doctor with babyManaging financial strain during a health crisis can be overwhelming. The American Journal of Medicine reported that medical bills are behind more than 60 percent of U.S. personal bankruptcies. What’s more, more than 75 percent of these bankrupt families had health insurance, but still were overwhelmed by their medical debts. The article, based on research from Harvard Law School, Harvard Medical School and Ohio University, underscores how a single health crisis can financially destroy both individuals and families.

Planning ahead is crucial, especially when known risk factors exist in a family. A financial expert such as a Certified Financial Planner™ professional can help individuals determine if their insurance and savings options are adequate to handle the possibility of any future health crisis.

But if you’re suddenly faced with a frightening, expensive and potentially life-threatening diagnosis without such preparation, there are some basic steps to take.

Start by realizing it’s not all about the money: If you or someone you love is sick, obtain the best care possible, not what your bank account and health insurance can buy.  A CFP® professional with experience in dealing with health care issues can help assess your financial situation against various goals for retirement, your expenses, your children’s education and other matters.

Grill the patient’s insurance agent or HR person: If you or family members have bought health insurance through an agent or your employer, insist that they explain exactly what the plan covers and where your deductibles do and don’t apply. Generally, a serious illness will quickly use up the deductible (this is where your emergency fund is important). Pay attention to how much the insurance will pay and how much you’ll pay out of pocket once the deductible is exhausted.

Get those directives in order: A health care advance directive is a formal, preferably notarized instruction sheet for doctors to follow in case you or family members are incapacitated. The most commonly known health care directive is a do-not-resuscitate (DNR) order. A health care power of attorney designates a particular individual — a spouse, a friend, an adult child — to carry out your medical wishes if you are incapacitated. Meanwhile, financial powers of attorney designate an individual to handle financial affairs if the sick or deceased are single or did not designate joint tenants for certain assets.

If there isn’t a will or a complete estate plan, make one: A will doesn’t have to be enormously detailed to relieve problems for survivors, but it can create enormous problems if it doesn’t exist. If there is no executed will, the estate is intestate, which means that property is distributed by state laws. Yet it makes even more sense to review all of a patient’s assets to determine if more detailed directives are necessary and most important, to make sure beneficiaries on insurance, retirement accounts and other investments are up to date.

Consider whether you can make monetary support a gift: It’s good to get tax and financial advice on making a one-time gift to support the patient. Would the potential loss of money injure you, and worse, will it injure the relationship? If you don’t think you will be repaid would you be willing to consider it a gift?

Begin negotiations before there’s a financial problem: The best time to speak with hospital administrators isn’t when you’re behind on your payments. Once a diagnosis is made, either you or someone you designate as your agent needs to contact the hospital business office to check on payment schedules and possible discount plans if you are uninsured or fear your insurance may not cover a significant portion of costs. Any creditor appreciates a customer who’s willing to come to the table first.

This blog was adapted from an article by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Perspective Financial Services, a local member of FPA.