Safeguard your assets with proactive financial preparation
Many individuals find themselves unprepared to deal with the financial toll of long-term disability or chronic illness. Before you drain your savings or empty out your emergency fund trying to cover the costs of unexpected medical expenses, taking these steps may safeguard your assets and ensure that you're getting every bit of financial assistance you're entitled to.
1. Carefully review the terms of both your health care and life insurance policies
You can't prepare for dealing with a serious illness or disability until you know exactly how far your health care coverage will go toward helping you pay for it all. You and your loved ones should know early on what you'll be on the hook for in terms of co-pays, prescription costs, etc. What are your deductibles? How much will your insurer pay toward medical care before you'll be expected to foot the bill? Next, review your life insurance policy. Some types of life insurance have a disability rider that can help you pay for some of these medical costs.
2. Make a claim on your existing disability insurance policy, if you have one
Unlike your healthcare insurance, disability insurance doesn't go directly toward your medical bills or health care. Instead, disability insurance replaces as much of 60% of your income in the event that you become disabled. If you obtained your disability insurance through an employer via a group plan, be sure to review your policy's terms and conditions. If you can, try to have both short-term and long-term disability coverage. If it's unlikely you'll be returning to work, certain insurers may offer you a lump sum payment in lieu of monthly payments, depending on the specifics of your policy.
3. Give a trusted friend or loved one durable power of attorney
Even if your condition is not terminal, it's a good idea to assign someone durable power of attorney, so that they can make hard decisions about your medical treatment and finances for you in the event that are unable to do so in the future.
4. Determine your eligibility for Medicaid, Medicare, and Social Security Disability Income (SSDI) benefits
Medicare is a federal health care coverage program, and Medicaid is a health care program run jointly by state and federal governments. Both of these programs provide inexpensive or even free health care coverage for people with certain disabilities. Social Security Disability Income benefits are also available to individuals with certain disabilities who are under full retirement age.