How to prepare for a health crisis
When loved ones are dealing with a serious illness, your thoughts are naturally on providing them the best care.
Money might be the last thing on your mind, but managing finances during a health crisis is important to securing your future, and ensuring those who need care receive the best treatment possible.
Take these important steps to help keep your finances on track during this difficult time.
Ask the right questions
Don’t wait until there’s an emergency to discuss what kind of care loved ones want, who will provide it and how it will be paid for. If your loved ones purchased an insurance policy years ago, it may be worth reviewing the coverage.
Important insurance questions to consider asking your loved ones include: Is their insurance a high-deductible plan? If so, does your loved one have enough money to cover the deductible until the policy would pick up the lion’s share of medical costs? Does the policy limit certain prescriptions and treatments?
Talking to a loved one’s financial advisor could also help you understand potential issues. Planning ahead is always a good idea, so try to establish contact with this person before a loved one falls ill. Advisors can’t bypass their clients and speak directly to family members, but your loved one can grant permission to include you in meetings and other communications.
Find income sources
Inquire about any disability coverage your family member has either through an employer or individually. Short-term disability policies are good for replacing a portion of an ill person’s salary for the first few weeks of an illness. Long-term policies, meanwhile, could replace income for up to several years.
Furthermore, short- and long-term policies usually have waiting periods, a certain number of days before benefits starts. Find out how long the waiting periods are and figure out how your loved one will pay for living expenses while waiting.
In the case of a permanent illness or injury, sign up for Social Security Disability payments. It may take many months of follow-ups to get the claim approved, so start the process as soon as possible.
Get all the documents together
When you do need to step in, you’ll want a full accounting of your loved one’s finances so nothing slips through the cracks. If possible, ask your loved one to make a list of all accounts and regular bills as well as logins and passwords for online accounts. Make sure you are aware of any liabilities too, such as a mortgage or a car loan.
If your loved one no longer has the cognitive abilities to assist you, you’ll have to play detective. The most recent tax return is a good source of information because it lists interest, dividends and capital gains as well as the institutions that earnings came from.
Make it legal
Your job will be a lot easier if you have the right legal documents, including:
Durable power of attorney
A power of attorney names an agent to act on a person’s behalf to make decisions should he or she not be able to. With a power of attorney, you can write checks and make financial decisions in support of your loved one’s care. This is preferable to becoming a co-signer on accounts since a power of attorney won’t impact your own credit.
Some powers of attorney are limited and are in place for only a certain period of time. If loved ones have cognitive impairment, make sure you have a durable power of attorney, which stays in effect even after they become incapacitated.
Without a power of attorney, you might be forced to petition the court for guardianship, which can be a lengthy and expensive process.
Like a power of attorney, a healthcare proxy grants someone decision-making powers for healthcare decisions. Since you never know when an accident or illness might strike, it’s a good idea to have a healthcare proxy executed even if your family members are in good health now.
This document lets a person communicate his or her wishes for end-of-life care while still healthy. A living will can specify if palliative care or medical intervention is preferred in the case of a terminal diagnosis, for example. As a caregiver, you can take comfort in not having to guess what type of care your loved ones want when they can’t tell you.
Dealing with a family healthcare crisis is difficult enough. Planning early and considering advice from a professional can make the financial aspect less stressful and more secure, so you can focus on getting loved ones the care they need.