Conventional wisdom may now get us into trouble...
...but the system can now work for us in new ways

As the 90s began, a radical realization dawned: HIV has changed many of the rules of personal finance yet people with HIV have continued to use conventional wisdom - sometimes with bad results. Here are some ways to recognize how HIV has changed the basics of personal finance - and what we can do to take advantage of these shifts in the system.

In summary, finance has become a major treatment tool, securing private insurance and paying for all the other actions we deploy to fight HIV. Insurance becomes a key concern - especially medical, disability and life. It is no accident that 3/4 of GMHC's long-term survivors have private insurance. Investments & real estate must take a back seat. And new tools are needed for control & planning for now rather than for later.

Medical insurance now becomes our greatest asset.

HIV treatment typically runs well over $100,000; GMHC regularly sees cases where expenses have topped $1,000,000. This makes medical insurance the biggest asset we have - worth far more than a condominium, investment portfolio or 401(k) deferred salary fund.

Medical insurance is not a place to skimp. If we have a low income, ironically we need the best medical insurance we can buy - no matter what the premium. Our flow of cash can't stand lots of non-reimbursed expenses or payment delays.

New Yorkers have become very lucky in medical insurance this year. In most cases, we can shift from one carrier to another with no worry - as long as the gap is no longer than 60 days. There's a program that pays our private health insurance premiums if our income drops. There are programs that pay for major medications and outpatient care. Find out what they are - beforehand.

Even when we've let our insurance lapse, if we're on disability there is a little known state-mandated disability extension of benefits for expenses related to that disability, for at least one year, free of charge. Hundreds of New Yorkers are in despair unaware they have this critical, free insurance.

The worst advice ever given anyone with HIV in New York is that they should give away their assets to go onto Medicaid. First, with all these alternatives in place, there may well be private insurance alternatives. Second, Medicaid is dangerous to our health; society's safety net has holes in it. Here's one example: If we go into a hospital with pneumonia, a bronchoscopy is needed to diagnose it properly. Yet private insurance pays $750 for this while Medicaid pays $60. In which case do you think we'll be offered pills for "general" pneumonia and in which case do you think we'll get the expensive procedure? The result could be crucial to our health.

Disability insurance is a key to make medical insurance work better

Over 55% of all non-HIV men are disabled for at least three months in their lifetime. HIV symptoms are such that they often keep people from working steadily. Providing for income during disability is essential to avoid adding insult to injury. That's basic.

What's not commonly understood are the other important areas where income often falls short: non-reimbursed expenses, low-reimbursed care, social security shortfalls, antiquated disability policy provisions and our need to play catchup with our dreams.

A typical AIDS patient has over $10,000 a year of nonreimbursed medical expenses alone. They include medical travel, having to pay our own insurance premiums, better food, moving, modifying our home, legal fees & alternative treatment.

Three major expenses are only partially reimbursed at best: psychotherapy, homecare, and prescriptions. Yet these are three of the major strategies for dealing with HIV.

Social security provides poverty level benefits for retirees and less for younger people with shorter earnings records: usually under $10,000 a year - less than what many PWAs need per year for nonreimbursed medical expenses.

Disability coverage typically pays 60-70% of salary - and if the employer paid the premium (typical) this is taxable, lowering the net take home to 50-55%. But the experience of people with HIV shows that expenses with disability are 130-40% of salary. Disability policies, like much of our medical system, is geared to simple diseases of the past - not the new complex realities of HIV.

Lastly, HIV brings to light many of the dreams, projects and goals we shelved. To realize them and to provide for a cure or experimental treatment fund we need money.

One way to provide these funds is to have a private disability policy. Private disability coverage is paid out in addition to employer disability and social security, making it possible to pay those extra expenses. Moreover, it's tax free. But it's next to impossible to get safely - once we have HIV. There are measures we can take but they require more effort - and life insurance.

Applying for disability & life insurance becomes a life-threatening act.

There simply is no way to legally acquire disability coverage with HIV except through employment. Yet some agents will write disability policies informally telling applicants to lie on the application forms. Where's the catch?

Except for a handful of strict companies who would insist on a blood test, most disability carriers screen out people when they make a claim - not when they apply. Their agent collects a hefty commission and they collect their premiums; when a claim is made they dust off the fine print that says "any thing said with intent to defraud makes this null & void." The tragedy is of course that the applicant could have taken other solid actions but relied instead of illusory protection.

While we're protected from discrimination in getting medical insurance, no such protections exist in other areas of insurance. Bluntly put, we're likely to be rejected, led into a false sense of security, and/or barred from all future insurance if we dare apply.

My clients are the greatest life insurance bloodhounds. Yet no one has found an average policy without a test in New York. Many are reluctant to push their luck with seemingly innocent saliva & urine tests. The problem is that if we lied and are rejected, this is recorded at the Medical Information Bureau for seven years - and that will bar us from even guaranteed issue insurance.

In spite of this, there is insurance available; and it is legal. But it is complicated to write, hard to find, somewhat expensive and limited. Yet it is saleable after two years and may fill the income gap left by lack of disability coverage.

Benefits become more important than salary.

All this expense makes benefits far more attractive than salary for someone with HIV. This is a major flipflop, especially since with HIV many of us suddenly try to play catchup in our lifedreams. The way out of this dilemma is to separate these two tasks. First, we may have to change jobs to get better benefits. Second, we can use those benefits, if HIV becomes disabling, to mobilize our newfound time to then realize those dreams. This is having the courage to first endow and then, as Joseph Campbell advises, follow our bliss - be true to ourselves.

It seems entirely natural now to carry out that dream of becoming an entrepreneur, to try out that idea we've had for a new business. It's important not to thwart these desires but to reschedule and perhaps rechannel them. It may in fact be a good time to reinventory our interests through testing, profiling and exercises using the results to reprioritize our lives. Now's the time to unshelve those innermost concerns especially if a decision was made years ago that a job was more important than career. We may in fact now have the time to pay attention to those projects in what is really early retirement.

The job benefits can be worth the effort. While individual coverage is now sparse and spartan (in New York especially), large groups use rich medical benefits to attract new employees. And we can take these medical benefits with us, paying only 102% of the premium; if we go out on disability we keep them all the way to Medicare with no danger of Medicaid.

Disability benefits, especially if the company allows us to pay the premium, are even more attractive though difficult to locate. They are not portable, giving new meaning to job security. NEVER walk away from a job with excellent disability benefits unless you go to equivalent or better ones.

Our best benefits treasure trove is life insurance. Next to impossible to get safely in NY individually, it's given to new employees without question. And it is portable if converted or continued within 30 days on leaving the job. Even low level Federal employees qualify for five times their annual salary in life insurance during their first month of employment. The time to get these multiples is when we start; a test is usually required later.

Life insurance becomes our investment portfolio, a major source of cash.

If you read ads you now know that people with HIV can get cash out of life insurance. This wasn't true five years ago. This makes a portfolio of life insurance nearly as good an asset as an investment portfolio or 401(k) deferred salary fund.

- Life insurance can be used to secure a private loan. Almost no one knows that the best way to get cash out of life insurance is to use the policy to secure a loan with a friend or family member; keep it in the family. Properly done, this makes the money tax free with the only cost being the interest that must be charged.

- Life insurance becomes collectable while we're living. The next best approach is to accelerate the benefit, i.e., apply to the insurance company to pay out the benefit now. We'll need a doctor willing to say we've 6-12 months of life expectancy. This is very complicated to research; many cases exist where people are told no at first but where subsequent digging reveal they're indeed possible. Benefits are free of NY city and state tax; they will be free of Federal tax when the IRS gets around to publishing its regulations.

- Life insurance can be sold for cash - and we often get less than we should. We can offer our policy for bid to viatical settlement firms. Yet like any new area, these sales are fraught with danger. This is a complicated, high-stakes transaction with experienced professionals. It's easy to get much less value than we could. Moreover, it's apparent that we need the money earlier vs later - yet the companies greatly discount high life expectancies. There are ways to structure deals to avoid that. If you're considering viatication, you might want to read the articles listed at the end.

Here are some of the mistakes:

• not paying attention to how much we really need, over what time;
• cashing in to buy real estate, tying up our cash;
• cashing in just to have the money available or to invest the money;
• selling off too much too early, losing much of the policy's value;
• not considering doing a loan or researching accelerated benefits;
• not getting enough bidders, being too trusting of salespeople;
• not seeking bidders who are self funded, avoiding the high commissions paid brokers (who constitute 3/4 of the companies);
• being told federal taxes don't have to be paid;
• taking our first offers;
• signing over the policy but not getting paid
• not using someone to navigate & negotiate this for us.

Investing becomes dangerous to our financial health.

Some of my clients, all too aware of their great needs, yearn for the promise of high returns in the market; already at risk, they are sometimes numb to or inexperienced in the risks of the market. Some clients with HIV come to me first for investment advice because the dominant culture teaches us that personal financial success is all about investment. As you've seen above there are many other, equally powerful financial techniques; moreover, no one should invest who can't weather loss of capital over a 3-7 year business cycle. This is yet one more area where I urge them to stop reading Money magazine.

Because of possible changes and cash requirements, A person with HIV should have the investment profile of a retiree: security, then predictable return - no growth. With unpredictable, high expenses it makes no sense to put capital at risk with no control over the return. Prudence dictates a low investment profile especially in a market that may well be overdue for a correction.

Real estate is no longer a wise placement.

People faced with illness want to nest. Some wanting security pay cash for real estate. These wishes can be met in other ways: leasing, renting, coupled with more liquid forms of security. Needs can change during HIV; flexibility is of first importance.

Credit cards can become a saving grace.

Clients often come in worried about debt, about to cut up their cards. Quickly I assure them that a sudden shift to disability income often is a valid basis to negotiate extremely low repayment plans. Sometimes much disability income is exempt from creditors. Sometimes having a lawyer shield us from harassment can not only lower stress - it can be a basis for a suit based on the harassment.

Liquidity is where it's at with HIV. Unpredictable expenses, slow reimbursements and disability delays make cash more than golden. It may be wiser to get more cards, especially with disability and life insurance coverage. It's especially important to pay bills promptly and to clean up credit records.

Powers of attorney become key tools for control.

At times HIV becomes a disease of competency. At times like these when we depend on support from a wide network of sources, it's important to maintain clear lines of control. It's important to arrange powers of attorney to provide for those situations when we can't write checks, deal with authorities, or ensure our premiums are paid. These powers can be limited to "springing" powers that literally spring into action for specified purposes only if certain specified conditions occur.

A will can be inadequate and but the tip of a probate iceberg.

We often leave off will making. One reason may be simply because wills aren't very useful to us while we're alive. My clients are concerned about the quality of life while they're fighting this disease. Powers of attorney or a living trust can provide seamless means of control that will cover all kinds of situations that can crop up when serious illness taxes us all. A trust provides instructions for all kinds of situations especially while we're alive. It protects against family will protests. It guarantees someone competent of our own choosing is always in control.

Trusts also eliminate the delays and fees of probate. One reason some wills are so cheap is that the lawyer knows the writer will never face the extensive fees charged against anything that's left nor will they have to endure the administrative, costly delays that always accompany probate: an average 14 months of delay. An additional value of trusts is in current protection; they're useful for receiving funds without interrupting entitlement benefits.

Postscript: financial planning itself has to change.

HIV has rewritten the way I practice as well. I work with many people with HIV on disability preparation, getting life insurance, improving medical coverage, solving cash & credit problems, engineering better benefits through job changes and solving the many problems HIV often presents. Usually I meet clients only once - to check chemistry, discuss documents, and take a read on what can be done. I've learned to telecommute, to handle followup actions by phone, cutting out the long, draining & expensive meetings that some planners love. Since I'm one of only several practitioners, this permits me to practice nationwide and helps ration my time as well.

I've had to solidify my background in career counsel since so many benefits hinge on career actions and since HIV brings to a head many career issues. This awareness often spells the difference between someone "forced out on disability" and someone "choosing early retirement to pursue lifedreams."

HIV highlights the psychological underpinnings of major financial decisions. I've had to train doctors to understand the impact of their statements on disability determinations and getting cash out of life insurance. It's been crucial to find insurance agents able to write special risk coverage. It's important to have on tap lawyers specialized in disability, apartment law and trusts. This all gives new meaning to the catchword "comprehensive planning."

Whereas traditionally an advisor would give a client a 125 page bound plan, I see that people need focused, tailored advice. Moreover, I'd have to rewrite that computer generated plan simply because, as I've shown here, HIV is rewriting the rules of personal finance every day.

I cite these details to urge you too to re-educate yourself financially and to insist that whoever you work with never apply traditional guidelines without thinking through how HIV changes them. This area is complicated; working from partial knowledge is dangerous; and conventional advice needs to be tested. It's usually well worth the trouble. We're often able to use the system in ways not possible with people in average health to catchup financially.