A Guide for Working Individuals
Receiving a medical diagnosis can be difficult no matter what stage of life you are in. Hearing that you will now have to deal with a chronic or progressive illness that will be disruptive to your life is hard enough. When you factor in the time, costs, and logistical aspects of treatment and ongoing medical care, it’s not unusual to be left with more questions than there are available answers. Undoubtedly, you will face new challenges as you learn to navigate everything that is involved in managing your health condition, and this can be particularly tricky if you are a working individual.
Various scenarios may come into play depending on your diagnosis. You may need to undergo treatment and allow for recovery time which may prevent you from continuing your work either temporarily or long term. Or you might be able to continue working but will require more frequent doctor visits. Your diagnosis may not allow you to continue to perform certain job responsibilities. It can be overwhelming to begin thinking about all the “what ifs,” especially when you are just learning about your change in health. Fortunately, with planning, there are strategies you can implement to help maintain your financial stability during this time.
Assess Your Current Financial Situation
It can be helpful to start by taking a good look at where you are financially, right now.
- Review your household budget. What are your monthly expenses and essential bills? Is there room to make any adjustments? Can you cut out any bills for things you do not rely on or regularly use?
- How much income do you need to replace? Your medical provider may be able to help give you an estimate of the amount of time you may need to dedicate to your medical treatment. This can help you to determine if you will need to replace short-term or long-term income.
- Do you have an emergency fund? If you have set aside savings for unexpected situations, now may be the time to use them. Start by reviewing how much you have available and estimate how long those funds can cover your essential expenses.
Speak With Your Employer
Communicate with your employer as early as possible and make them aware of your situation. They can help you make the most of the resources that are available through your job.
- Sick Leave and Paid Time Off (PTO). Learn about your employer’s policies regarding how much time you can use.
- Short-Term Disability Insurance. This is also known as temporary disability insurance, and you may have coverage through your employer. If you are too sick (or injured) to work, benefits can cover 40% to 70% of your monthly income and typically last from 3 to 6 months. The benefits are paid directly to you, and you can use them to cover your expenses. It is important to keep detailed records about your condition in coordination with your medical provider so that you do not run into issues when filing an eligible claim.
- Long-Term Disability Insurance. If you have long-term disability insurance, depending on your specific policy, you may be eligible to receive payments for up to 5 or 10 years. Each policy will have its own terms, including a waiting period for payments to begin, but long-term disability insurance typically pays from 40% to 65% of your pre-disability earnings. Some policies may offer more. Your employer or plan manager can help you to review waiting periods, documentation requirements, and the exact coverage that your policy offers.
Look Into Government and Supplemental Options
- State Disability Benefits. Depending on where you live, there may be short-term disability programs that can offer you assistance. For instance, New York State Disability Benefits Law requires employers to provide disability benefits coverage to employees for an off-the-job injury or illness. The benefit amount is 50% of your average weekly wage for the last eight weeks worked but is capped at a maximum of $170 per week. These benefits are subject to Social Security and Medicare taxes and are paid for a maximum of 26 weeks of disability during any 52 consecutive week period. Other states may offer programs with their own rules and regulations.
- Social Security Disability Insurance (SSDI). If your condition is likely to keep you from working long-term, you may want to consider applying for SSDI. This is a government program that provides monthly payments to people who cannot work because of a disability. To qualify, you need to have worked long enough and paid into Social Security through your taxes. Your medical condition must seriously limit your ability to work. Monthly payments can be up to a maximum of $4,018, depending on your past earnings. If eligible, you can submit an application directly on the Social Security website to begin the evaluation process.
- Charity and Community Programs. There are many nonprofit groups that might be a source of support for individuals with specific conditions, such as cancer or Alzheimer’s disease. These organizations vary widely in the services they offer. Some may include educational resources, emotional support, or financial assistance. Your doctor may be able to offer recommendations.
How Your Financial Advisor Can Help
If you are dealing with a new medical diagnosis, it can be hard to know which way to turn. It is important to direct your energy toward following your medical provider’s orders and to actively participate in managing your health. At the same time, responsibilities of daily life will continue to fight for your attention. This can be an ideal time to lean on your trusted financial advisor for support.
Your financial advisor can be a source of strength and comfort, offering unbiased advice as they get a clear picture of the health challenges you are facing. They can review your current financial situation and help you to look at all of your options. Not only can they help you to make decisions about your budget and savings, but they can also work with you to create a plan that best utilizes any employment or insurance benefits you may have while planning for potential tax impacts in the future.
You do not have to travel this road alone. If you take action as early as possible and reach out to your financial advisor for help, together you can find ways that you can replace your income and plan for financial stability as you work through your medical diagnosis. If you would like to learn more about how we can help you, please contact us.
