Managing a Disability or Chronic Illness

Create a financial plan that can help you make the best of any circumstance. Here’s a checklist for financial preparedness.

Lay a secure foundation

Consider disability insurance to replace income that you may no longer receive if you become disabled by illness or injury. Some employers offer free or discounted disability insurance policies to their employees. Many insurance companies sell individual policies.

Some key points to consider for any disability insurance policy are:

• Your policy cost and whether it might be offset in part by employer contributions or insurance policy dividends
• Proportion of your income to be replaced (you may need a supplemental policy to ensure that you have sufficient funds)
• Time you’d have to wait for benefits to be paid after becoming disabled
• Any caps on total benefits

Look into long-term care insurance, which can provide you with care in the event that you cannot take care of yourself due to any physical or mental incapacity. Here are some key points to consider:

• • Be confident that you can make premium payments because coverage will generally lapse if you stop.
  • Assess the financial details of benefits. Some policies provide periodic fixed payments, some reimburse a percentage of the actual costs you incur and some pay all direct costs. Some policies may require you to use a specific provider or will only give you full reimbursement if you use the insurance company’s preferred provider. Some policies have an annual or lifetime benefit ceiling.

• Understand the kinds of care being offered. Some policies may not cover in-home health aides, adult day care, assisted living facilities or nursing homes.
• Determine whether the policy has any exclusions. Some policies, for example, may not cover mental health issues, disabilities resulting from substance abuse, injuries resulting from acts of war or attempted suicide.

Ask these questions before buying a policy

• Are there automatic adjustments for increases in the cost of living? (Inflation can erode the value of fixed payments over time.)
• Is the issuing company licensed in your state and financially sound? (Independent companies such as Standard & Poor’s and A.M. Best Company rate insurance companies based on their fiscal health.)
• When do you want benefits to kick in? (Generally, the longer the waiting period, the lower the cost of a policy.)
• Is there a guaranteed renewal clause, meaning the policy remains in force even if you become physically or mentally incapacitated?

Be sure you’ve created the documents that your loved ones will need to carry out your intentions

• Wills, trust documents and letters of intent should detail your wishes for care and control of your affairs should you become unable to act for yourself.
• Advanced directives, living wills and powers of attorney that you’ve created should address the potential consequences of your disability or incapacity.

Managing the effects of reduced capability

• Assess your current situation
  • Can you effectively manage routine financial affairs such as paying bills and monitoring your assets?
  • Can you take care of personal needs such as food and hygiene?
  • Can you manage your daily medication and any medical devices may you need?
  • Have you made alternative arrangements for activities you cannot manage yourself?
• Evaluate your prognosis and understand its implications
  • Can you reasonably expect to regain important capabilities at some future point?
  • Are you likely to remain stable at your new (albeit diminished) level of capability?
  • Should you prepare for increasing loss of capability? (Begin planning now for assisted living or custodial care for which you can foresee a need.)
• Consider your future circumstances
  • Can you foresee returning to work at some point, and if so, will you need any accommodation? Discuss your future work potential with your employer.
  • Will you be taking any medication indefinitely, and if so, have you made any necessary financial or insurance arrangements? You should discuss the financial implications of medication choices with your physician; there may be lower-cost alternatives.
  • Can you remain in your home, and if so, can you manage with support from family and friends, or will you need in-home professional services? Discuss your needs with the people you plan to rely on for support.
  • Have you updated your estate plan (especially your will, trust documents, advanced directives and letters of intent) to reflect your new circumstances?
  • Do you see a time when you will not be able to make decisions for yourself? If so, you can work out arrangements in advance with those who would become your guardians.

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