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Americans Greatly Overestimate Large Healthcare Expenses

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UK and Ireland online news outlet PoliticsJOE went viral in December 2019 by quizzing locals on the cost of healthcare in the United States. Every person underestimated the expense of each healthcare treatment, ranging from the cost of having a baby to the cost of calling an ambulance.

We wanted to see if Americans knew the cost of healthcare in their own country. We surveyed a total of 4,000 Americans and learned that they expect major hospitalizations to cost a lot of money.

Key Takeaways

  • Less than 1 in 10 Americans correctly guessed the average hospital cost for having a baby
  • More than 1 in 10 Americans correctly guessed the cost of fixing a broken leg
  • More than half of Americans correctly guessed the cost of an inhaler
  • Nearly three in four Americans correctly guessed the cost of a first-time eye exam

Healthcare costs greatly vary based on numerous factors, including the severity or complexity of the treatment needed, the state you live in, the medical facility hospital you visit and many other factors. 

For this study, we’re referring to general averages, but we want to emphasize that the cost of individual hospitalizations greatly differ.

Americans Expect High Prices for Major Healthcare Expenses

Unlike our British counterparts, many Americans believed that big healthcare procedures like fixing a broken leg and childbirth cost a high amount of money. 

Less than one in 10 Americans could correctly guess the average cost of childbirth.

The average cost of childbirth can vary greatly, but we turned to the Healthcare Cost and Utilization Project (HCUP) (sponsored by the Agency for Healthcare Research and Quality (AHRQ) for a baseline comparison. HCUP found in a 2019 study using 2016 data that uncomplicated births cost $1,200 on average while complicated births cost about $8,900 on average.

Complications during childbirth can include perineal tears, water breaking early and excessive bleeding, according to the National Institute of Child Health and Human Development (NICHD). These complications can be costly, especially in out-of-pocket fees.

A seven-year study published in 2020 found that the individual costs billed stayed about the same over the years. However, the portion paid by patients increased and they found that deductibles rose from about $1,500 to $2,500.

In our study, more than one in 10 Americans correctly guessed the cost of fixing a broken leg. HealthCare.gov, a website managed and paid for by the U.S. Centers for Medicare & Medicaid Services, says that fixing a broken leg can cost up to $7,500.

The severity of a broken leg varies based on things like the injury’s location on the leg and the type of injury. The United Kingdom’s National Health Service (NHS) says compartment syndrome, bone infection and damaged nerves are a few complications a person can experience.

Most Americans Have a Grasp on Small Healthcare Expenses

Despite most Americans highballing prices for complex procedures, most could accurately guess the prices of smaller procedures.

About six in 10 respondents correctly guessed the average cost of an inhaler.

Researchers at GoodRx found that the average cost of an inhaler was more than $380 in 2018. This number came after analyzing cash prices for the 16 leading inhaler products in the country from a representative sample of prescription fills at American pharmacies.

Their report also found that some inhalers are on the lower tier of coverage. This means that Americans with asthma can face high copays or may have to pay the full amount of the inhaler depending on their insurance coverage.

The Centers for Disease Control and Prevention (CDC) found that nearly half of adults with asthma ages 18 to 64 have no or partial year insurance coverage, meaning that they’ll need to pay out of pocket to cover the difference. A study published in 2017 also found that the annual per-person medical cost of asthma was $3,266 in 2015 U.S. dollars.

More than three in four Americans correctly guessed the cost of a first-time eye exam. FAIR Health estimates (as reported by NVISION Eye Center) that the national average cost of an initial eye exam is $200.

Eye health and vision correction resource site AllAboutVision.com says that costs of an eye exam can differ based on who is performing the exam, the tests included in the exam and if the exam includes any services related to contact lenses.

Medical Bills and Your Credit Report

Understanding how your health insurance works and knowing what it covers are the first steps to understanding your medical bills. In addition to understanding your current coverage, you should also consult with your insurance and healthcare providers to learn about the different options available to you for procedures and treatment that fit your budget.

consult with your insurance and healthcare providers to understand all of your options

Understanding costs is crucial since these bills can impact your credit score. However, receiving a medical bill or paying it late does not directly affect your credit score, according to Experian. It only affects your score if a collections agency takes over your debt.

However, some Americans may mistakenly have debt in collections. An error like this can unfairly lower your credit score and may impact your ability to qualify for personal loans, auto loans and more.

If you feel you might have medical debt inaccurately reported in collections or other mistakes on your credit report, contact a Lexington Law credit consultant to learn how we can help you identify unverified and incorrect items from your report.

Methodology

This study was conducted for Lexington Law using Google Consumer Surveys and interpreted by Siege Media. The sample consisted of no less than 1,000 completed responses per question. Post-stratification weighting has been applied to ensure an accurate and reliable representation of the total population. This survey was conducted in January 2020.

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How Much Does It Cost to File for Bankruptcy?

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Filing for bankruptcy is a process that can take more time and cost more money for a variety of reasons. There are some standard costs involved in all cases—less than $400 in court fees for filing paperwork and other surcharges—but this doesn’t account for attorney fees and payment plans.

In most cases, Americans pay between $400 to $4,000 in bankruptcy filing and attorney fees.

Bankruptcy Filing Fees

There are slightly different fees depending on whether you’re filing for a Chapter 7 or Chapter 13 bankruptcy. In both cases, the total cost in filing fees and surcharges is under $400 for the majority of people.

  • Chapter 7 filing costs: $245 filing fee, $75 administrative fee and $15 trustee surcharge
  • Chapter 13 filing costs: $235 filing fee and $75 administrative fee

Petitioners in both cases must also finish two mandatory bankruptcy education courses from approved credit counseling agencies. The federal government sets maximum allowable costs, and as such, the total cost to complete the courses is from $0 to $100.

Small additional costs may be added—$0.50 per page for reproducing documents, $11 for document certification and $22 for exemplification—among other miscellaneous fees that could become significant in complicated and prolonged court cases.

Attorney Fees

As mentioned previously, attorney fees are difficult to estimate in general and can be wildly different based on the location and specific elements of each bankruptcy case. Basically, if it’s a complicated situation, it will take longer to resolve and will incur more fees.

You’re not required to work with an attorney, which means you can file a bankruptcy petition on your own, but that leaves you responsible for all interactions with the court. The likelihood of you being successful is much higher when you’re represented by professionals who have experience handling these matters.

The specific attorney fees in your area are on the public record—made available by the government via PACER for $0.10 per page of information—which means you can find reliable costs at a local level.

Some estimates are provided below using data outlined in the Consumer Bankruptcy Fee Study produced by the University of Maine School of Law.

If You’re Filing Chapter 7

The national mean for Chapter 7 attorney fees is $968 in no-asset cases and $1,072 in asset cases. When comparing state by state, the difference in average cost can be over 200 percent. Averages range from a low of $692 in Idaho to a high of $1,530 in Arizona.

If You’re Filing Chapter 13

The national mean for Chapter 13 attorney fees is $2,564. The difference in cost from state to state can be even greater than in Chapter 7, with an increase of over 300% from lowest to highest cost. The most affordable state is North Dakota, where the mean attorney fee is $1,560 for Chapter 13 cases, and Maine is the least affordable at $4,950.

Each court has its own limits when it comes to no-look fees (also known as “presumptively reasonable fees”). These refer to the fact that if someone’s Chapter 13 filing fees are below a set amount (like, say, $4,500), the court will consider the fees reasonable without further review.

What Can Make a Bankruptcy Filing More Expensive?

Other than the filing fees, attorney fees and court costs, there are several issues that can add to the complexity and total cost of filing for bankruptcy.

  • Non-dischargeable debts, such as the majority of owed taxes, debt incurred due to deliberate injury or damage to people or property, child support, alimony and debts that were not disclosed in bankruptcy filing. These are debts that can’t be removed (discharged) via the bankruptcy process
  • Higher-than-average income based on your state and the number of people in the household
  • Previous bankruptcy filings within the last seven or 10 years that appear on your credit report
  • Multiple current filings, such as an ongoing personal bankruptcy case occurring alongside a business bankruptcy
  • Complications due to income streams and/or creditors—having more creditors generally increases the amount of time needed, as does the presence of multiple and/or complex income streams
  • Ongoing fraud cases, investigations or allegations
  • Payment plans and other arrangements made between attorney and client

Is There Any Way to Reduce Costs?

Most of the costs associated with bankruptcy are either set in stone, such as the filing fees and court costs, or predetermined by your specific situation and unable to be changed. However, there are a few circumstances that may help lower your costs.

Anyone over the age of 65 and people with disabilities, as well as the unemployed and those on a low income, may qualify for help at the local level via city and county programs. They may also receive lower fee agreements and more favorable terms on payment plans from individual attorneys.

Options such as this are dependent on location and whether the attorney in question is willing to accept it.

Theoretically, the biggest cost-saver would be to represent yourself, which would remove the attorney fees and keep your total costs fairly low. However, in reality, representing yourself in a bankruptcy or any other case is risky and can create higher costs and headaches that would’ve been avoided by paying for professional help.

The Bottom Line

As detailed above, the costs associated with Chapter 7 and 13 bankruptcy cases can vary by 300% or more and are dependent on many factors that are out of your control. It could cost a few hundred dollars, or many thousands of dollars, and the cost of a typical case is somewhere around $2,500.

It’s best to consult with a professional, even when it brings additional costs at such an unfortunate time. Bankruptcy attorneys are experts in the field and can give advice on other issues, such as the differences between foreclosure and bankruptcy.

After the dust has settled in the initial process of filing and satisfying the bankruptcy process, it’s important to get back on track and rebuild your credit and become eligible for all of the benefits it can bring. The bankruptcy will appear on your credit report for up to 10 years, but it’s never too early to start improving.


Reviewed by Vince R. Mayr, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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Paying Taxes as a Freelancer

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Paying taxes as a freelancer can be a bit more involved—and expensive—than paying taxes as a W-2 employee. When you’re a freelancer, you’re the boss. That’s great if you want some flexibility, but it also means you’re self-employed, so you are responsible for both the employer and employee parts of employment taxes.

When you work for someone else, your paycheck amount is your pay minus all appropriate deductions. That includes deductions for federal and state income taxes as well as Medicare and Social Security contributions.

But what you might not realize is that your employer covers part of the Medicare and Social Security amounts. As a self-employed individual, you have to pay the total amount yourself. That’s 12.4 percent for Social Security and 2.9 percent for Medicare—a total of 15.3 percent of your taxable earnings, not including federal and other income taxes.

When Do I Have to Start Paying Taxes as a Freelancer?

According to the Internal Revenue Service, if you earn $400 or more in a year via self-employment or contract work, you must claim the income and pay taxes on it. The threshold is even lower if you earn the money for church work. If you earn more than $108.28 as a church employee and the church employer doesn’t withhold and pay employment taxes, you must do so.

What Tax Forms Should I Know About?

Freelancers report their income to the IRS using a Form 1040, but they may need to include a variety of Schedule attachments, including:

  • Schedule A, which lists itemized deductions
  • Schedule C, which reports profits or losses from their freelancer business
  • Schedule SE, which calculates self-employment tax

These are only some of the forms that might be relevant to a freelancer filing federal taxes. Freelancers must also file a tax form for the state in which they live as well as with any local governments that require income tax payments.

If you’re planning to do your taxes on your own as a freelancer, it might be helpful to invest in DIY tax software. Look for options that cater specifically to home and business or self-employment situations. These software programs typically walk you through a series of questions designed to determine which forms you need to file and help you complete those forms correctly.

Six Tips for Doing Your Taxes as a Freelancer

As a freelancer, chances are you spend a lot of your time attending to clients and getting production work done. You may not have a lot of time for business organization tasks such as accounting. But a proactive approach to paying taxes as a freelancer can help you prepare to do your taxes and pay what can be a surprisingly big bill each year.

Here are six tips for handling taxes as a freelancer.

1. Keep Track of Your Income

Track your income so you know how much you may need to pay in taxes every year. Keeping track of your numbers also helps you understand whether your business is profitable and how you’re doing with income compared to past years.

You can track your income in a number of ways. Apps and software programs such as QuickBooks and Wave let you manage your freelance invoices and track income and expenses. Some also help you generate financial reports that might be helpful come tax time.

Alternatively, you can track your income in an Excel spreadsheet or even a notebook, as long as you’re consistent with writing everything down.

2. Set Money Aside in Advance

It’s tempting to count every dollar that comes in as money you can use. But it’s wiser to set money aside for taxes in advance. Depending on how much you earn as a freelancer, you could owe thousands in federal and state taxes by the end of the year, and if you didn’t plan ahead, you might not have the money to cover the tax bill.

That can lead to tax debt that comes with pretty stiff penalties and interest—and the potential for a tax lien if you can’t pay the bill.

3. Determine Your Business Structure

Make sure you know what your business structure is. Many freelancers operate as sole proprietorships. But you might be able to get a tax break if you operate as an LLC or a corporation. Talk to legal and tax professionals as you set up your business to find out about the pros and cons of each type of organization.

4. Know About Relevant Deductions

As a freelancer, you may be able to take certain federal tax deductions to save yourself some money. Tax deductions reduce how much of your income is considered taxable, which, in turn, reduces how much you owe in taxes. Here are a few common deductions that might be relevant to you as a freelancer.

Home Office

You can take the home office deduction if you’ve set aside a certain area of your home for use by the business. The IRS does have a couple of stipulations.

First, you have to regularly use the space for your business, and it can’t be something you use regularly for other purposes. For example, you can’t claim your dining room as a home office just because you sometimes work from that location.

Second, the home has to be your principal place of business, which means it’s where you do most business activity. You can’t claim the deduction if you normally work outside the home but sometimes answer work emails while you’re in the living room.

Equipment and Supplies

You can also deduct the cost of equipment and supplies that you buy for your business. That includes software purchases and relevant subscriptions, such as if you pay monthly for Microsoft 365 or annually for a domain name.

Make sure you have backup documentation for any business expenses you deduct. That means keeping receipts that show what you purchased so you can prove that the expenses were for business. You also have to be careful to keep business and personal expenses separate—art supplies for your child’s school project, for example, wouldn’t typically be considered valid business expenses.

Travel and Meals

Meals and travel expenses that are related to your business may be tax deductible. If you stay in a hotel, book a flight or incur other travel expenses that are necessary for the running of your business, you can claim them as a deduction. The same is true for 50 percent of the value of meals and beverages that you pay for as a necessity when doing business.

The IRS does set an “ordinary and necessary” rule here. For example, if you’re traveling to meet with a client and you need to eat lunch, that is likely to be considered necessary. But if you opt for a very lavish meal for no other purpose than to do so, it might not be allowed under the “ordinary” part of the rule.

Business Insurance

If you carry liability or similar insurance for your business, you can deduct it as a cost of doing business. You may also be able to deduct the cost of other insurance policies if they are necessary for your trade.

5. Estimate Your Taxes Quarterly

The IRS offers provisions for estimating your employment taxes on a quarterly basis. Self-employed individuals, including freelancers, can make these estimated tax payments, too. Paying as you go means you won’t owe a large sum every April, and if you overestimate, you may get a tax refund.

Quarterly payments are due in April, June, September and January. They can be mailed or made online. Depending on how much you earn, you may need to make quarterly estimated tax payments to avoid a penalty at the end of the year.

6. Consult a Tax Professional

As you can see just from the basic information and tips above, paying taxes as a freelancer can get complicated quickly. Consider talking to a tax professional to understand what all your obligations are and how best to reduce your tax burden using legal deductions. You might be missing a major deduction every year that could save you a lot of money.

And remember that as a freelancer, you’re running your own small business. That means paying attention to all your finances, including your credit report. If you ever want to take out a business loan or seek other funding to grow your business, you might need to rely on your good credit score.

Check your credit score, and if you find inaccurate negative information making an impact on your score, contact Lexington Law to find out how to get help disputing it.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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Understanding Credit Card Security Codes

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Credit card security codes are an important security measure to prevent fraud and identity theft. They add an additional layer of safety when making purchases and help ensure the buyer is, in fact, the cardholder.

These security codes—often called CVV codes, short for “card verification value”—are three- or four-digit codes located directly on your credit card. They’re typically, but not always, asked for when making card-not-present transactions, such as those made online and over the phone. Here, we detail where to find them, how they work and why they’re important for consumer protection.

Where to Find Your CVV Code

The location of your CVV code depends on the credit card issuer:

  • Visa, Mastercard and Discover: The code will be three numbers on the back of the card to the right of the “authorized signature.”
  • American Express: The code will be four numbers on the front of the card above and to the right of the card number.
Where to locate your card's security code.

How to Find Your CVV Code Without the Card

Credit card security codes were designed to ensure that the person making a purchase actually has the card in their possession. Because of this, it’s impossible to look up your CVV code without having the physical card. This is why it’s important to have the physical card on hand if you need to make a purchase that requires a CVV code.

If an identity thief obtains your credit card number—for example, via shoulder surfing—may try to call the bank and pretend to be you in order to get the CVV code. However, banks typically don’t give out this information. Each financial institution has their own policies, but if you can’t read or access your CVV code, they will usually issue you a new card.

While most retailers require a CVV code when making card-not-present transactions, many don’t. In these instances, crooks would still be able to use your card.

How Are CVV Codes Generated?

According to IBM, CVV codes are generated using an algorithm. The algorithm requires the following information:

  • Primary account number (PAN)
  • Four-digit expiration date
  • Three-digit service code
  • A pair of cryptographically processed keys

Other Names for CVV Codes

Depending on the credit card company and when your card was issued, your security code may go by a different name. Even though there are many different abbreviations, the basic concept remains the same. Below are all the abbreviations and meanings for credit card security codes:

  • CID (Discover and American Express): Card Identification Number
  • CSC (American Express): Card Security Code
  • CVC (Mastercard): Card Verification Code
  • CVC2 (Visa): Card Validation Code 2
  • CVD (Discover): Card Verification Data
  • CVV (All): Card Verification Value
  • CVV2 (Visa): Card Verification Value 2
  • SPC (Uncommon): Signature Panel Code

Credit Card Security Code Precautions

While CVVs offer another layer of security to help protect users, there are still some things to be aware of when making card-not-present transactions.

  • Sign the back of your credit card as soon as you receive it.
  • Keep your CVV number secure. Never give it out unless absolutely necessary—and if you fully trust the person.
  • Review each billing statement to ensure there are no transactions you don’t recognize or didn’t authorize. If there are, contact your financial institution immediately and consider freezing your credit.
Credit card security precautions.

Protecting your identity requires constant vigilance—but emerging technology may have the potential to mitigate some of the risk of credit card fraud.

Shifting CVVs: The Future of Credit Card Safety?

Since chip-enabled cards replaced magnetic stripes, in-person credit card fraud has taken a big dip. Crooks are turning toward online and card-not-present methods of fraud. CVV codes are good at combating this type of fraud—but shifting CVVs, also referred to as dynamic CVVs, may be even better.

The technology works by displaying a temporary CVV code on a small battery-powered screen on the back of the card. The code regularly changes after a set interval of time. This helps thwart fraud because by the time a hacker has illegally obtained a shifting CVV code and tried to make a purchase, it will likely have changed.

Despite the security benefits, shifting CVVs haven’t been widely implemented due to high cost, and it remains to be seen if the technology and process can scale. Financial institutions have many measures in place, such as fraud alert, to notify you of potentially suspicious activity.

If you suspect you’ve been a victim of identity theft, call your credit card company, change your passwords and notify any credit bureaus and law enforcement agencies. By regularly checking your credit card statements, being careful about who you give your information to and being vigilant when making purchases, you’ll help do your part in keeping your identity secure.


Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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