A serious long-term illness or disability can have a devastating, often irreversible, effect on a family’s financial well-being. In fact, health care expenses are among the most common cause of bankruptcies, according to findings published in the American Journal of Medicine last year.
Most people are not financially prepared to have their employment interrupted, even briefly. For example, studies find more than 60 percent of workers live paycheck to paycheck. The U.S. Department of Commerce reports that the personal savings rate in March was just 2.7 percent of after-tax income.
So, what can you do to ease the financial risks if you are one of the millions who must stop working each year because of a serious health condition?
“First, have hope, because there are things you can do to take control,” says Paul Gada, personal finance director for the Allsup Disability Life Planning Center. Allsup is a nationwide provider of Social Security Disability Insurance (SSDI) representation and Medicare plan selection services.
According to Gada, seeking help is essential. “Many people are afraid and overwhelmed. Asking for help is a sign of strength, and being your own best advocate can help you feel more in control.”
Among the first steps people with serious health conditions or their caregivers should take quickly are:
• Create a financial plan. The plan should focus on establishing a budget and making certain you are spending down your assets in the least harmful way. Generally, this means using your savings or other resources before withdrawing from retirement accounts that could trigger a penalty or using high interest-rate credit, which could have you paying off interest for years.
Unfortunately, approximately 15 percent of people awaiting SSDI report raiding their retirement savings. Additionally, 17 percent are relying on their credit cards and 7 percent on home equity lines of credit to meet financial needs until they receive their SSDI benefits, according to the Allsup Disability Finance online poll. The poll was conducted online this spring with 138 respondents.
• Contact your mortgage company or landlord. As part of this, identify housing assistance programs. For example, the U.S. Department of Housing and Urban Development (HUD) has programs to assist with mortgage modifications, as well as rental assistance that can lower housing costs drastically. However, there are waiting lists, so it’s important to sign up as soon as possible.
“People are often reluctant to reach out to their mortgage company or their landlord, they start missing payments, and the foreclosure or eviction process starts before they finally explain the situation,” says Gada. “By that time, it may be too late.”
• Seek assistance with utilities, food and other necessities. Conserve your resources by finding assistance to help you cope. Hundreds of federal, local and private resources are available in most communities. These can range from neighborhood food pantries to federally funded programs, such as Low Income Home Energy Assistance Program (LIHEAP). Local phone companies provide reduced-rate support for home phone service. Associations such as the American Cancer Society and the National Family Caregiver Association also offer guidance.
Many more people indicate they are considering assistance than are actually securing this assistance, according to an Allsup poll. They may not understand how to apply or they may not meet the income thresholds initially, but could later on as they spend down their assets.
“It can be overwhelming and people too often give up,” explains Gada, adding that Allsup offers links to many of these resources from its Web site.
• Secure health care coverage. Continuing medical treatment is vital. Among the options are COBRA through your former employer, a spouse’s plan or other private coverage, such as through the health insurance exchanges being established as part of the health care legislation enacted earlier this year. Compare plans closely to make sure you are getting the coverage needed and that you understand the costs. Additionally, if you must take expensive prescription drugs, check if the pharmaceutical company offers a prescription-drug assistance program.
• Pursue income sources, including SSDI. If you have paid into the Social Security Disability Insurance program, you may be eligible for benefits. If you are eligible, it’s essential to apply quickly as it can take up to two years or more to be approved. Gada advises seeking help with your SSDI application to speed the process. For example, people with disabilities represented by Allsup are significantly more likely to receive SSDI benefits at the initial level.
“It’s heartbreaking to hear of people with serious illnesses and disabilities unable to work and struggling month after month to pay for food or medical costs until they’re financially wiped out,” says Gada. “It shouldn’t be that way. There are steps people can take, but they need to ask for help and know how to get it.”
More information on financial assistance is available at www.Allsup.com or (800) 279-4357.
Courtesy of ARAcontent