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How to pay your bills when you can’t work

Tips to help ease your financial pain due to illness or injury

Life is unpredictable. One moment you’re healthy and active, and the next moment an accident or illness strikes unexpectantly and you’re not — a reality many people have recently experienced firsthand during the COVID-19 pandemic.

Think you’re invincible? Of course you want to have a positive outlook on life – it’s good for your overall health. However, you don’t want to be naïve.

The truth is that 1 in 4 20-year-olds will experience a long-term disability and miss work for at least a year before they reach retirement age. And even short-term disabilities (lasting six months or less) take their toll, affecting around 5 percent of working Americans each year.1

The reasons for missing work run the gamut. The ailment that tops the long-term disability list is musculoskeletal disorders (27.6 percent). Then there’s cancer (15 percent), injuries due to fractures and sprains (12 percent), mental health issues (9.3 percent), and heart attacks and strokes (8.2 percent). And there are other things that can keep you from working long-term — and do a number on your family’s income.2

Finding financial relief

There are several types of income-replacement insurance available to help you offset a loss of income while you're unable to work.

Government disability insurance programs

Here in the United States, the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs through the federal government can help alleviate some of the financial burden of a longer-term disability — but it may not always be enough. 

As of April 2021, the average SSDI benefit amount was $1,455.67 a month.3 That’s about $17,500 annually.

Be aware that not all who apply may qualify to receive this benefit, as you must meet the eligibility requirements and be unable to work for a year or more, so it won't be helpful for short-term disabilities. And, with it taking on average three to five months to get a decision on your SSDI application, it might be a while before you start receiving your SSDI benefits.4

Disability and income replacement benefits through your employer

Your employer may also offer short-term and long-term disability insurance, workers' compensation, or voluntary supplemental health insurance products like critical illness insurance or accident insurance

These products all work differently, but the ultimate goal is to help replace lost income resulting from an illness or accidental injury.

  • Disability insurance typically pays you a percentage of your salary until you're recovered and return to work, or for a certain amount of time as specified by your policy
  • Workers' compensation provides benefits to offset your expenses and lost income resulting from an on-the-job injury
  • Critical illness insurance typically provides a single lump-sum payment based on the diagnosis of a condition covered by your policy
  • Accident insurance also typically provides a lump sum when you experience an accident covered by your policy

Check with your employer now to learn what they offer, since employers' policies vary and some will require you to enroll prior to experiencing disability in order to receive benefits.

Being proactive

If you find yourself out of work due to a disability or illness, here are some strategies to help ease the financial pain. Even if you’re feeling healthy, there are steps you can take now to help ensure you can pay your bills in the future – just in case anything bad should happen to you.

Create a barebones budget

If you have an emergency fund, congratulations. According to the Federal Reserve, 30 percent of Americans can’t pay an unexpected $400 bill without using a credit card or borrowing from their family or the bank.5

Delay dipping into your rainy day fund by creating a budget that allows for just your bare necessities, such as groceries, rent, transportation and insurance.

Need a budget assistant, one that will keep you on track? There’s an app for that. Research a few online to find one that works best for you.

Also, (almost) everything is negotiable. Don’t believe it? Call your service providers (such as your garbage collector and home and auto insurance company) and ask for better rates. If they don’t budge, tell them you’re going to shop around.

Be upfront and honest with your lenders and service providers if you are unable to pay your bills on time. In this scenario, it’s better to ask permission rather than forgiveness.6 Many service providers —utilities, mobile/wireless carriers and other necessities — are often willing to set up alternate payment plans or take IOUs if you work it out with them in advance.

You can also generate some income by selling household items or clothing that are in good shape but you don’t need anymore. There are plenty of apps for you to use to list your stuff. If you don’t want to go the online route, take your things to a brick-and-mortar consignment store in your neighborhood.

Use coupons and consider store brands

You can’t eliminate groceries from the budget, but you can save on how much you’re spending on them.

Many grocery and big-box stores have apps that allow shoppers to add digital coupons to a store loyalty card. And often everyone in the family can get their own card for the same account, amounting in even bigger savings. And other apps may give you cash back for buying certain items.

Whether you use paper or digital coupons, you can save even more money by “stacking” coupons and shopping at stores that have “double” or “triple” coupon days.

And don’t forget about store brands, which can offer significant savings over name brands.

Evaluate and eliminate some nonessential expenses

Binge-watching your favorite shows while recovering from an illness or injury sounds like good medicine. And so does listening to your favorite musicians on a music streaming service.

But it’s never a bad idea to evaluate how many you’re subscribed to, how often you’re using them and what they cost each month. You may be surprised how much you’re spending each month and want to consider canceling some. You can always resubscribe once you’re back on your feet.

Have you reviewed your mobile/wireless plan lately? You can save money by switching from an unlimited data plan to one with a smaller quantity.7 Also, a prepaid or a no-term cell phone plan might better meet your needs.

Other “extras” that you may consider eliminating include gym memberships, dining out at restaurants and frequent trips to the coffee shop.

Prioritize credit card payments

Americans tend to have more than one credit card and the average credit card balance is about $6,200.8

Pay what you can – even if it’s just the monthly minimum. Don’t go into avoidance mode and not pay them. If you do, you’ll be hammered with late fees. And your credit score will take a hit since payment history accounts for 35 percent of your overall score.9

If you find yourself with a late fee, ask your credit card company to waive it. During the height of the pandemic, several credit card companies waived their fees for customers affected by their new circumstances. You might want to ask to have your card’s annual fee waived or reduced and ask for a lower interest rate.

Talk to your creditor to find out if you qualify for any hardship or relief programs. Thanks to the CARES Act of 2020, you might be able to defer or pause a payment, make a partial payment, forbear delinquent amounts, modify a loan or a contract, or suspend federal student loan payments.10

Apply for government programs

Don’t forget there are state and federal government programs and resources to help people who are struggling financially.

If you’ve lost your job, check your state’s unemployment insurance program to learn what benefits are available. The U.S. government also offers programs to help people pay their bills – including rent, telephone, home energy costs, medical, and prescription drugs.

The Supplemental Nutrition Assistance Program (SNAP) provides such foods as fruits and vegetables; meats, fish and poultry; dairy products; and breads and cereals to low-income families.

And the Low Income Home Energy Assistance Program (LIHEAP) helps low-income households pay their heating and cooling bills and also provides weatherization assistance by fixing drafty doors and windows, and repairing or replacing furnaces or air conditioners that don’t work.

Some qualifications apply to these programs, so check into your eligibility.

Explore credit and debt protection options to be prepared

Payment and credit protection programs help ease financial concerns in case you lose your income.

So before an illness or injury wreaks havoc on your finances, consider getting a credit life insurance or credit disability insurance policy when taking out a loan at your credit union or bank.

Credit life insurance will reduce or pay off the insured balance on your loan if you die; credit disability insurance will pay your loan payments up to the contract limit if you become ill or disabled and are unable to work. And both can help protect your family and your credit rating.

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Interested in credit protection?

Your bank, credit union or finance company may offer products that work for you. Talk to a representative at your financial institution to learn about your options.

1. Maleh, Johanna and Tiffany Bosley. “Disability and death probability tables for insured workers born in 2000.” Social Security Administration. Published June 2020.

2. Family Matters fact sheet. Council for Disability Awareness. Published April 2021.

3. Disabled worker average benefits. Social Security Administration. Updated July 2021.

4. What you should know before you apply for social security disability benefits. Social Security Administration. Accessed August 25, 2021.

5. Federal Reserve Board’s Division of Consumer and Community Affairs. Update on the Economic Well-Being of U.S. Households: July 2020 Results.  Board of Governors of the Federal Reserve System. Published September 2020.

6. Adamczyk, Alicia. “Exactly what to say if you can’t pay your rent, student loans or credit card bills.” CNBC. Published May 21, 2020.

7. McLaughlin, Molly. How to save money on your mobile phone plan.” Lifewire. Updated April 13, 2021.

8. Snider, Mike. “Contact your credit card issuer: Fees or payments may be waived amid coronavirus pandemic.USA Today. Published March 18, 2020.

9. White, Alexandria. “Want a good credit score? This is the most important factor.” CNBC. Published August 30, 2020.

10. Fiano, Liane. “Protecting your credit during the coronavirus pandemic.” Consumer Financial Protection Bureau. Updated April 7, 2021.


Additional articles

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