Business Content
Chronic Illness and Finances: What to Do Now

Receiving a diagnosis of a chronic illness can be a life-altering event, not just medically but also financially, especially when it brings significant changes to your health, work, or daily routine. Suddenly, you’re faced with new expenses, possible career changes, and the emotional weight of navigating the unknown. While it can feel overwhelming, taking proactive steps now can bring peace of mind and help protect your long-term financial security. Here are eight important actions to consider after a diagnosis.
Assess Your Current Financial Situation
Start by taking a clear, thorough look at your finances. List all of your assets, including bank accounts, investments, retirement savings, and property like your home or car. Next, list all of your liabilities, such as credit card balances, student loans, mortgages, and medical debt. Evaluate your income sources, including your job, disability benefits, paid time off, and your spouse’s or partner’s earnings. Carefully review all insurance policies, including health, disability, life, and long-term care, to understand what’s covered, what isn’t, and where gaps may exist.
Organize Your Financial Records
Gather and store important documents in a safe, accessible place. This includes bank statements, investment records, insurance policies, medical bills, tax returns, and legal documents like your will or power of attorney. You can store them physically in a fireproof safe or digitally in a secure, password-protected folder. Consider using a financial management app to help you track everything. Make sure a trusted family member or friend knows how to access these documents in case of emergency.
Estimate Your New Financial Needs
With a solid understanding of your current situation, estimate how your diagnosis may impact your finances going forward. This includes the cost of treatments, medications, doctor visits, therapy, assistive devices, or home modifications like ramps or widened doorways. Think beyond medical costs: Your living situation or transportation needs may change, and you might need help with daily activities. Consider whether your ability to work will be affected, and calculate any potential loss of income from reduced hours, medical leave, or a career change.
Explore Government Assistance Programs
Depending on your illness and financial situation, you may be eligible for various government assistance programs. Social Security Disability Insurance (SSDI) offers income based on work history and is available to those unable to work for at least 12 months. Supplemental Security Income (SSI) is available for individuals with limited income and resources who are disabled, blind, or over the age of 65. Most individuals receiving SSDI become eligible for Medicare 24 months after their disability benefits begin. Also, research state and local programs, such as help with prescriptions, transportation, or in-home care.
Adjust Your Budget
Now is the time to create a realistic budget based on your current income and projected expenses. Look for ways to reduce spending by cutting nonessentials like dining out, travel, or subscriptions. Prioritize essentials like housing, utilities, food, and healthcare. Be sure to include any government benefits or assistance you’re receiving in your income calculations. Budgeting tools or apps can help you track your spending and stay on course.
Revisit Your Financial Goals
A chronic illness may shift your long- and short-term financial goals. You may need to reconsider milestones like buying a house, paying for your children’s education, or retiring early. Review your investment strategy and assess whether your risk tolerance or time horizon has changed. If you’re concerned about income stability or life expectancy, you might consider adjusting your retirement plan or moving toward more conservative investments.
Communicate With Key Individuals
Open and honest communication is important during this time. Talk to your employer about your diagnosis and explore flexible work options, medical leave, or disability accommodations. Inform family members of your financial situation and plans so they can support you. A financial advisor may also be a valuable partner, helping you evaluate your options, adjust your plan, and understand the long-term financial impact of your diagnosis.
Review Your Estate Plan
Consider reviewing your estate plan to ensure it reflects your current wishes. Revisit your will to confirm that your assets will be distributed according to your wishes. Establish or update a power of attorney for healthcare and finances to designate someone you trust to make decisions on your behalf if you become unable to do so. A living trust may help manage your assets during your lifetime and can, in some cases, simplify or avoid probate.
Facing a chronic illness? Contact one of our financial advisors to help you build a plan that supports your health and financial future.