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Have you ever come down with a case of shingles, needed a knee replacement, or undergone emergency surgery? Let’s hope not — for the sake of your finances. Many people don’t realize just how much an illness can impact their financial lives.

Independent contractors, business owners, and even employees who need to miss work due to a non-job-related illness or injury may have to shoulder a serious financial burden. In today’s increasingly gig economy, you are not guaranteed paid sick leave even if you are a salaried worker, according to the United States Department of Labor (“Sick Leave,” United States Department of Labor, May 21, 2018).

What’s more, having paid sick leave doesn’t always protect you. A serious illness requiring significant time off can negatively affect your finances, forcing you to take out loans or use your credit cards to keep afloat.

The 2016 Federal Reserve Board survey found that 44 percent of adults say they either could not cover an emergency expense costing $400 or could cover it only by selling something or borrowing money (Board of Governors of the Federal Reserve System, “Report on the Economic Well-Being of U.S. Households in 2016,” May 2017).

Here are four tips for handling your finances before, and after, getting sick:

  • Build an emergency fund. Create a separate account from your retirement and other savings for emergency living expenses. Set up regular automated withdrawals from your checking account, and aim for a minimum of three to six months of living expenses.
  • Look into disability insurance. (Products available through one or more carriers not affiliated with New York Life, dependent on carrier authorization and product availability in your state or locality.) While most people with dependents understand the need for life insurance, they may overlook disability coverage. The latter can protect those in the gig economy, as well as stay-at-home spouses/partners, by replacing a portion of income that is lost when someone gets sick.
  • Negotiate medical bills: Did you know that medical bills are negotiable? Just because the pay line says $5,000 doesn’t mean there isn’t some wiggle room. Research what is a fair and reasonable rate for a procedure by checking websites such as Healthcare Bluebook or the Medicare/Medicaid provider database (Centers for Medicare and Medicaid Services, “Medicare Provider Utilization and Payment Data,” August 10, 2017), which tracks procedure prices across the country. Then call both your health insurance provider and the hospital and try to negotiate a lower bill (Patty Lamberti, “What to Do When You Get Medical Bills You Can’t Afford,” Money Under 30, May 9, 2018.)

A little planning now can save you from the big financial headache that frequently comes with a medical emergency.

This educational, third-party article is provided as a courtesy by Martin Blau and Saul Fisher, agents, New York Life Insurance Company. To learn more about the information or topics discussed, please contact Martin at 917-714-9315 or Saul at 718-486-4667.

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