Eric Tyson - Financial Security For Dummies

Replace your insurance coverage. Before you finally leave your job, get proper insurance. With health insurance, COBRA regulations require many employers to allow you to continue your existing coverage (at your own expense) for at least 18 months. According to the U.S. Department of Labor: “The law generally applies to all group health plans maintained by private-sector employers with 20 or more employees, or by state or local governments … In addition, many states have laws similar to COBRA, including those that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA).” You can also shop for health insurance on your own and, depending upon your household income, may qualify for a reduced price (subsidized) policy. With disability insurance, secure coverage before you leave your job, so you have income to qualify for coverage. If you have life insurance through your employer, obtain new individual coverage as soon as you know you’re going to leave your job. (See Chapter 11for more details on insurance.)

Stay on top of your income tax obligations. When you run your own business, it’s 100 percent on you to make your income tax payments, which you’re required to do through quarterly estimated tax payments. Equally importantly is to reserve and set aside that tax money so that you have it ready to use when the payments are due. I’ve seen too many small-business owners dig themselves into big financial holes and in the worst cases end up in financial ruin because they failed to plan for and make their quarterly estimated income tax payments.

Establish a retirement savings plan. After your business starts making a profit, consider establishing a retirement savings plan such as a SEP-IRA. Such plans allow you to shelter up to 20 percent of your business income from federal and state taxation.

Our personal health is often taken for granted when things are fine, which thankfully for most people is nearly all the time. But a health challenge, typically unforeseen, can turn your life and emotions upside down.

To keep your sanity and to ensure your best health, here are some important steps to take and points to keep in mind:

Check your coverage. Make sure your health insurance coverage is being paid and in force. While insurance companies can’t boot you from your coverage for a medical problem, you can lose your coverage if you haven’t been paying for it. If your coverage has lapsed or you simply never bothered to get coverage thinking you wouldn’t need it, get signed up pronto!

Take time off from your job. We have enough stressors in our lives even when all is good with our health. Adding the uncertainty of the possible paths of a medical problem can easily cause any normal person to feel overwhelmed. If you work for an employer, they may offer sick days and/or personal days.Currently, there are no federal legal requirements for paid sick leave except for temporary COVID-19 paid leave law. More than a dozen states mandate some sick pay beyond temporary COVID-19 requirements. At the federal level, the Family and Medical Leave Act (FMLA) allows for up to 12 weeks of unpaid sick leave for either the employee or a member of their immediate family for particular medical conditions. “Employees are eligible to take FMLA leave if they have worked for their employer for at least 12 months and have worked for at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 miles,” according to the U.S. Department of Labor. For more on these and other safety nets, please see Chapter 4.

Enlist and embrace support. It can be difficult to be objective and calm when your health is on the line. Having a spouse, relative, or other close friend assist you with your research and serve as a sounding board for decisions can be useful and calming. When it’s your health problem, dealing with important medical decisions can feel isolating and lonely, so finding a trusted person willing and able to share some of the burden and thinking can be invaluable. Just be sure that the person you’re trusting will keep your information and situation confidential and that they understand what you’re hoping to get from their involvement.

Seek second opinions and do some research. There is rarely just one clear-cut course of action to deal with a particular medical problem. Be sure you ask any medical provider what treatment options exist for your problem and their opinion of the pros and cons of each. Doctors are often rushed and may make you feel that you can’t ask a lot of questions. If necessary, schedule another office visit or ask a time-constrained doctor when you can follow up with them by phone. Recognize that medical providers have conflicts of interest, make mistakes, and have imperfections.You should also do some of your own research, but please understand the dangers of unvetted things you may read online that any person with a computer can choose to publish on a website. Check and vet your sources!

As your parents age, they may need help with a variety of issues and living tasks. An illness or accident such as a fall can be a triggering event. Although you probably won’t have the time or ability to perform all the help your parent(s) may need, you may end up coordinating some service providers who will. Here are key issues to consider when unexpectedly needing to care for aging parents:

Get involved in their healthcare. Your aging parents may already have a lot on their minds, or they simply may not be able to coordinate and manage all the healthcare providers who are giving them medications and advice. Try, as best as you can, to be their advocate. Speak with their primary care doctor so you can understand their current medical condition, the need for various medications, and how to help coordinate caregivers. Visit home-care providers and nursing homes and speak with prospective care providers.

Get help where possible. In most communities, a variety of nonprofit organizations offer information and counseling to families who are caring for elderly parents. Numerous for-profit agencies can help with everything from simple cleaning and cooking to health checks and medication monitoring, to assisted living and health advocacy. You may be able to find your way to such resources through your state’s department of insurance, as well as through recommendations from local senior centers, doctors, and other medical providers. You’ll especially want to get assistance and information if your parents need some sort of home care, nursing home care, or assisted living arrangement.

Take some time off. Caring for an aging parent, particularly one who is having health problems, can be time-consuming and emotionally draining. Do your parents and yourself a favor by using some personal or vacation time to help get things in order. Also be sure to take care of yourself and give yourself some needed downtime and a real vacation from your obligations.

Understand tax breaks. If you’re financially supporting your parents, you may be eligible for a number of tax credits and deductions for elder care. Some employers’ flexible benefit plans allow you to put away money on a pretax basis to pay for the care of your parents. Also explore the dependent care tax credit, which you can take on your federal income tax Form 1040. And if you provide half or more of the support costs for your parents, you may be able to claim them as dependents on your tax return.

Discuss getting the estate in order. Parents don’t like thinking about their demise, and they may feel awkward discussing this issue with their adult children. But opening a dialogue between you and your folks about such issues can be healthy in many ways. Not only does discussing wills, living wills, power of attorney, living trusts, and estate planning strategies make you aware of your folks’ situation, but it can also improve their plans to both their benefit and yours.