extra amounts to be taken out of the plan without busting the 72t plan. The extra amounts were taxable, but penalty free because they had their own penalty waiver. In your case, the medical penalty waiver applies in excess of 7.5% of AGI, so you would still have a small amount subject to penalty. These PLR requests will cost 10k plus legal costs, therefore the relative amounts here will determine whether this is a viable solution. While prior PLRs are not binding and limited to the specific applicant, there is still a degree of precedent established by Benz.Your long term medical condition and potential for future employment are also factors in your decision. In addition, you should research any potential benefits of the new healthcare legislation for future considerations. I think there was something in there providing government reinsurance for large medical bills for those between 55 and 64, but I think it kicks in later this year and would NOT be retroactive. 2010-04-02 03:40, By: Alan S., IP: []