Making the system work in new ways

A radical realization has dawned: while many with HIV in the 80s floundered financially, spending down what they had to go on public assistance, many in the 90s see that it is now possible for someone with HIV not only to survive but to turn the HIV lemon in to lemonaid. Here are some ways to recognize where HIV has changed the basics of personal finance - and what we can do to take advantage of these shifts in the system.

Simply put, finance is a major treatment tool, paying for the other actions we deploy to fight HIV. Medical, disability and life insurance become key assets. It is no accident that 3/4 of long-term survivors have private insurance. Traditional financial tools such as investments & real estate must take a back seat; their time frames are ill suited to the task. New microplanning techniques are needed - and possible.

Medical insurance: our greatest asset.

HIV treatment typically runs well over $100,000; $1,000,000 totals are no longer rare. Expenses can easily go over the maximum that a policy will pay. 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. Ironically, if we have a low income, we need the best medical insurance we can get - no matter what the premium. Our flow of cash can't stand lots of non-reimbursed expenses or payment delays.

A national health system may eventually come, but we must deal with the insurance/medical complex the way it is now. In many states we cannot leave a job without the risk of being slapped with a pre-existing condition waiting period of no reimbursement. Besides this job lock, if we don't have medical insurance, we face similar waits or discrimination through exclusions.

Is the remedy Medicaid? Only as a last resort. Why? Simply put, Medicaid can be 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. Private insurance pays $750 for this but 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.

Beware well meant advice to "spend down" (i.e., get rid of assets & income) to get onto Medicaid; it could be a poor bargain. It's far better to explore these possible alternatives first. Explore jobs or programs that enable you to increase your private or group medical insurance.

Disability insurance is a key to make medical insurance work better

Even 55% of all non-HIV men are disabled for at least three months in their lifetime. We know all too well that the ups and downs of HIV symptoms often keep us from working steadily. Providing for income during disability is essential. That's basic.

What's not commonly understood is that the expenses of HIV often require more income than was earned before, because many treatments are new, expensive & poorly reimbursed, because HIV can trigger a seemingly endless cascade of subsequent conditions and because HIV can require fundamental changes in our lifestyle.

A typical PWA has over $10,000 a year of nonreimbursed medical expenses alone. They include having to pay our own insurance premiums, exclusions of alternative treatment, medical travel, healthier food, moving, modifying our home, legal fees. There is now increased cost shifting through higher deductibles & copayments - more out of pocket expense. Three major expenses are barely partially reimbursed at best: psychotherapy, homecare, and prescriptions. Yet these are three of the major strategies for dealing with HIV.

Social security, which provides bare bones benefits to retirees, gives even less to younger people with shorter earnings records who go out on disability. These benefits are usually under $10,000 a year - less than what many PWAs need per year for nonreimbursed medical expenses alone.

Disability coverage typically pays 60-70% of salary - but if the employer paid the premium (typical) this is taxable when it's paid, lowering the net take home sharply. Disability policies, like much of our medical system, are geared to simple, one-shot diseases of the past - not the new, complex, continually changing realities of HIV.

HIV brings to light many of the dreams, projects and goals we shelved. When our future is threatened, these acquire an urgency and value that must be acted on. To realize these dreams, as well as to provide for a cure or experimental treatment fund, we need a great deal more money than traditional finance provides.

Applying for disability insurance becomes a life-threatening act.

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. If you have no record of HIV yet are at risk line up such insurance now. If you have a record of HIV beware of unscrupulous agents who 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. The agent collects a hefty commission and the company collects its 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 anytime." The tragedy is of course that the applicant could have taken other solid actions but relied instead on this illusory protection.

Similarly, we're likely to be rejected, led into a false sense of security, and/or barred from all future insurance if we cavalierly apply for life insurance. Despite this, there is insurance available - legally. After all, people with other medical conditions have been searching for insurance alternatives for years. "You cannot be turned down" insurance is advertised, mostly to older people. Whatever the source, life insurance is saleable after two years and may fill the income gap left by lack of disability coverage. But it is often complicated to write, hard to find and somewhat expensive. The effort & cost are well worth it.

People with HIV are the greatest life insurance bloodhounds. Some embrace their alumni associations anew because of non-medically underwritten insurance. Some seek non-underwritten increasese on existing policies. Yet many are wisely reluctant to push their luck with seemingly innocent saliva & urine tests, sign releases for medical records or submit to physical examination. If we lie and are rejected before we can withdraw the application, this is recorded at the Medical Information Bureau for seven years - and that will bar us from even guaranteed issue insurance.

Benefits become more important than salary.

Again the only safe avenue is through employment. Even with people in full health I combine career & financial planning; they drive each other. With HIV, getting a job can mean grabbing a lifeline of free insurance benefits, often granted the first day.

This is clearly a case where the tail should wag the dog: benefits first, salary second. This is a major flipflop, especially since with HIV many of us suddenly try to play catchup in our career ambitions. The way out of this dilemma is to separate 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 and money to then realize those dreams. This is having the courage to first endow and then follow our bliss - be true to ourselves. With HIV we need to arrange the money first; then we can do what we've always wanted.

One pitfall is that with HIV it's very tempting to become an entrepreneur, to try out that idea we've had for a new business. It's important not to thwart these desires but to re-schedule and re-sequence them. Leaving one's old career on disability is in fact an excellent time to re-inventory our interests through testing, profiling and exercises and to use 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 ourselves. Instead of looking at disability as the end of life or the end of the world, we can see disability as early retirement through which we engineer tangible activities & goals to go towards.

First line up job benefits that are worth the effort. It may make sense to change jobs to large groups that use rich medical, disability & life benefits to attract new employees. Many give medical coverage from day one, with no pre-existing conditions. It's important to make sure your medical coverage will last until you're eligible for Medicare.

Beware leaving the larger, long term asset of disability benefits to go on unemployment: a poor bargain. Disability benefits, especially if the company allows us to pay the premium, are even more attractive though difficult to locate. They are not portable. 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 individually, it's given to new employees without question. The time to get these multiples is when we start; a test is usually required later. And it is portable if converted or continued within 30 days on leaving the job.

Even low paid Federal employees qualify for five times their annual salary in life insurance during their first days of employment - insurance that has no contestability or suicide clauses, that is saleable upon conversion on leaving the job.

Leave on disability after careful planning.

Disability precipitates unforeseen consequences like a cold snap freezes water. Proceed with caution. First, recognize that denial is not a river in Egypt but a natural reaction. Many of us don't want to face change even when it can help us.

Disability insurance can be a major treatment tool that removes stress, provides secure income, unleashes government entitlements and gives us that resource we now prize so dearly, time. Driven by re-energized lifedreams, seen as a new phase of life, disability becomes early retirement - something that happens to nearly everyone in their lives - opening us up to a wealth of resources, experience and wisdom of others who've been there before. I've never had a client who said "I went out out on disability too soon."

Going out on disability is a complex, once in a lifetime happening that requires careful consideration. Once undertaken, many benefits and insurances are closed that require employment. Waiting periods, notification deadlines must be learned & respected. Life insurance must be converted (instead of being continued on disability waivers of premium). This must be requested within 30 days. Care needs to be taken that suicide and contestability clauses not be reset (making them unsaleable for another 2 years). These examples should give notice of the care that needs to be taken.

Don't leave an employer without presenting a wish list, options some employers will grant if asked: salary continuation, payment of medical insurance, reimbursement of premiums on long-term disability plans (to make them tax-free), continuation of special perqs. If employers don't know what to do about HIV at the workplace, this is the time to show them.

While my clients clearly prefer disability benefits earlier than later, care must be taken not be to turned down. Find out how social security determination of disability is established by the state review board. Beware of moving to states like Florida with antagonistic boards before receiving your determination. Prepare carefully your case even in liberal states like New York. I have taken out people with t cell counts of over 700 yet I've seen people with counts of 60 refused. The key is knowing the criteria, getting help and overdocumenting symptoms - how HIV concretely, specifically, exactly is disabling.

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 life insurance nearly as good an asset as stocks and bonds; a portfolio of life insurance is in fact cheaper, giving a much higher return for the money invested.

• Life insurance can be used to secure a private loan. Almost no one is aware 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 with a loan agreement, this makes the money tax free as long as a reasonable interest is charged.
  
• Life insurance becomes collectable while we're living. The next best approach is to accelerate the benefit, apply to the insurance company to pay out the benefit now - if a doctor is willing to say there's 6-12 months of life expectancy. It's sometimes hard to find out even if accelerated benefits exist. Many cases exist where people are told no at first but where subsequent digging reveals they're indeed eligible. These benefits will be free of Federal tax when the IRS gets around to publishing its regulations on them.
  
• 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 entrepreneurs. It's easy to get much less value than we could. Moreover, while we often want the money earlier vs later - yet most companies want people with less than two years life expectancy and the companies that consider cases more than that offer very low percentages of the policy's value. Yet there are ways to structure deals to avoid that. If you're considering viatication, you might want to read the article listed at the end.

Here are some of the mistakes: not considering doing a loan or researching accelerated benefits; selling off too much too early, losing much of the policy's value, ending up with needlessly high tax liabilities; cashing in to buy real estate, tying up our cash; cashing in just to have the money available or to invest the money; relying on advertisers who are in reality brokers or low-ball bidders; not searching out the companies who are self funded, avoiding the very high commissions paid brokers (who constitute most of the companies); not getting enough bidders; being too trusting of salespeople; believing federal taxes don't have to be paid; taking the first offers instead of fiercely negotiating; signing over the policy without having the money put in escrow.

Navigating this unknown territory either requires a guide, extra knowledge or just sheer time & effort. Even with careful preselection of bidders, I've had a case of long life expectancy where bids varied from 35-56%. Even with a straight forward case of short life expectancy the bids went from 68-80%. When some companies simply know I'm on a case they often jump existing offers by 5%.

Why all this variation & fluctuation? Because there is little hard knowledge about life expectancy & HIV and because this industry is a no holds barred bazaar not a stock exchange. Many companies skim, give low-ball offers, use high pressure tactics, seek to be the sole bidder. Brokers don't reveal the high percentage commissions they take; some brokers pretend they don't receive commissions. Three of the largest, mostly widely advertised companies refuse to bid on my cases because they will not pay top dollar in a competetive bidding situation; they want easy, top profits. Yet many people with HIV naively put in 1/10 the effort to liquidate a $100,000 policy than they would in buying a $100,000 house.

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. Inexperienced, already at risk, they are sometimes numb to the risks of the market. Some clients with HIV come to me first for investment advice because the dominant culture teaches us to solve financial problems through investment. This is yet one more area where I urge them to stop reading Money magazine. As you've seen above there are other, more powerful financial techniques where HIV is an asset not a liability. Moreover, few should invest who can't weather loss of capital over a 3-7 year cycle.

Because of unpredictable cash requirements, a person with HIV should have the investment priorities of a retiree: security, then predictable return - growth only to match inflation. With uncertain, high expenses it makes no sense to tie up capital at high 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 and sensitive to interest rate increases.

Real estate is no longer a wise placement.

Some faced with illness want to nest. Some wanting security pay cash for real estate. Yet these wishes can be met in other ways: leasing, renting, backed up with more liquid forms of security. Two things we know about HIV: needs can change and flexibility is #1.

Credit cards can become a saving grace.

Clients often come in worried about debt, about to cut up their cards. This concern is misplaced. What's important is to secure more credit for this odyssey. It's especially important to pay bills promptly and to clean up credit records.

First, liquidity is where it's at with HIV. Unpredictable expenses, slow reimbursements and disability delays make cash and credit golden.

Second, it may be possible to get disability and life insurance coverage on card balances that has no medical screening and short waiting periods. This "backdoor insurance" can provide welcome last-minute funds when all other alternatives have failed.

Third, a sudden shift to disability income is often then a valid basis to negotiate extremely low repayment plans, especially if individual card balances are relatively low. 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.

Powers of attorney become key tools for control.

HIV can be a disease of competency. At times like these it's important to maintain clear lines of control when we depend on support from a wide network of resources. If we have no one person who could practically exercise a durable power, it's possible to arrange springing powers of attorney to provide for those situations when we can't write checks, deal with authorities, or ensure our premiums are paid - powers that literally spring into action for limited purposes with certain people only if specified conditions occur.

A will can be inadequate and 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.

A living trust and powers of attorney can provide seamless means of control of our own choosing that cover all kinds of situations that can crop up when serious illness is in the picture.

Trusts are useful for receiving funds without disqualifying us for government entitlements. Trusts also protect against family will contests. One reason some wills are so cheap is that some lawyers know that will writers never face the high percentage based fees often 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).

At the least, negotiate an hourly fee with a lawyer, after competitive bidding, to have the assurance that your estate won't be needlessly wasted. If you have substantial assets, simply taking actions three years before death (or Medicaid) can save heirs enormous sums lost to the government.

Postscript: financial counsel itself has to change.

HIV has rewritten the practice of financial counsel as well. I've had to minimize meetings. Usually I meet clients only once - to check chemistry, discuss documents, and take a read on what can be done. After that we telecommute, to handle followup actions by phone, cutting out the long, draining & expensive meetings that some planners love. With long-distance clients I've learned to do everything by phone, fax & fastmail.

Gone is the fancy computer generated static financial plan - useless in the face of so many changes, so many twistings of traditional financial vehicles & techniques. We need focused, tailored advice. It's crucial to find insurance agents able to write special risk coverage. It's important to know lawyers specialized in disability, apartment law and trusts.

I've had to add expertise career counsel since so many benefits hinge on career actions and since HIV brings to a head many career & lifeplanning issues. This focus 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. At the outset I met with a HIV therapist one day a week to review my cases. I've had to train doctors to understand the impact of their statements on both disability determinations and getting cash out of life insurance. This multidisciplinary approach what people with HIV need.

I cite these details to urge you too to re-educate yourself financially. Insist that whoever you work with apply traditional guidelines only after thinking through how HIV has rewritten them. Create your own financial team. Turn the financial lemon of HIV into lemonade and use the system in these new ways to catchup financially.