Staying Financially Sound During Illness

We all know to eat right, exercise, and see our doctors regularly to stay healthy. But we also know an injury or illness can happen at any time. Should that happen, the cost of medical treatment can be almost as devastating as the impact to your health. Here are some steps you can take, both proactively and during an emergency, to reduce the financial pain of getting hurt or sick.

Health insurance

Few people could afford to pay themselves the full cost of a hospital stay, illness treatment, or even preventive health care. It is critically important to obtain health insurance for yourself and your dependents. When investigating insurance options, shop around and shop early. Compare the costs of the plan, how much you will still pay for medical care through deductibles and copayments, and whether your preferred healthcare providers or medical treatments are covered by the plans you are considering. Also, some types of insurance, such as long-term care, can be difficult to obtain if you don’t secure them ahead of the need.

Types of Health Insurance

There are several different types of health insurance plans:

• Fee for Service (FFS)—You choose your own doctors and hospitals, pay for services up front, then get reimbursed by the insurance company. In exchange for the flexibility, though, they also come with higher out-of-pocket expenses, a lot of paperwork, and higher premiums than other plans.
• Health Maintenance Organization (HMO)—These are typically the most affordable plans. You must select a primary care physician (a PCP) who then refers you to specialists. Instead of flexibility, policyholders have low co-payments, minimal paperwork, and extensive coverage.
• Point of Service (POS)—More flexible than an HMO, but does not require you to select a PCP. If you see a doctor outside the network, the amount covered will be substantially less than if you went to a physician within your network.
• Exclusive Provider Organization (EPO)—This is a hybrid health insurance plan. You don’t have to have a primary care provider, but you do have to stick to seeing health care providers within a preapproved network.
• High Deductible Health Plan (HDHP)—This plan generally has lower premiums and higher deductibles. Surprisingly, this option can work well for those on the really healthy side and those with serious health conditions. If you are up for doing your homework and managing your healthcare, it might be worth looking into.

Paying for Health Expenses

Even with health insurance, you will still need to budget for health expenses. Consider these ways to keep those costs manageable:

• Establish a health savings account (HSA) through your employer or on your own. The money you deposit isn’t taxed as long as it is used to pay for medical expenses (learn about HSA rules and limitations from your financial institution or financial planner). Some employers may also contribute to the fund as an added benefit.
• Contribute to a flexible spending account (FSA) through your employer. This work place benefit allows you to set aside funds that are not taxed^* to pay for health costs. As with HSAs, some employers may contribute. However, this is a “use it or lose it" fund where some or all of the money must be spent before the end of the fiscal period.
• Look into ways to lower the cost of medication by asking your doctor whether a generic medicine will be as effective as a brand name, or by talking with doctors or pharmacists about prescription assistance programs that may provide medicine at a reduced cost. Explore any rebate programs that might be available to you (usually through the medication manufacturer) for additional ways to save on pharmacy costs

Paying Your Bills While Sidelined with Injury or Illness

There are proactive steps you can take to help you manage your living expenses while sick or hurt:

• Consider purchasing short-term or long-term disability insurance, which provide pre-determined monthly payments for a set number of months should you become physically unable to work.
• Build an emergency fund with your own savings equivalent to three-to-six months of your basic expenses. Also, if you have significant medical expenses on the horizon, take a look at your investments to see if any funds need to be invested differently to be readily accessible.
• Identify someone you trust who can act as a financial power of attorney should you become incapacitated. This is a legal document that authorizes a trusted person to make financial decisions for you and administer your money.
• Contact your state’s health and human services department to learn whether you are eligible for disability assistance through Medicaid, Social Security Disability, or Supplemental Security Income.

Keeping Your Job as You Recover

Once you and your doctor have discussed what your road to recovery looks like, you will have the information you need to discuss options with your employer:

• Negotiate accommodations to your job that allow you to deliver the needed work in a way that supports your recovery or new physical situation. Familiarize yourself with the protections offered to you under the Americans with Disabilities Act (ADA).
• Learn about the Family Medical Leave Act (FMLA) to see if that helps you keep your job should you need a longer recovery time. If you’ve worked at least one year for a company with 50 or more employees, you may be eligible for 12 weeks of unpaid leave through FMLA. Caregivers can also look into FMLA provisions.

Long-Term Care Insurance

Long-term care insurance is for people who can no longer perform aspects of daily living, such as eating, dressing or getting around on their own. Many people buy long-term care insurance for a loved one. It gives them the peace of mind that they will be properly cared for while protecting their finances against the high cost of assisted living facilities, nursing homes, and extended home care. When exploring a long-term care insurance policy, whether for you or someone else, be aware of several key factors:

• Coverage can be denied—Insurers can deny coverage to people with serious health problems.
• High cost—This insurance coverage tends to be expensive. The cost of the policy depends on your age and health when you sign on and the type of coverage you select.
• Some expenses are not covered—Even the most comprehensive and pricey long-term care policy will not cover all long-term care needs.

When evaluating any policy, research the company, plan thoroughly, and don't buy more than you need. Your financial health depends on it.

*CFS does not provide tax or legal advice. For such guidance, please consult a tax and/or legal advisor

† Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. UFCU has contracted with CFS to make non-deposit investment products and services available to credit union members.