June 2000
HIV -- or just the possibility of HIV -- remains the crucial financial challenge for gay men. HIV has not just revolutionized the way people fight disease; it's spawned new techniques and resources in personal finance as well.
What are we providing for, anyway? Up to now the job of financial planning has been seen as providing for our last days. Nursing-home care is the bogeyman that insurance salesmen, investment brokers, and financial planners have used to convince us to save for that last great battle.
On the surface it seems logical. A medical frenzy accompanies life-threatening illness and our days of dying -- our last big blowout. About 20 to 30% of all medical costs are expended in those last days before death.
As people with AIDS have found out, the real financial impact of illness happens during our lives -- when disease suddenly stops our money machine, when we care as much about comfort as about care, and when the costs of fighting illness count.
Our only practical defense is crisis management. Cash and credit become king, and cash flow estimating is key. Preapprovals are crucial. Mistakes in billing and reimbursement are widespread. It may pay to have a technical specialist take over the claims payment and reimbursement process. Some guidelines to keep in mind:
Welfare just isn't very gay. We not only lose choice, we lose dignity, turning control over both our finances and a wealth of information about every detail of our lives to a potentially uneducated bureaucrat of unknown homophobic tendencies.
Group or individual insurance now becomes an asset greater than any real estate or investment holdings we might own. In fact, those traditional focal points of personal finance must take a backseat if illness strikes, since their long time frames are ill suited to the need at hand.
Certain industries, such as finance and computers, offer liberal and luxurious benefits that are often effective soon after employment starts. Medical insurance is usually cheap and with few limits. If the employer is large enough, we can take the insurance with us for eighteen months under the COBRA laws -- and if we leave on disability, our COBRA coverage will continue right up to the point where Medicare kicks in.
Corporate coverage is not without pitfalls. Beware of maximums on pharmaceuticals and even specific diseases. Look out for poor-quality managed-care offerings, because you usually can't change plans more than once a year. And keep in mind that if the company goes out of business while you're employed or on disability, its group-based medical insurance will also disappear.
Disability benefits are offered by fewer than half of all employers, mostly in prosperous, "benefits-rich" industries. Get to know what those industries are in your locale. Look for plans that pay 60 to 70% of current compensation, including bonuses. The best plans make you pay the low premium, making the benefit tax free and usually near-equal to take-home pay; in portable plans the coverage can be convertible to an individual plan if you leave.
It is often possible to get disability and life-insurance coverage on card balances with no medical screening, although it usually needs to be in place for six months before it's effective. If illness forces expenses onto cards and forces you onto disability, this back-door insurance will pay off the balance.
If you insure your cards you can reduce premiums by keeping your card balances low, ideally using them only once a year to keep them current. If you do have outstanding uninsured balances at the time of disability, you can sometimes argue that the sudden shift to disability income is a valid basis to negotiate extremely low repayment plans, to freeze interest, or to forgive accounts -- especially if individual card balances are but a few thousand dollars. Sometimes much disability income is exempt from creditors.
Lastly, federal student loans and many other types of student loans are often forgiven automatically on disability. If this is true, it pays to keep payments minimal until disability starts.
As someone trained to run HMOs, I recommend managed care only for people who have little need for the medical system. HMOs are taking power away even from physicians, much less consumers. They see sick people as costs -- to be eliminated.
We can fight back. Find out if the HMO has an ombudsman -- and become a squeaky wheel. We are, after all, ultimately in charge of our own care. One of the great revolutions of HIV needs to be repeated. In New York the major disease groups banded together to change state insurance laws. For the first time in history representatives of people with heart, lung, kidney, blood, HIV, and cancer problems converged on lawmakers. Think about it; this is an incredible lobby -- if we will but band together.
Well-meant advice to "spend down" (i.e., get rid of assets and income) to get onto Medicaid is a bad bargain financially as well. Poor is not gay. It is far preferable to seek health insurance through work, domestic-partner benefits, or, after legal consideration, a marriage of convenience.
Disability benefits can also help us build a bridge back to life, to realize the dreams that acquire a new urgency when time becomes precious. Clearly, they are resources worth planning for -- but far more difficult to acquire after the barn is already burning. People whose illness has already progressed to disability levels can still get these benefits through group plan employment benefits packages, and are encouraged to do so if health at all permits.
There are two other methods that people have tried, but both are fraught with risks so high and success rates so low that they cannot be recommended.
Few realize those on Social Security already have an elaborate system for returning to work. [Editor's Note: The trial work-period program is discussed in detail in the author's "Getting Back In -- A Two-Pronged Approach" and "Hitting the Streets -- Getting the Job and Keeping It" in the April and May issues of Body Positive.]
There are also government programs that pay the educational fees and retraining expense of people on disability; these are usually run through the states. Other programs exist by which people on welfare can put money aside tax free to start a business, while continuing to receive benefits. Turning to such programs should be a first step when news turns good.
Private disability carriers are neither so structured nor so helpful. Bad insurers suddenly stop benefits whether there's good news or not, effectively shifting the burden of proof to the person on disability. For example, insurers may approve mental health claims -- but stop paying soon thereafter. Insurers are very good at putting words in the mouths of physicians and twisting the words on their reports; instruct your physician accordingly. Bad insurers send field hacks around to eyeball people on disability, but rarely go to the expense of hiring detectives. The real danger is not from insurance detectives, but from panicked physicians and patients. The problem to avoid is a premature return to work -- and patient panic.
Back to work is often a misnomer, because life moves forward and we rarely return easily to any early life stage or job. People on disability aren't put on ice. They grow, they age, they reflect. They often come to appreciate other things of value in life than money making; they come to realize that needs can be very few and wants don't necessarily require money; they move on to new interests. People on disability need new training before working again. The world of work changes in but a few years, especially in high-tech fields.
Beware of reentering the workforce at a low level; people tend to get pegged where they start. It's far better to learn a new trade, adopt new interests, and take the time necessary to thoroughly plan what role career is going to play.
The new treatments for AIDS have revealed how shredded the public safety net has become. A year after their introduction, fewer than half of the states were paying for the new AIDS drugs for people without medical insurance.
Going off disability means either paying the piper on these bills or -- more likely -- facing a damaged credit record. Usually old balances have been written off. What many don't realize is that rebuilding credit has become much easier.
The shift in funding has dramatic, unintended tax consequences for sellers, since investor-funded firms often are unlicensed -- and licensing is required for settlements to be tax-free in many states where those with HIV live. For example, nine out of the thirteen licensed viatical firms effectively withdrew from the New York market.
Since most sellers do not understand how the industry operates, since the industry changes a great deal, and since illness prevents the sellers from fully acting as cautious consumers, much more consumer abuse has resulted.
These events highlight how the sporadic way medical information is released causes artificial overreactions that hurt the seriously ill financially. Medical news is kept under wraps until publication in periodic scientific publications or release at annual medical news events (such as the annual AIDS conferences). This makes progress seem sudden and prompts patients and their financial suppliers to lose perspective. Panicky sellers are a problem in any financial market; in viatication a lot more is at stake than money.
Whether or not an illness is life threatening or chronic has major implications in both medicine and finance. When illness becomes chronic we return to standard operating procedure where planning is possible. As long as illness remains life threatening, crisis management is the order of the day. New treatments can in fact increase uncertainty and shatter time frames, making an illness like AIDS an even great financial crisis than before.
Amazingly, virtually all of the above advice, given in 1997, applies today -- especially to someone newly diagnosed or considering disability. The key exception is anything related to viatication -- the sale of life insurance -- a totally changed market.
In other key areas, the change is one of emphasis:
Some of the more than 100 articles Per Larson has contributed to Body Positive, Positively Aware, and POZ, among other publications, are available at www.GayMoney.com. He can be reached at PerLarson@aol.com or (212) 734-0941.