Caring for a Loved One While Maintaining Financial Stability
Nothing can fully prepare you for the emotions that may arise when someone you love is diagnosed with a terminal illness. The fear, shock, and uncertainty that accompany this news is difficult enough, but when you also serve in the role of caregiver, stressful demands make it even harder. You must navigate your own feelings of heartache while coordinating medical care, helping with daily needs, and managing financial responsibilities that may change rapidly as the illness progresses. There can be a tremendous weight on your shoulders while you work to ensure that your loved one is as comfortable and supported as possible.
This is why financial planning becomes so important when a loved one is living with a terminal illness. Having a clear plan in place can help to alleviate stress, protect family finances, and allow caregivers the ability to focus on spending meaningful time with the person they love. While no amount of preparation can lessen the emotional difficulties of this chapter, organizing financial matters can make an incredibly challenging time feel more manageable.
Here are some steps you can take:
Understand the Financial Impact of a Terminal Illness
A terminal diagnosis brings with it a number of financial pressures, and each family’s experience will be unique. However, some common challenges often arise.
- Medical Expenses – There may be insurance copays, deductibles, prescription medications, medical equipment, and fees for specialists or treatments that are not fully covered by insurance. In-home assistance, private nursing, or increased supervision may involve substantial out-of-pocket costs.
- Travel Expenses – Costs may include transportation to and from appointments, parking fees, meals away from home, or overnight stays. These smaller, frequent costs can add up quickly.
- Home Modifications – You may need to install ramps, railings, or even bring in a hospital bed to help your loved one remain safely at home.
- Loss of Income – A terminal illness can disrupt income in multiple ways. Your loved one may no longer be able to work, or they may need to reduce hours significantly. Caregivers often cut back on their own work hours or take extended leave to provide support. Over time, these shifts can affect savings, retirement contributions, and the overall household budget.
Organize Key Documents and Essential Information
Keep important documents and information up to date and easily accessible. A fireproof safe is a secure place to store physical copies at home, and you can supplement this by keeping digital versions in a secure online vault for quick access when needed.
Create or update estate planning documents. This specific set of legal documents dictates how medical care will be handled if an individual becomes incapable of making decisions for themselves, how loved ones will be taken care of upon that person’s passing and how assets will be transferred. Estate planning documents may include a last will and testament, a trust or trusts, a financial power of attorney, a healthcare proxy, a living will, beneficiary designations and a last letter of instruction.
Gather additional important documents. Keep paperwork organized including insurance policies, deeds, titles, bank and investment account statements, tax documents, and Social Security or pension information.
- Create a secure list of logins and passwords for online accounts. In the event the caregiver needs to access accounts, it is important to have the login information available. You can use a secure password manager service such as 1Password or Keeper and you can keep a printed copy stored in a fireproof safe.
- Consider designating a trusted contact. If your loved one is hospitalized or physically unable to speak with their financial advisor, a designated trusted contact can keep the advisor informed about any updates in their condition.
Review Insurance Coverage and Benefits
Understanding what is covered by insurance can help reduce financial surprises and clarify which costs the family may need to prepare for.
- Health Insurance – Whether the patient has private health insurance, Medicare, or Medicaid, it is helpful to determine what treatments, medications, specialists, and care services are covered. Your financial advisor can review these policies and create a plan that can address any out-of-pocket expenses that may not be paid for by insurance.
- Hospice Care – Medicare and many private insurance plans cover hospice care services. However, it is important that all services are coordinated by the hospice medical team or you run the risk that they may not be covered. For instance, prescription drugs designed to cure the illness rather than control symptoms or offer pain relief will not be paid for by Medicare once the benefit starts.
- Long-Term Care Insurance – If the patient has this type of a policy, it can help pay for home care, assisted living, or nursing facilities by providing daily or monthly benefits for a set period of time.
- Life Insurance – Some policies include accelerated death benefits (ADB), which allow a portion of the benefit to be accessed while the patient is still living to help cover care expenses or other financial needs.
- Disability and Employer Benefits – If the patient was working at the time of diagnosis, they may have access to employer-sponsored disability benefits, paid leave, or other resources. Caregivers may also be eligible for protections under the Family and Medical Leave Act (FMLA), which allows them to take unpaid leave to take care of a loved one. Speaking with your employer can help you to understand what support may be available.
Evaluate Current and Future Expenses
As caregiving needs increase, expenses often grow. Creating a realistic, flexible care budget can help you anticipate costs and make informed decisions.
- List current care expenses. This may include in-home care, certain hospice services, medications, medical equipment, and respite care.
- Explore potential sources of financial support for caregivers. Veterans’ benefits, local community or nonprofit programs, and state assistance for caregivers may offer relief. Exploring these options early can help supplement the family’s resources.
- Plan for final expenses. Although this can be difficult to discuss, making decisions about funeral or memorial arrangements can reduce emotional strain and ensure that your loved one’s wishes are honored.
Protect Your Long-Term Financial Stability with the Help of Your Financial Advisor
While caregivers focus on the immediate needs of their loved one, it is also important to consider long-term financial stability for the entire family. Your financial advisor can help you with this process by explaining your options and guiding you through decisions.
- They can help you review your financial plan. If necessary, they can adjust your retirement, savings, and investment strategy to reflect your current and future needs.
- They can guide you through important tax considerations. Medical deductions, required minimum distributions (RMDs), and changes in filing status may impact your financial planning.
- They can help guard you from financial exploitation. Scammers and con artists constantly come up with new ways to prey on us, and during periods of vulnerability, individuals may be at greater risk of fraud. Your financial advisor can be a trusted source you can turn to with any questions or concerns you may have if someone contacts you and it just doesn’t “feel right.” They can also help you to strengthen account protections and ensure that only trusted individuals have access.
- They can assist you with estate planning. Your financial advisor can review the documents in your estate plan to make sure that they reflect your wishes and appropriately meet your needs.
- They can help bring you clarity and ease some of your burden. Caregivers become responsible for so many things when they are supporting a loved one with a terminal illness that oftentimes, they put their own needs on hold. While it may feel nearly impossible to focus on anything else, your financial advisor can be your partner to lean on while you navigate this difficult time. They can provide you with caring, unbiased guidance to help you organize priorities, understand your options, and make thoughtful decisions during an overwhelming time.
The responsibilities that fall on caregivers during a terminal illness are immense, and managing the financial side of care can feel especially overwhelming. You do not have to face these challenges alone. Your trusted financial advisor can help you create a plan that supports both your loved one’s comfort and your family’s long-term financial wellbeing. If you would like to learn more about how we can help you, please contact us.
