How to deal with debt when serious illness strikes

While universal health care is extensive in Canada, it is not completely free. Drug coverage varies based on province, accessibility and how the drugs must be administered, among other factors. Patients are also on the hook for time off work, transportation to appointments, parking and any time their partners take off work. Suddenly, they're buried in medical bills, on top of regular expenses, while fighting for their health.

Deborah Maskens, founder of Kidney Cancer Canada, has seen families remortgage their homes, max out credit cards and retirement savings, and drown in debt to pay for serious illnesses such as cancer. "No one plans to have cancer," Maskens says. "It always comes as a surprise to people and not always at the most financially stable point in their lives. A second shock, of course, is how this is going to impact your life in a financial way."

You may feel helpless, but experts say you have options to help you make smart financial decisions when serious illness strikes.debt-illness

Create a new budget
Hopefully you had a budget before illness struck, but it's more important than ever to have a plan when you're paying for new, unexpected costs. You may have to make sacrifices to your funds for entertainment, hobbies or other nonessential categories to balance your new budget.

"It starts off being a revenue problem -- you have less money coming
in but your expenses don't change," says Brian Betz, a
Calgary-based debt counsellor with Money Mentors.  "You have a mortgage, debts to pay, kids going to university, then the additional costs of your [illness]."

However, no matter how many sacrifices you make, it's simply hard to plan for medical expenses. For instance, your treatment could be covered, but the treatment could result in side effects that need medication, too, and you could be stuck paying out of pocket for those, Maskens says.

When your budget isn't enough, your emergency savings are crucial, says Pat White, executive director of Credit Counselling Canada.

"Hopefully you were proactive and you have emergency savings for when something really serious might happen," White says. Your safety net may not cover your entire medical journey, but it'll help you avoid (or at least put off) dipping into credit to make ends meet.

Figure out financial aid
Determine what assistance is out there for you. Touch base with your insurance providers, health care officials and organizations that advocate for patients, such as the Canadian Cancer Society or the Alzheimer's Society of Canada. Maskens, who has advanced kidney cancer, spearheaded her own organization, CanCertainty, a campaign that advocates for fair and equal access to cancer medication.

Whether you have coverage through your employer or a private plan, figure out what kinds of benefits will kick in. Some workplace disability plans could cover about 66 per cent of your income. However, if you're self-employed, you could end up without any compensation.

There are many experts at your disposal. For instance, hospitals and cancer centres have "full-time drug navigators" dedicated to helping you figure out how your drugs can be partly funded and how to wade through the paperwork. In other facilities, social workers or pharmacists fill this role.

The onus is on you to be upfront with your doctor and medical staff. Tell them if you don't have insurance or a drug plan or if there are caps on your coverage. "Sometimes they can switch the treatment and give you something else," Maskens says.

You should also be sure your financial house in order. For example, you need to have filed your taxes in previous years so you can qualify for provincial coverage, Maskens says.

Other resources include financial planners, who can help you liquidate certain assets, such as a second car, investments or your retirement savings. Credit counsellors could help crunch the numbers to create a feasible budget and may even set up a debt repayment plan if it's the right choice.

The one thing you may want to hold off on is telling your creditors about your predicament. While Maskens says banks may extend leniency, such as suspending mortgage payments while you're on disability leave, Betz says filling in your credit card lenders could be risky, as they could increase your interest rate now that you're a greater risk. If you can keep your head above water, you shouldn't have to fill them in.

"But if you're in a situation where you cannot make payments or continue to fall behind, it's a conversation you need to have," Betz says.

Get creative
If you are really struggling, it's time to get creative. Take a hard look at all of your assets -- your home, your car and your investments -- your income, and your expenses. Can you sell any of these assets or move into an apartment so you're dealing with a small rental fee compared to a mortgage and insurance on your home?

You could also move provinces, which is more common than you might realize. A drug therapy may be covered in one province and not in another. Maskens says after you reside in your new province for three months, the benefits of the health coverage there should kick in.

Other Canadians have turned to crowd funding, creating online petitions and fundraisers so friends, family and strangers can chip in for their cause. Some patients have raised tens of thousands of dollars using these methods, Maskens says.

Maskens says she has seen clients who drive to a hospital for chemotherapy appointments with their partners, then go into the hospital alone while the partner stays in the car to avoid $30 parking fees.

Such measures may seem desperate, extreme or even silly, but they're all better than forgoing treatment altogether, which she has also seen patients do.

Don't shy away from any available resources, including other families that have gone through similar cases, Betz says. They could shed light on organizations that may not help financially, but can provide respite care to your loved one or other social services.

"Make sure you know everything you can possibly know," says Betz. "You're going to review all alternatives to see what options are available to you how it's going to work."

See related: Is credit card insurance right for you?, In an emergency, what comes first: savings or credit?
Published November 11, 2015

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