Work related benefits

• File for paid sick time/paid time off at work
• File for disability benefits through work (if activated)
• File for Workers' Compensation if disability related to work
• Arrange to continue health insurance

Find additional sources of income

• File for Social Security Disability
• Review health insurance policy for disability clause
• Financial assistance programs

Manage cash flow

• Update your budget
  • List existing sources of income
  • Suspend discretionary spending
  • Explain situation to family, ask for suggestions

Actions
to take

• Consult a professional financial advisor
• Ask creditors to reduce or defer payments, if necessary
• Decide what to do with your 401(k)

Only as a last resort

• Tap into retirement accounts
• Declare bankruptcy

Work-Related Benefits

Many employers offer benefits packages that go well beyond the paycheck. If you have disability coverage, you may be able to weather this experience fairly well. But even without coverage, there are actions you may want to take.

Paid Time Off (PTO)

Every employer has a sick leave policy. Find out how many days of sick time you can be paid for and file whatever paperwork is required to put it in motion. PTO won't solve your long-term income needs, but every dollar will help.

Disability Coverage

Does your employer offer disability coverage? If you signed up and have been making payments, file for benefits right away. You want to ensure you start receiving payments before running out of money. Examine the terms of your employer disability insurance to make sure you are adequately covered.

Worker's Comp

If your disability happened on the job, or is a work-related illness, you may be eligible for Workers' Compensation. This coverage can pay for medical care and rehabilitation services that may help you return to work sooner. For details on your state's benefits, http://www.comp.state.nc.us/ncic/pages/all50.htm.

Health insurance

Continuing your health insurance coverage is crucial for two reasons:

1. You may need it
2. It can be much harder to get reinsured if your coverage lapses — especially following a disability. Health insurance companies may require a checkup before starting coverage and can deny you for pre-existing conditions.

401(k)

If you are permanently leaving your employer, you may have to decide what to do with your 401(k). You may have the option of leaving your retirement savings in the plan of your previous employer, but if not, you can roll the funds over into an IRA. Either way, you'll probably be allowed to leave the funds for a little while, so don't rush to take them out.

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Find Additional Sources of Income

Being out of work due to disability or long-term illness may be a much more challenging situation than losing your job for any other reason. If your health is what's keeping you from working, you're not likely to land another similar job soon. So you need to be creative about finding new sources of income.

Social Security Disability Insurance (SSDI)

You may qualify for disability benefits through the Social Security Disability Insurance program. Eligibility for and amount of the benefit is dependent upon the number of years you contributed to the SS program and your wages. File for SSDI coverage right away, as it can take months for any payments to start. Also, be aware that Social Security has very strict rules about who qualifies and most people do not receive benefits the first time they file. For more information about Social Security Benefits, http://www.ssa.gov/dibplan/.

Health Insurance coverage

Some personal health insurance policies also provide coverage for disability. Check your policy to see if yours is one of them — and file right away if it is.

Financial Assistance

Many local, state and federal government programs exist to help disabled workers with financial aid — and rehabilitation that may help them get back to work. Check the details at all levels at DisabilityInfo.Gov.

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Manage Cash Flow

Now that you don't have a regular paycheck coming in, you'll probably need to make some changes to control how much money goes out. There are many expenses that may be necessary — and a good idea to continue — such as health insurance, car insurance, mortgage/rent, and utilities. But anything that isn't required may be put off for now.

A. Create an income and spending plan

The first step in staying afioat during a disability is creating an Income and Spending Plan. The second step is sticking to it. So let's get started:

• List all sources of income you can depend on for the next few months
• List all expenses in two columns: required and discretionary — be honest when making these lists; gas is required to get to the grocery store but cable TV isn't
• Stop spending on anything that's not on your "required" list
• Don't stop paying your bills — ask creditors if they offer grace periods that allow you to defer payments or can offer any other ways of keeping current
• Evaluate adjusting your spouse's tax withholding for more cash now rather than a refund later — get a W4 form http://www.irs.gov/pub/irs-pdf/fw4.pdf
• If you have to tap into savings, withdraw money from low-interest savings accounts first — avoid triggering penalties from CDs or retirement savings plan
• For those eligible to begin receiving retirement income from Social Security, contact the Social Security Administration to find out how this may impact your disability benefits. For assistance with this process, http://www.aarp.org/money/social_security/planning_for_soc_sec.html

Use these credit card-specific tips:

• Don't use your credit cards to buy anything you can't pay off in full — high interest rates can be costly
• If cash if really tight, just make the minimum payments — if you can afford more, pay more to avoid interest charges getting out of hand
• Call your credit card companies and request a lower interest rate — sometimes you can get one just by asking

B. Get Extra Help

C. Avoid These Actions (if you can)

While you may not be able to control your cash fiow as much as you'd like during a period of extended unemployment, there are still a few things you should try to avoid as long as possible:

• Try not to dip into your retirement accounts — although there is such a thing as a "hardship" withdrawal from 401(k) plans, it may be in your best interests to avoid one. Not only will you have to pay a stiff penalty, you'll be depleting funds that will be required for retirement.

• Try to avoid filing for bankruptcy — unlike missing payments, which lowers your credit score and stays on your report for seven years, bankruptcy badly damages it — and stays on file ten years. Yes, you can recover. But it's much harder than if you merely had late payments of 60 days or under*.