3 Ways to Protect Your Finances From the Coronavirus Outbreak
While many people will feel a financial impact, you can reduce the long-term consequences with careful planning.
COVID-19, more commonly known as the novel coronavirus, is changing American life in profound ways. In addition to the health considerations, one of the major negative impacts of the virus is a financial one. Millions of Americans are likely to experience a job loss or a reduction in income as aggressive social distancing measures are put into place to help slow the spread of this deadly virus.
If you're worried your financial situation could be affected as a result of the coronavirus pandemic, you're definitely not alone, and you are right to be concerned. The good news is, you don't have to just sit back and let your financial stability be destroyed -- you can work to limit the impact. Here are three smart financial moves you may want to take now if you're worried about COVID-19.
1. Read your health insurance policy
While insurance companies have generally agreed to cover coronavirus testing free of charge, some insurers aren't waiving treatment fees.
Most people who have coronavirus will experience mild symptoms that can be treated at home, but some cases may require hospitalization. You want to be prepared for the costs you'll incur if this happens to you or a family member. Therefore, you should review your insurance coverage.
Many policies have deductibles to meet, as well as high coinsurance costs for emergency room visits -- especially if you go to an out-of-network hospital. You don't want to be trying to figure out where to go for care in a time of crisis. Make sure you know now what your coverage is, and find out which hospitals in your area work with your insurer. The difference between an in-network and out-of-network hospital could be tens of thousands of dollars.
It's also a good idea to aim to save enough to cover your deductible if you can -- especially if it's a high one. You can still make contributions to a health savings account (HSA) for 2019 if you're eligible through a high-deductible health plan. This means you could put money aside for care now and claim a tax deduction on it this year so you get the cash back sooner.
2. Shore up your emergency fund
With the double threat of income loss and recession likely, there's never been a better time to have a big emergency fund. If you don't already have three to six months of living expenses saved up, do everything you can to start beefing up this fund, even if that means eliminating nonessential spending.
With so much of public life shut down, it should be easier than ever to avoid spending money. So divert every dollar you can into an emergency fund in a high-yield savings account.
You should also consider using your tax refund to build your emergency fund, even if you had other plans for it, such as paying down debt. That way, the money will be there if you need it in the event that your economic situation gets worse.
3. Sign up for a credit card with travel insurance
Most people are canceling trips right now, rather than planning travel. But at some point, you may want to reschedule any vacations you had planned -- and you'll probably want to visit family members when the current social distancing measures have been lifted.
The only problem is, there's a risk that, although the current coronavirus threat could die down with warm weather, it might come roaring back later in the year as temperatures drop. You don't want to suspend plans to travel indefinitely, but you also don't want to sign up for a trip you have to cancel in the future.
That's where credit card travel insurance could help. Travel insurance will not protect you if you change your plans because you fear a pandemic. However, most cards that offer this benefit will cover you in the event that:
- You, a traveling companion, or an immediate family member gets sick.
- You're under a mandated quarantine, or the area you plan to travel to is locked down.
So if your doctor or the government imposes lockdowns again, your insurance should cover you. However, be sure to read the fine print on any credit cards you're considering as you need to understand specifically what's covered and what's not.
Be prepared for the economic impact of coronavirus
When it comes to coronavirus preparations, the most important thing you can do is take steps to keep yourself and your loved ones safe. Always focus first on protecting your health and the safety of your community members. But since the virus and social distancing are likely to have an economic impact as well, it doesn't hurt to take these three steps to be as prepared as possible for what may be to come.
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