If you are sick or disabled and can’t work, it’s important to make a financial plan and use every financial resource available to you.
With interrupted pay (and potentially high medical bills), getting sick or injured can derail your finances. Here are some tips to help you stay financially afloat.
Your job protections
If you’re sick or disabled, you may be wondering how safe your job is when you can’t show up to work. Under federal law, companies aren’t required to offer paid sick leave. But your job may still be protected.
“The Family Medical Leave Act protects qualified individuals who are not able to work because of a serious health condition,” says Staten Island bankruptcy attorney Karra L. Kingston.
FMLA requires up to 12 weeks of unpaid leave when you or someone in your immediate family has a qualifying medical situation. To be eligible for FMLA, you have to:
- Work for a covered employer
- Have worked for your employer for at least 12 months
- Have worked at least 1,250 hours over the previous 12 months
- Work at a location where at least 50 employees are employed by the employer within 75 miles
Under the Family First Coronavirus Response Act (FFCRA), some employers have to offer two-week paid sick leave or expanded FLMA guidelines when leave is related to COVID-19. For now, these rules apply through Dec. 31, 2020.
According to Kevin Haney, president and owner of Growing Family Benefits, roughly half of workers qualify for FMLA leave. But, he says a number of states have their own supplemental rules to expand eligibility.
Your employer’s human resources department should be able to tell you what kind of leave you’re eligible for and how to apply for benefits.
Financial assistance when you’re sick or disabled
If you can’t work because of an illness or disability, you might have some other options for financial help:
- Medicaid is a federal program administered at the state level that offers financial assistance for low-income families and individuals. To see if you’re eligible, apply through your state’s Medicaid program.
- Workers’ compensation may be an option if your illness or injury is work-related. Workers’ compensation can help you pay medical bills and replace some of your lost income when you can’t work. File a claim through your employer to see what kind of benefits you might be eligible for.
- Supplemental Security Income benefits might help you if you have a permanent disability and won’t be able to return to work. If you’re only out of action for a short period of time, you likely won’t qualify.
You also have some options for additional cash benefits or assistance purchasing food or paying utility bills. These programs can be a temporary stopgap until you’re able to get back to work. Check the links below for more information about eligibility:
- Supplemental Nutrition Assistance Program
- Low Income Home Energy Assistance Program
- Temporary Assistance for Needy Families
If you’re out of work because of the coronavirus, there may be additional options for you to try. The CARES Act allows people affected by COVID-19 (sick or not) to defer mortgage payments for up to 360 days. It also offers a temporary reprieve on federal student loan payments through Sept. 30, 2020.
How to manage your money and protect yourself financially
Even if you’re eligible for government assistance programs, you’ll likely need to take some additional steps to keep your finances on track.
See related: Where to get free financial advice
Protect your credit
In times of illness, it’s easy to fall behind on bills or stop paying them altogether. But this can deliver a serious blow to your credit, should your creditors report the late payments or delinquencies.
“On time payment is the critical credit score factor to keep in mind as delinquency stains your record for seven years,” says Haney.
Late payments can have a huge impact on your credit for years, which will make it harder to access credit or get the best terms. If you are having trouble making monthly loan payments or meeting your credit card minimum payment, contact your lender and discuss your options before that first missed payment.
Talk to your lenders
“If someone can’t pay their bills at all due to sickness or disability, they should notify their lenders right away,” says Howard Dvorkin, CPA and chairman of Debt.com.
Your lenders and billers might give you some options, such as temporary deferments or forbearance on loans, credit card hardship programs, waived fees or deferred payments. Contact your lenders and other billers to find out what they’re willing to offer you.
Dvorkin says that if your credit card company doesn’t offer a specific hardship program for illness or disability, try to negotiate. You might be able to get interest rate reductions or a waiver of minimum payment requirements.
In some instances, billers may offer pandemic-specific relief or aid. Haney notes that many car insurance companies discounted premiums for consumers since many are spending more time at home and driving less.
Use credit cards to your advantage
When used wisely, credit cards can help ease financial stress when you’re sick and struggling to stay on top of regular bills and debt payments.
A credit card with a 0% introductory APR on purchases could help you temporarily cover basic living expenses without accruing interest, as long as you pay off the balance before the introductory period ends.
If you’re already carrying a balance on a credit card, a 0% balance transfer card could be a good option, says Kingston. But keep in mind that both of these options may require good to excellent credit.
Consider all of your financial resources
It’s possible that you might have financial resources on hand to tap into in times of illness or disability.
A retirement plan is one option. Under the CARES Act, you can take out up to $100,000 from your IRA penalty-free and borrow up to $100,000 from a 401(k) with repayment deferred up to 12 months. But before you decide to tap into your retirement, consider the trade-off.
Unless you have no other option, “it probably isn’t the best idea to wipe out a retirement account,” says Kingston.
Also look at the benefits your employer offers. Beyond short term disability, you might have banked sick leave or vacation days, says Haney. Cashing that in could add to your cash flow if you’re unable to work.
If you have an unexpected illness or disability, it might be tempting to ignore your financial health as you take care of your physical health. But it’s important to be proactive and consider every available resource. That’s the best way to mitigate the damage.