Every parent knows that raising a child is one of life's most fulfilling challenges. But if your child has a chronic illness, condition, or disability, your role takes on an even greater purpose. You are more than a loving parent — you're also your child's primary health advocate.

Although the emotional price of raising a seriously ill child can be devastating, it's only part of the picture. Even during this difficult time, you have to consider the financial implications of your child's illness.

Some parents become overwhelmed by medical expenses or are blindsided by unexpected bills and additional fees. Even wealthier families can find themselves on the brink of financial free-fall when medical expenses pile up.

Even so, maintaining your family's financial health is not impossible. With organization and careful planning, you can learn to manage your money during a medical crisis.

Costs of Health Care

The costs of long-term health care can be staggering, and families don't always deal with them until they're hit with the first bill or explanation of benefits that they don't understand. "When you're faced with a child with as many medical complications as our son, we were just worried about having him breathe every day and the last thing we thought about were the bills," explains Carol, whose son Dylan has spina bifida.

Some parents may think that insurance will cover all or most of their child's medical expenses — or that being able to afford their child's health care needs won't be a problem. But each medical service comes with its own price tag, and parents are often shocked to learn that hospital care, surgical procedures, doctor visits, and laboratory tests are separate services with separate bills. "Financially, it was a disaster coming. Her first hospital bill, not including surgery and anesthesia, was $308,000," says Kellie, whose daughter has a serious disability. Even the typical 10% co-pay can consume a family's financial reserves.

Some parents may overlook costs that are indirectly related to their child's care — costs that can quickly add up. These include missed time at work, childcare for siblings, increased utility bills, custom transportation, and home renovations, such as ramps for wheelchair accessibility.

There are ways to handle these costs, but you need information to find your way through the health care system.

Understanding the Health Care System

The best way to make sense of bills and prevent financial problems is to take a proactive stance. Learn all you can about your health plan.

Just as you want to know as much as possible about your child's health, you should learn as much as you can about your insurance policy. Which doctors participate in your plan? What services are covered?

Learn the meaning of insurance language, such as:

• co-pay: the part or percentage of the bill you are responsible for
• deductible: the amount you must pay before your insurance company will pay for services
• referral: your insurance company may require the primary care doctor to refer your child to another doctor or specialist before your insurance company will pay for services performed by another doctor
• precertification: you may have to let your insurance company know in advance about any medical tests or treatments the doctor has ordered. If you do not precertify before receiving treatment, the procedure may not be covered.
• network provider: any doctor, hospital, or other provider of medical services who has agreed to participate in your insurance company's network and to offer their services at negotiated rates. Also called a participating provider.
• pre-existing condition: an injury or illness that existed prior to the effective date of your current insurance policy and therefore may not be fully covered
• usual, customary, and reasonable: refers to the amount usually charged by health care providers for services and treatments in the area where you live

Understanding your health plan's design and its policies can ultimately save you thousands of dollars.

It can be useful to get a written copy of your policy from the insurer. Although you may have an enrollment information book from your employer, the actual policy provides specific details about your coverage. If your insurance company has a website, you should check it out for additional information.

Policies and bills can be confusing, but help is available. These simple steps can help you avoid problems:

• Locate the resources available within your child's hospital, such as a financial counselor or hospital business office, for answers to your questions about medical expenses.
• Ask the hospital to have a case manager assigned to your child. If the hospital has none on staff, ask your insurance company.
• Make your child's health care providers aware of your plan's benefits and limitations. They can become your partners in coordinating care with your health plan.
• Negotiate fees with the doctors, clinics, and hospital and set up realistic payment plans.
• Organize! Keep a journal and files to record doctor visits and any services performed (including lab work, X-rays, CT scans, etc.) and the fees for these services so that detailed information is easily accessible. This may seem like a lot of work, but it will be extremely helpful when dealing with your insurance company.
• Know your rights as a health consumer. If your insurance company denies coverage for certain expenses, appeal the decision. The doctors can sometimes write letters or help you appeal to the insurance company to get certain services covered.
• Contact your state's department of insurance if you encounter problems with your health care coverage — especially if you've already appealed denied or inadequate coverage.

Warning Signs of Financial Trouble

Families may struggle to meet new expenses, particularly if one parent must stop working to care for a child. Regular monthly bills may be put aside or ignored. Debt begins to grow, and a family that has maintained a comfortable lifestyle can find itself headed for trouble.

If the following questions seem all too familiar, it's time to seek help:

• Do you spend more than you earn?
• Are you using credit for everyday purchases?
• Do you make only minimum payments on bills or skip payments entirely?
• Are your savings inadequate or nonexistent?
• Do you use cash advances on credit cards to pay other expenses?
• Are you getting calls from collection agencies?
• Have you received notices about utility disconnection?

Procrastination can be your worst enemy. Ignoring financial obligations now can lead to even greater problems later, like bankruptcy, loss of assets, and a bad credit record — all of which can affect the entire family.

Instead of putting things off, communicate your problem as early as possible to the appropriate person or office.

Negotiating Payments

It's vital that you stay in regular contact with the people on the other end of your bills. As soon as possible, call doctors' offices, billing departments, hospital business offices, creditors, and lending institutions to explain the change in your family's situation. Most people are willing to work with you, but they won't know that you need help unless you tell them.

Some offices may ask you to "put it in writing." Most doctors or hospital social workers are happy to write a letter on your behalf, explaining why more time is needed to pay a bill or to appeal an insurance company decision.

Creditors can be lenient — arranging payment schedules, accepting partial payments, and so on — but they need to hear from you. Even if you can only make a portion of a payment, it will show an attempt to keep up your side of the obligation.

Parents who have gone through this process advise that you:

• Notify the appropriate offices as soon as you can.
• Keep in touch with your creditors.
• Remember to record the names and phone numbers of the people you are dealing with.
• Document the date, time, and results of your phone communications.
• Pay something — even a small amount — on each bill each month as a gesture of good faith.

Where to Get Help

Few people get through a catastrophic illness without needing help of some kind. You may find it difficult to put aside your pride and ask for help, but family and friends usually take genuine pleasure in helping out.

Make use of your case manager, particularly in deciphering bills and making sense of paperwork. Remember to update your case manager with new information and stay in frequent contact. Hospital business offices can be valuable, too, interpreting bills, estimating costs, or contacting your insurance company on your behalf.

Compare notes with other families who have dealt with catastrophic health issues. Their efforts may save you time and energy, and many parents appreciate the support of those who have experienced similar problems.

Short- and long-term financial assistance is also available from various sources, including private as well as government agencies. You may be surprised by the services available and the enthusiasm with which others embrace your needs.

Explore these private organizations:

• charitable foundations
• disease- or disability-related organizations
• civic or social welfare associations
• churches and community groups

Although not all provide financial aid, they may be able to direct you to other sources and services.

Government organizations can also assist in the medical and related care of your child. You don't need to be at poverty level to qualify; you may, in fact, be eligible for programs you never knew existed. Two such government programs that supplement the health insurance of a chronically or seriously ill child are Medicaid and Supplemental Security Income (SSI). As you research various avenues of assistance, ask your case manager about these and other options.

You can also take advantage of free financial advice and support offered by national agencies like the Consolidated Credit Counseling Service (CCCS). The CCCS provides certified financial counselors who help families examine their financial picture and overcome debt. They can negotiate with creditors on your behalf for lower payments, reduced interest rates, and forgiveness of late charges or penalties. You may choose to enroll in their formal debt management program, in which case you would send one payment per month to the CCCS office, which then prorates and disburses your payments to creditors.

The bottom line, though, is that even as you seek financial assistance, you will need to reduce your expenses.

Reducing Your Expenses

To ensure financial stability, you must learn to cut your expenses by making lifestyle changes. When you have a sick child, your priorities will shift. Going out to dinner a few times a month may no longer be in your budget; paying the electric bill has to be.

You may find it helpful to compare monthly costs against your income, then eliminate any expenses that aren't completely necessary. Other tips:

• Avoid impulse purchases.
• Eliminate "luxuries" such as cable TV.
• Switch to generic prescriptions whenever possible.
• Buy groceries in bulk and take advantage of coupons and store specials.
• Use cash instead of credit whenever possible.

By making a conscious decision to reduce spending, acting early, asking questions, and learning how to find and accept help, you can protect your family's future.

Reviewed by: Leta E. Bachman, CPAT
Date reviewed: August 2011