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By Laura T. Coffey
TODAY contributor
updated 5/28/2008 9:07:33 AM ET 2008-05-28T13:07:33

Whether or not you know it’s coming, a trip to the hospital can lead to some startling reality checks. Beyond the medical issues, you and your loved ones also could find yourselves sorting out messy financial issues.

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To prevent that from happening, consider these tips to help anyone – healthy or sick – prepare for emergencies before they strike.

1. Investigate your insurance policy. As far in advance of your hospital stay as possible, clarify which treatments your health insurance will cover. Get pre-approvals as needed, and set aside money for deductibles. Also remember to find out whether your policy has lifetime maximums.

2. Know the details of your disability coverage. Hopefully you have such coverage through your employer, and in an ideal world you also have some supplemental personal coverage to give you even more protection. If you do have disability insurance, clarify all effective dates as well as your range of benefits before you head to the hospital. If you don’t, it’s true that comprehensive disability coverage can be very expensive for individuals – but you can find accident-only disability policies for as little as $25 a month. The key is to apply for any form of disability coverage while you’re employed and your income is at its highest. For more information about individual disability insurance policies, visit this About Disability Insurance site and this Insurance Information Institute site.

3. Stay current. Are your premiums all paid up for your health, disability, life and long-term care insurance policies? Check to make sure they are, and also do a quick check to see that all of your beneficiaries are current.

4. Appoint a primary contact. Designate a family member or close friend to maintain contact with the rest of your family, your friends and your place of employment during your hospital stay. You also could have this person pay your bills for you if you get laid up longer than expected.

5. State your desires clearly. You can spell out your medical wishes in writing via a health care directive. This directive can either be a living will, which allows you to prescribe which life-saving medical treatments you want to receive, or a durable power of attorney for health care, which also lets you spell out your wishes while giving another person the authority to make medical decisions for you if you can’t do so.

6. Think about your accounts. Your health care power of attorney may or may not end up being the same person you authorize to pay your bills. No matter which person you ask to handle your expenses, consider adding his or her name to your checking account or opening a line of credit that he or she can tap into if necessary.

7. Face the situation head-on. Your biggest financial blow may come from losing your income if you’re unable to keep working. If the nature of your health problem will make it impossible for you to go back to work, look into extending your employer’s group insurance coverage through the federal program COBRA. Be aware that you will have to pay the employer and employee shares of the premiums.

8. Calculate your expenses. Find out what costs commonly are associated with your illness. In many cases you can contact a disease-specific organization such as the American Cancer Society for information and guidance.

9. Remember your estate plan. Before you ever become hospitalized, establish a will or trust to specify how you want your property distributed if you die. You also could use a durable power of attorney to appoint another person to make financial and legal decisions on your behalf if you cannot.

10. Set up a “disaster file.” To help loved ones or your power of attorney find important information, index key paperwork before your hospital stay. Such paperwork should include: birth, death and marriage certificates; a detailed list of bills that must be paid with due dates; location of wills, trusts and power of attorney documents; health-care directives; detailed funeral and burial wishes; a plan for your pets; three years of tax returns; important passwords; and the location of safe deposit box and filing cabinet keys.

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