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Contents

TitlePageCopyrightNotice

DedicationAcknowledgments

IntroductionSpecialFeaturesofBePrepared

PartI:ASummaryChapter1:InaNutshell

PartII:TheBuildingBlocksforSuccessfullyLivingwithaLife-ChallengingCondition

Chapter2:TheKeystoSuccessSection1.KeepingPositive

Section2.It’sYourHealthandYourLifeSection3.TheTeamApproachSection4.NowIs“When”

Section5.CopingSection6.OptionsforGettingEmotionalSupport

Section7.WorryingSection8.NoShame,NoBlame

Section9.Relaxation

Section10.VolunteerSection11.Charity

Section12.WhomandWhentoInformSection13.ChildrenSection14.Privacy

Chapter3:GatheringtheInformationYou’llNeedSection1.EmploymentBenefits

Section2.OtherInsuranceCoverageSection3.SocialSecurityInformation

Section4.YourHealthSection5.YourCreditStatus

Section6.Life,Health,andDisabilityInsuranceInformation:TheMedicalInformationBureau

Section7.YourFinancialInformation

Chapter4:AssessingYourSituationSection1.YourEmployment

1.1TrueNetPay1.2LifeUnits1.3Fulfillment

1.4TwoPeopleinaSingleEconomicUnitSection2.AFinancialSnapshot:Today

2.1NetWorth2.2CashFlow

Section3.AFinancialSnapshot:IfYouBecomeDisabled3.1NetWorthinTwoYears3.2CashFlowonDisability

Section4.AFinancialSnapshot:YourGoals

Chapter5:KeepingYourFinancialInformationOrganizedSection1.WheretoStoreorFileYourPapers

Section2.AFilingSystemSection3.ListofInstructions

PartIII:IncomeChapter6:LegalProtections—Employment

Section1.Employment1.1CoveredEmployers

1.2DisabilityforPurposesoftheAmericanswithDisabilitiesAct1.3HiringandRehiring

1.4ReasonableAccommodation:WhenaDisabilityInterfereswithWork1.5ConfidentialityandDisclosure

1.6ProtectingtheFamilyandFriendsofaDisabledPersonfromDiscriminationatWork

1.7AdvancementIssuesandBonuses1.8IfYouAreDiscriminatedAgainst

Section2:LeavesofAbsence:FamilyandMedicalLeaveActandtheADA2.1LeavesofAbsenceUndertheFMLA2.2LeavesofAbsenceUndertheADA

2.3CombiningYourRightstoaLeaveofAbsenceUndertheADAandtheFMLA

2.4TheFMLAand“Nontraditional”FamilyRelationships2.5UnprotectedLeave

Section3.BenefitProtectionsWhileYouAreEmployed3.1ERISA3.2ADA

Section4.BenefitProtectionsAfterLeavingYourJob:COBRASection5.ProtectingYourBenefitsAfterLeavingYourJob:OtherRights

5.1Conversion

5.2ChangesintheBenefitPlanWhileYouAreExercisingContinuationRights5.3DisabilityExtension

Section6.HealthInsuranceProtection:HIPAA

Chapter7:EmploymentSection1.ReconsideringWhatYouDoforaLiving

1.1MakeYourJobWorkBetterforYou1.2IsNowaGoodTimetoChangeJobs?

Section2.LeavingVoluntarily2.1ConsiderationsBeforeLeavingYourCurrentJob

2.2NegotiateBeforeYouLeaveYourJobSection3.IfYou’reFired

Section4.LookingforaNewJob4.1IdentifyYourIdealJob

4.2ConsiderationsBeforeTakingaNewJob4.3TipsforaJobInterview

Chapter8:DisabilityIncomeReplacement—PrivateandGovernmentPrograms

Section1.PrivateInsurance:IndividualDisabilityIncomeInsuranceSection2.GroupDisabilityIncomeInsurance

Section3.OtherTypesofGroupDisabilityCoverage3.1GroupShort-TermDisabilityCoverage

3.2EmployerSalary-ContinuationPlans(SickPay/Leave)3.3Workers’Compensation3.4GroupLifeInsurance

3.5GroupIndividualRetirementPlansSection4.IndividualRetirementAccount(IRA)

Section5.CreditDisabilityInsuranceSection6.IndividualLifeInsurance

Section7.CoverageforSelf-EmployedProfessionalsandSmall-BusinessOwners

7.1DisabilityIncomePolicies7.2OtherCoveragestoConsider

Section8.FederalDisabilityPrograms8.1SocialSecurityDisabilityInsurance(SSD)8.2SupplementalSecurityIncome(SSI)

8.3Veterans’PensionsSection9.StateCoverage9.1DisabilityInsurance

9.2Workers’Compensation9.3UnemploymentInsurance

Chapter9:PreparingforthePossibilityofNotBeingAbletoWorkSection1.PreparingtoGoonDisability—Long-RangePlanningSection2.PreparingtoGoonDisability—Short-RangePlanning

Chapter10:ApplyingforSocialSecurity:TheProcessSection1.BeforeYouBeginSection2.ACaseStudy

Section3.PreparingthePaperworkSection4.StartingtheProcess

4.1In-PersonorTelephoneInterview4.2ARepresentative4.3Documentation

Section5.DeterminationofDisabilitySection6.IfSocialSecurityDeniesYourClaim

Section7.HiringanAttorney

Chapter11:OnDisability

Section1.WhattoAnticipate1.1TheEmotionalExperience

1.2CheckingonWhetherYouAreStillDisabled1.3IfPaymentsStoporMayStop

Section2.TipsforPeopleonDisabilityLeaveSection3.ReturningtoWork:Part-TimeorFull-Time

3.1WhatWorktoReturnTo3.2Preparation

3.3YourPrivateDisabilityIncomeInsurance3.4YourHealthInsurance3.5YourLifeInsurance

3.6EffectofEarningWagesonSSDandSSI3.7Medicare

3.8SSAIncentivestoReturntoWork3.9InformSSAAboutWork

3.10StatePrograms

Chapter12:RetirementPlanningSection1.WhyPlanforRetirement?

Section2.HowMuchtoSaveforRetirementSection3.TypesofInvestments

Section4.OverviewofRetirementPlansSection5.Government-SponsoredRetirementPlan—SocialSecurityRetirement

BenefitsSection6.Employer-SponsoredPlansSection7.Individual-SponsoredPlans

Section8.TenCommonsenseTipsforRetirementPlanningSuccess

Chapter13:InvestmentsSection1.HowMuchTime?

Section2.PersonalPlanningSection3.ProfessionalAdvice

Section4.DevelopYourInvestmentStrategySection5.InvestmentCriteria

5.1Liquidity5.2Risk5.3Return5.4Fees5.5Taxes

5.6AdministrationSection6.InvestmentVehicles

6.1CashEquivalents6.2MutualFunds

6.3TipsRegardingMutualFundTaxesandFees6.4Annuities

Section7.AnExampleSection8.TenCommonsenseTipsforInvestmentSuccess

PartIV:ProtectionAgainstIncreasedExpensesChapter14:HealthInsuranceCoverage

Section1.PrivateHealthInsurance—Overview:FromIndemnitytoManagedCare

Section2.IndemnityHealthInsurance:AnOverviewSection3.ManagedCareHealthInsurance

3.1AnOverview3.2EvaluatingManagedCarePlans

Section4.MaximizingUseofHealthInsurance(IndemnityandMCO)Section5.Claims(IndemnityandMCO)

Section6.AppealsIfYourClaimIsRejectedSection7.KeepingHealthCoverage

Section8.ObtainingHealthCoverageSection9.LegalProtections

Section10.HospitalIndemnity(Income)CoverageSection11.CoveringtheCostofLong-TermCare

Section12.ExcessMajorMedicalPolicies

Chapter15:Medicare,Medicaid,andOtherGovernmentProgramsSection1.Medicare1.1Eligibility1.2Benefits1.3MediGap

1.4Medicare+Choice1.5TheRelationshipBetweenMedicareandPrivateHealthInsurance

1.6HowtoApplyforMedicare1.7IfYouNeedAssistancetoPayforMedicarePartBPayments,Fees,and

DeductiblesSection2.Medicaid2.1Eligibility2.2Benefits

2.3ImpoverishingYourselftoQualifyforLong-TermCare2.4Appeals

Section3.Hill-Burton—FreeHospitalandHealthFacilityCareSection4.Veterans’Benefits

Section5.StateandLocalPrograms

Chapter16:PropertyandCasualtyInsuranceSection1.GeneralConsiderationsWhenPurchasingPropertyandCasualty

InsuranceSection2.Losses

Section3.TheCoverages

3.1HomeownersInsurance3.2PersonalArticlesFloaters:JewelryandFineArtsCoverage

3.3FireInsurance(akaDwellingInsurance)3.4RentalInsurance3.5LiabilityInsurance

3.6WhyPurchaseFireandLiabilityPoliciesSeparatelyRatherThanaHomeownersPolicy?

3.7ExcessLiabilityandUmbrellaCoverage3.8AutomobileInsurance

3.9InsuranceWhenYouRentaCar3.10Workers’CompensationInsurance

3.11TravelInsurance3.12OtherPropertyandCasualtyCoverages

Chapter17:FinancialManagementSection1.MoneyManagement

1.1SmartSpending1.2IfYourExpensesExceedYourIncome

1.3ABudget1.4LivingwithYourBudget

Section2.CreditManagement:DealingwithCreditors2.1SetYourPriorities

2.2CreateaPaymentPlan2.3PutthePlaninAction2.4AvailableAssistance

2.5AWordAboutCreditorHarassmentSection3.DebtManagement:Bankruptcy

3.1Chapter73.2Chapter13

3.3ComparingChapters7and13

3.4ConsiderationsPriortoPursuingBankruptcy

Chapter18:TaxSection1.BiographicalData

1.1FilingStatus1.2DependentsSection2.Income2.1TaxableIncome

2.2NontaxableIncome2.3FlexibleSpendingAccountsandIndividualSpendingAccounts

2.4MedicalSavingsAccountsSection3.AdjustmentstoGrossIncome3.1Self-EmployedInsurancePremiums3.2MedicalPaymentsasAlimony

3.3Dependency3.4ItemizationofDeductions3.5MedicalDeductions

3.6CharitableContributions3.7InterestDeduction

3.8HandicappedExpensesintheWorkplaceSection4.Credits

4.1Dependent-CareCredit4.2DisabilityCredit

4.3Employer-ProvidedDependent-CareCreditSection5.RetirementPlans

5.1EarlyWithdrawalofRetirementFunds5.2EmployeeStockOwnershipPlans

Section6.StrategicRecognitionofIncomeandDeductionsSection7.Audits

7.1AvoidinganAudit

7.2DelayinganAudit7.3OtherTipstoSurviveanAudit

Section8.OtherMatters8.1GettingHelpwiththeTaxCode

8.2GeneralConsiderations8.3Cheating

PartV:NewUsesofAssetsChapter19:LifeInsurance,aLiquidAsset

Section1.LoansAgainstYourLifeInsurancePolicy1.1LoansfromtheLifeInsuranceCompany—CashValue

1.2LoansfromPrivateIndividualsSecuredbyYourLifeInsurance1.3LoansfromCommercialLendersSecuredbyYourLifeInsurance

1.4AdvantagesandDisadvantagesofaLoanSection2.AcceleratedDeathBenefits

Section3.ViaticalSettlements3.1Salability

3.2ConsequencesofaSale3.3FederalandStateRegulation

3.4Timing3.5FactorsThatDeterminePrice

3.6SaleofPartofaPolicy3.7Beneficiaries,Payment,andMonitoring

3.8TheBestWaytoSellaPolicySection4.TerminatingCoverage

4.1IndividualPolicies—CashSurrender4.2GroupInsurance—LeavingYourJob

Section5.HowtoObtainLifeInsurance(EvenwithaDiagnosisofaLife-ChallengingCondition)

5.1IndividualLifeInsurance

5.2GroupLifeInsurance

Chapter20:OptionsforConvertingRetirementAssetsintoIncomeSection1.Loans

Section2.Withdrawals2.1InGeneral

2.2OptionsUnderEmployer-SponsoredPlans2.3OptionsUnderIndividual-SponsoredPlans

Section3.Transfers3.1OptionsUnderEmployer-SponsoredPlans3.2OptionsUnderIndividual-SponsoredPlans

Chapter21:RethinkingCreditSection1.CreditLifeInsurance

Section2.CreditDisabilityInsuranceSection3.ProtectYourCredit

Section4.GettingMoreandBetterCredit4.1IfYouHaveCredit

4.2IfYouDon’tHaveCredit—SecuredCreditCards4.3IfYouDon’tHaveCredit—OtherMethods

Chapter22:RealPropertySection1.PurchasingRealProperty1.1AdvantagesofOwningaResidence1.2DisadvantagesofOwningaResidence1.3IfYouDecidetoPurchaseaResidenceSection2.HomeEquityConversionPlans

2.1MortgageRefinancing2.2HomeEquityLoansandCreditLines

2.3SaleLeaseback

2.4LifeEstate2.5ReverseMortgages

2.6RentingYourResidenceinWholeorPartSection3.SellingYourHouse

Chapter23:OtherAssetsSection1.CertificatesofDepositandOtherTermBankAccountsasCollateral

foraLoanSection2.StocksandBondsasCollateralforaLoanSection3.PersonalPropertyasCollateralforaLoan

Section4.SellingPersonalProperty4.1PrepareWellinAdvance

4.2AlternativePlacestoConsiderforSellingPersonalPropertySection5.CharitableDonations

PartVI:HealthMattersChapter24:Doctors

Section1.ChoosingaDoctor1.1TwoRoutestoChoosingaDoctor

1.2WhattoLookFor1.3TheInformationalInterview1.4ManagedCareDoctors

1.5AlternativeCarePractitionersSection2.WhatDoYouWanttoKnowAboutYourHealthandTreatment?

Section3.TheDoctor/PatientRelationshipSection4.VisitswithYourDoctor

Section5.PainSection6.SecondOpinionsSection7.MedicalRecords

Chapter25:DrugsandTreatmentsSection1.YourRights

Section2.WhenYourDecisionIsRequiredSection3.WheretoFindInformationAboutDrugs,Treatments,andYour

ConditionSection4.RefusalofTreatmentSection5.PrescriptionDrugs

5.1IfaNewDrugIsRecommended5.2FollowtheOrders

5.3MonitorYourProgressontheDrug5.4ComplianceAids

Section6.PurchasingDrugs6.1ChoosingaPharmacist6.2ChoosingaPharmacy6.3MailOrderDrugs6.4Buyers’Clubs

6.5DrugsfromForeignCountries6.6Insurance

6.7Medicare/Medicaid6.8IfYouCan’tAffordaDrug

6.9Taxes6.10TakeCare

Section7.Over-the-CounterDrugsSection8.ExperimentalDrugs—ClinicalTrials

8.1InGeneral8.2Costs

8.3BeforeJoiningClinicalTrials8.4InformedConsent

8.5LocatingClinicalTrials8.6ObtainingaNewDrugOtherThanThroughaClinicalTrial

Section9.AlternativeMedicineandTreatments9.1InGeneral9.2Herbs

Section10.HealthSupplementsSection11.Treatments

11.1Decisions11.2Surgery

11.3Chemotherapy11.4RadiationTherapy11.5UnprovenTreatments

Chapter26:NutritionandExerciseSection1.Nutrition

Section2.SafeFoodHandlingSection3.Exercise

Chapter27:HomeSection1.HousingDiscrimination

1.1FederalProtection:TheFairHousingAct1.2StateLaws

Section2.StayinginYourOwnHome:FactorstoConsider2.1AccessibilityofthePremises

2.2AvailabilityofMedicalTreatment2.3YourFinances

2.4EmotionalConsiderationsSection3.HomeHealthCare3.1HomeCareProviders3.2AttendantCare

3.3Nursing/InfusionHomeCare3.4MedicalEquipmentatHome

3.5Transportation3.6FoodandChores

3.7Insurance

Chapter28:AssistedLivingandNursingHomesSection1.AssistedLivingor“BoardandCare”Homes

Section2.NursingHomes2.1LocatingaNursingHome2.2AssessingaNursingHome

2.3Payment2.4Complaints

Chapter29:HospitalsSection1.ChoosingtheRightHospital

Section2.OutpatientSection3.EnteringtheHospital

3.1InGeneral3.2EnteringtheHospitalThroughtheEmergencyRoom(ER)

3.3ElectiveAdmissiontotheHospitalSection4.StayingintheHospital—MakingtheBestofIt

Section5.TipstoMakeYourStayEasierSection6.Money-SavingTips

Section7.OnDischargefromtheHospital

Chapter30:HospiceCareSection1.LocatingaHospiceAgencySection2.AssessingaHospiceAgencySection3.EvaluatingHospiceServices

Section4.Payment

Chapter31:BodilyChangesSection1.LookingGoodSection2.HairLoss

Section3.SkinChangesSection4.Dressing

Section5.ContraceptionandSterilitySection6.Sex

Section7.OptionsforCopingwithBodyChanges

PartVII:EstatePlanningChapter32:ProvidingforthePossibilityofIncapacitation

Section1.AnOverviewofAdvanceDirectivesSection2.HealthCarePowerofAttorney

Section3.LivingWillsSection4.DoNotResuscitateOrder

Section5.GuardianshipSection6.TheDurablePowerofAttorney

Section7.RevocableLivingTrustSection8.PreneedDecisionsConcerningMinorChildren

8.1GuardianforChildren8.2AnAdoptiveFamilyforYourChildren

8.3FosterCareSection9.WheretoStoreAdvanceDirectives

Chapter33:ProvidingforthePassageofAssetstoYourHeirsSection1.InGeneralSection2.YourWill

2.1WhoWillReceiveYourAssets2.2WhatTheyWillReceive2.3WhenTheyWillReceive

2.4HowtheDispositionWillBeAdministered2.5ProtectAgainstChallenges2.6WritingYourWillYourself2.7WheretoKeepYourWill2.8MovingfromStatetoState

2.9ChangingorRevokingYourWillSection3.WillSubstitutes3.1RegistrationofTitle

3.2RegistrationofBankAccountsinGeneral3.3TottenTrusts

3.4CustodialAccounts3.5TrustsinGeneral

3.6RevocableLivingTrusts3.7CreditShelterTrust/BypassTrust

3.8IrrevocableLivingTrust3.9CharitableRemainderTrusts

3.10Incorporation3.11RetirementPlans

Section4.MinimizingTaxes4.1Gifts

4.2IfYourNetWorthIsClosetoorMoreThantheUnifiedGift-EstateTaxAmount4.3Trusts

4.4RetirementPlans4.5RealEstate4.6Bonds4.7Debts4.8Liquidity

Section5.WhatYourHeirsCanExpect

Chapter34:FuneralArrangementsSection1.GeneralInformationtoThinkAbout

Section2.DispositionoftheRemainsSection3.Ceremonies

Section4.ChoosingaRestingPlaceSection5.PaymentArrangements

PartVIII:YourTeamandOtherMattersChapter35:SupportGroups

Section1.WhatIsaSupportGroup?Section2.WhyJoinaSupportGroup?Section3.HowaSupportGroupWorks

Section4.DifferentTypesofSupportGroupsSection5.HowtoLocateaSupportGroup

Chapter36:YourSupportTeamSection1.GeneralConsiderations1.1HowtoChooseTeamMembers1.2OtherMatterstoConsider

Section2.PhysicianSection3.Lawyer

3.1DoYouNeedaLawyer?3.2WhatTypeofLawyerIsRightforYou?

3.3Communication3.4Fees

3.5PrepaidServices,Clinics,andLegalAidSection4.FinancialPlanner

4.1DoYouNeedaFinancialPlanner?4.2ChoosingaFinancialPlanner4.3CompensationandLoyalty

4.4TheInterview4.5AGoodFinancialPlan

4.6MaximizingUseofaFinancialPlannerSection5.Accountant

5.1DoYouNeedanAccountant?5.2ChoosinganAccountantSection6.InsuranceBrokerSection7.Stockbroker

Section8.ClaimsAssistanceSection9.HomeCareTeamSection10.PharmacistSection11.Dentist

Section12.NutritionistSection13.SocialWorker

Section14.MentalHealthProvider(Psychiatrist/Psychologist)Section15.Caregivers

Section16.FamilyandFriendsSection17.ClergyPeople/SpiritualAdviserSection18.Malpractice/ErrorsandOmissions

Chapter37:TravelSection1.InGeneral

Section2.ChoosingYourDestinationSection3.MakingTravelPlans

Section4.PreparingforYourTripSection5.PackingforYourTripSection6.PlanesandTrainsSection7.AtYourDestination

Section8.WaterSection9.IfYouBecomeIllWhileAway

Chapter38:And…Section1.MedicalIdentification

Section2.LyingSection3.StudentLoans

Section4.PetsSection5.TransportationtoandfromPhysiciansorTreatmentCenters

Section6.ParkingSpotsfortheDisabledSection7.OtherLegalRights7.1PublicAccommodations

7.2Communications7.3FederallyAssistedProgramsandActivities

7.4NewConstructionandAlterations7.5Transportation

AfterwordResources

BibliographyIndex

Copyright

InmemoryofDavidE.Hankermeyer

Acknowledgments

Althoughmynameappearsasauthor,BePreparedistheresultofthesamekindofteameffortIespouseinthetext.Seldomweremorethantwoofustogether,inpersonoronthetelephone,buttheinputandcross-pollinationwasaneffortofanincrediblygiftedandcaringteam.Iwasluckytobethecaptain.

Be Prepared would not exist were it not for the enthusiasm, support, andgentle guidance of my editor, Bob Weil. The excitement of the St. Martin’sfamily has been gratifying, especially Steve Boldt, John Karle, Becky Koh,AndrewMiller,JohnMurphy,andSallyRichardson.

The first-rate research team, Miriam Gladden, Andrea Ovanesian, andThomasWhite,wasputtogetherbyElizabethHumphreys,Esq.,andwasledbyJimWilliams,Esq.,whoalsoactedassoundingboard,editor,andadviser.

EveryoneatNationalViatorRepresentatives,Inc.(NVR)pitchedintohelpat one point or another, including Cory Crayn, Rob Green, Keith Limitone,GeorgeMartino,LenoreRaeger,DouglasRamirez,andDavidWilson.

I was lucky to have the following team of professionals who sowillinglygave of their time gratis to share their knowledge with you—in interviews,reviewofdrafts,sharingthoughts,oralloftheabove.Inalphabeticalorder,theyare Diane Blum, C.S.W., Donna Brown, Kimberly Calder, M.P.S., JacquesChambers,JerryChasen,Esq.,JohnCutler,Esq.,KennethDoka,Ph.D.,RichardFeldman, Esq., Carl Galli, Charles Garfield, Ph.D., Audrey Gartner, EliGoldbaum, Rhonda Villard Growney, C.L.U., C.F.P., Leslie Jameson, Ph.D.,Ronnie Kasowitz, Barry Katz, C.P.A., Don Kaufman, Donald Lefari, Esq.,ArthurLeonard, Esq., Thomas P.McCormack,BernieMcKinnon,LeeMiller,ThomasMoorhead,Esq.,MichaelNaimy, JonNathanson,HeleneNovin,Neil

Novin, M.D., Robert Prull, Capt. Jerry Rosanbalm, Richard Scolaro, Esq.,DebbieShulman,Ph.D.,CorinneSmith,Ph.D.,BobStella,JanetStokes,KathyStrickland,SamWasserman,JuliaWellin,M.D.,andCatherineNellisWhite.

My support team consisted of my close friends across the country whoprovidedencouragement,listenedtomymoaningwhentheworkanddeadlinesseemedoverwhelming,andprovidedsuggestionsfromtheirownexpertise.MysisterEllenNovin’s loving support has always been important inmy life.MyfriendErmaBombeckgavemeinspirationandencouragement.BarryShulman,Esq., not only provided daily friendship, advice, and encouragement, but alsoaccess to the expertise of his law firm, Scolaro, Shulman,Cohen, Lawler andBurstein, P.C. Sheila Zubrodwas instrumental in expandingmy thoughts andshared her creativity. Paul Rice graciously and lovingly bore the brunt ofmyobsessionwiththiswork.

AndreaDiLasciaBusk, Esq., overcame her own pain to share experiencesandhelpeditthiswork.

WhichbringsmetoJeffreyBarnes,Esq.Jeffreyworkedwithmeforthepastfewyearshelping toconceptualize,narrow themassiveamountof informationandscopeofthisbook,andactasmyconscience,editor,andsoundingboard.

Last, but not least, are the many people living with a life-challengingconditionwho shared their stories and another group (many ofwhomCancerCare,Inc.kindlyassistedmeinlocating)whotookthetimetoreadadraftofthetextfromareader’spointofview.Forthesakeoftheirprivacytheyallliveinthisbookunderassumednames.

Words fail to express thedeep appreciation I have for eachof you.Thankyou.

Introduction

Itseemsasifmostofmylifehasbeenspentpreparingforwritingthisbook.My father was a healer at heart. Although he was forced to abandon his

premedstudiesaftermygrandfather’searlydeath,heandmymotherfoundanoutlet for their shared desire to take care of people through their insurancebusiness.Anticipatingcontinuingthefamilybusiness,ImajoredininsuranceattheWharton School of Finance and Commerce and went on to Harvard LawSchool.

I learned immediately after graduating law school thatmy father had lungcancer and wasn’t expected to live more than a year. In those days, peoplewhispered that he had “c” or “the bigC.”He had spent his life helping otherpeople,butgiventhetimes,hedidn’twishtogopublicabouthiscondition.Wefound little practical information available, particularly about dealingwith thesideeffectsofhissurgeryandtreatments.Weseemedtobelivinginavacuum—isolated from theworldwe’d known and not able to access other peoplewithcancer. If there were any mechanisms for support, we didn’t find them, andtherapywasonlyforthementallyill,notforpeoplewhowerehavingadifficulttime coping. At the same time, we held out an “everything’s okay” face tofriends and colleagues. Although home care was much less expensive thanhospitalization,thehealthinsurancecompanywouldn’tagreetoitsinceitwasn’tprovided for in the policy.Worst of all, in his final days his discomfort wasunnecessarilyprolongedbythehealthcaresystem.

Asacaretakerforalovedonewithleukemiaafewyearslater,Iwasagainfacedwiththerealitythat,whiletherewasmorepracticalinformationavailable,westillhadtonavigateavastexpanseofunchartedterritory.Sinceinthosedaysdoctorswerestill treatedasdictators,wehad topush toobtain informationonalternativetherapiesandtheirpotentialconsequences.Withnoguidelines,facingdecisionsaboutdisabilityandwhenandhowtotellhisemployerwasagonizingforallofus.

Ihadpracticedlaw,runalifeinsurancecompany,andwasproducingashow

onBroadwaywhentheAIDScrisishit.Thetheatercommunityandmyfriendsweredevastatedbythedisease.Itmadeusallwanttodosomething.Inadditionto caring for friends one-on-one, I became a founder of BroadwayCares, thetheatricalcommunity’sresponsetothedisease.

Mylifepartner’sboutwiththediseasewasevenmorechallenging.Choicesfor treatmentwere limited,and themessagesas towhichof those touseweremixed.Theconditionwasstillnewandthepotentiallifespanwasuncertain.Wehad to fight the insurance company when it refused to pay for an expensivetreatment it called “experimental.” Home care had become prevalent andsophisticatedinourarea,anddailynurse’svisitsreplacedmuchoftheneedforhospitalization.

By then, the late 1980s, many books and avenues were available foremotional support, and Guardian Organizations were offering some practicaladvice, but therewas still no easy roadmap to help guide us over the roughpracticalterrainoflivingwithalife-challengingcondition.Inanefforttorealizesome lifelong dreams, we complicated matters by purchasing a new home, a“fixer-upper.”Thepurchasewaspossiblebecause,asalawyer,Iknewthat thelending banks could not refuse a mortgage based on the fact that part of theincome that justified themortgage came from a disability policy rather than atraditionaljob.Wealsotookanextensivetriparoundtheworld.Eventhoughwehadbothtraveledalot,westillhadtothinkthroughthepracticalaspectsofthetripvery,verycarefully.

Aftermypartner’sdeath,Idecidedtousemyeducationandexperiencesfull-timetohelppeoplewithlife-challengingconditions.Becauseofmybackgroundininsuranceandlaw,Iwasdrawntoanewindustrythatwashelpingpeopleselltheir life insurancepolicies for cash, apercentageof thedeathbenefit of theirpolicy thatwould otherwise have gone to a loved one.This new industry, theviaticalsettlementindustry,gavepeoplewithlife-challengingconditionsaccesstofundsmanyofthemdesperatelyneeded.Theyalsorequiredrepresentationintheprocess.IstartedNationalViatorRepresentatives,Inc.(NVR),inresponsetothatneed.

In addition to helping people sell a policy, we provided information and

advice—includingwhennottosellapolicy.Ourclientswerefromallacrossthecountry, living with all kinds of life-challenging conditions with all kinds ofproblems.MuchofwhatyoureadinthefollowingpagesisaresultofouryearsatNVRsearchingforanswers.Aspartofmyresearch,IattendedacoursetaughtbyDavidPeterson,afinancialplannerwithalife-challengingconditionwhohaddeveloped certain strategies for people like himself. David’s passion was asignificantinfluenceininspiringmetowritethisbook.

Through all my experiences, I have come to realize that many concerns,questions, and answers are basic to all life-challenging conditions. I have alsolearned that the conditions people call “terminal” are not always 100 percentterminal.Therearemanysurvivors.What is“terminal” todaymaybecuredortransformedintoatreatableconditiontomorrow.Consequently,Ihavechosentousethewordslife-challengingconditiontodescribethediagnosesthatareattheheartofthisbook.

While it is clear thatknowledge truly ispower, evenwith all the availableinformation there is still no single source that provides a comprehensiveoverview, much less a guide, to living with a life-challenging condition. BePreparedismyattempttoprovidesuchasource.

The information and tips contained in this text are the result of over threeyears of research and thirty years of personal experience, aswell as extensivediscussions with health-care and other professionals, caregivers, and peoplelivingwith different life-challenging conditions.There is nomagic—although,asyouwillsee,inmanyareastheconventionalwisdomnolongerapplies.

BePrepared is thebookIwishmyfather,myfriends,andIhad. Ihope ithelpsyou.

SpecialFeaturesofBePrepared

Summary.ThecontentsofBePreparedaresummarizedinchapter1toprovideanoverviewofthesubjectsdiscussedinthisbook,includinglegalprotectionsofwhichyoumaynotbeaware.

Manyoftheconceptsinthisbookappeartoflyagainstconventionalwisdomor instinct.Tohelp you focus on these areas, they are noted in chapter 1 (thesummary) with the symbol . I call them CASH for conventional adviceswitchedonitshead.Thesesuggestionsareamongthemostimportantaspectsofthebook.

Usingthisbook.YoucanaccesstheinformationcontainedinBePrepared•byreadingstraightthroughthetext,frombeginningtoend.•bymeansofthetableofcontents.•byreadingthesummarycontainedinchapter1.•bymeansofthesubjectindex.

Nomatterwhichrouteyoutake,atleastreadchapter1initsentirety.Theinformationinthisbookisintendedtoprovideasufficientbasisforyou

tomakeinformeddecisions.Iftheinformationismorethanyouwant,youcanreadjustthebeginningofeachsectiontogetthegeneralidea—oraskafriendorfamilymember to read the section for you. In some instances, nomatter howmuchinformationisprovided,gettingfurtherassistanceorinformationfromanexpertisstronglyadvised.

It is important to filter the informationandprinciples in thisbook throughyourownemotionalandpsychologicalmakeupandquality-of-lifechoices.

Chapter introductions. If you are turning right to a subject inwhichyouareinterested,pleaseglanceattheintroductorymaterialinthepertinentchapter.Theintroductory material is often helpful in understanding information presentedlaterinthechapter.

Tips. You’ll find simple, practical tips throughout the book that result fromyearsofmypersonalexperienceand research.Tipsare intended tomakeyourlifeandvariouschoiceseasier.

GuardianOrganization=GuardianOrg.Irefertoanorganizationthatserves,advocates for, and/or does research on specific conditions as a GuardianOrganization, which in shorthand becomesGuardianOrg. The choice of thewordguardianisanotverysubtletributetothepeoplewhochoosetolivetheirlivesinthenonprofitarena.Myhatisofftothem,oneandall.

Boldtypeanddefinitions.Wordsthatmaybeunfamiliartoyouareprintedinboldthefirst timetheyappear in thetext.Definitionsofallsuchwordsfollowwithinthesameparagraphinwhichthewordisused.

↑↑↑.Certainfactsmayapplytomorethanonesectioninachapter.Ratherthanrepeat this information, the ↑↑↑ symbol alerts you to also read the previousinformationinthechapterforamorecompleteunderstandingofthesubject.

Time.Everystepontheroadtofinancialhealthtakestime.Forexample,creditisimportant.Applyingforacreditcardshouldnottakelong,butifyoufirsthaveto clear your credit record, it can takemonths or even years.When time is acriticalelement,itisincludedinthetext.

Pronouns.Withthehopeofmakingthetextasaccessibleaspossible,theuseofmasculineandfemininepronounsalternatesbychapter.Malewonthetosstobethepronouninthefirstchapter.

Youandyoureconomicunit.Forthesakeofexpediency,thetextoftenrefers

to “you.” If you are part of an economic unit, whether wife/husband orsignificantother,tailortheadvicetoyoursituation.

Friendsandfamily.Ifyourdecisionswillaffectotherswhoareclosetoyou,itmay be useful to involve them in the process described in this book. If yourassetsareintertwined,itmaybenecessary.

Asyoumakeyourdecisions,bearinmindthatiftheexercisesdescribedinthetextindicateanultimatefinancialshortfall,includingpeopleclosetoyouintheprocessmayincludetheminassistingtofindthesolution.Attheleast,theywillbeawareoftheproblem.

Worksheets.Youwillfindworksheetsthroughoutthetexttoassistyou.

Toll-freetelephonenumbers(andotherphonenumbers).Whereverpossible,when an organization is mentioned, current contact information is provided,including a toll-free number. Each number has been verified fromNewYorkCity.Ifthenumberdoesnotworkfromyourarea,calldirectoryinformationat800–555–1212.Ifthatdoesn’twork,trythelocaldirectoryfortheareainwhichtheorganizationislocated.Ifallelsefails,feelfreetocontacttheauthorandIwillgiveyouwhateverinformationIhave.

Resources. So as not to disrupt the flow, resources in addition to thosementioned in the text are included at the end of the book under the heading“Resources.”

Peopleidentifiedinthisbook.Throughoutthetext,Ioftenillustrateapointorideawith a personal example. In every instance names and other details havebeen changed to protect confidentiality, and in some examples composites ofvariousexperienceshavebeendrawntobetterillustrateasubject.

PartI

ASummary

PartII

TheBuildingBlocksforSuccessfullyLivingwithaLife-Challenging

Condition

Chapter3

GatheringtheInformationYou’llNeed

Ifyouplanforthebestcaseandtheworstcasehappens,youareinbadshape.Butifyouplanfortheworstandyouendupwiththebest,thenyouareonlyslightlyinconvenienced.

—DavidPetersen,founder,AffordingCare

This chapter starts you on the path to understanding where you would befinancially if you didn’tmake any of the changes discussed in this book. It’snecessarytounderstandthatrealitybeforelookingatthealternativesavailabletomakeitbetter.

Spendingalittletimenowtoobtainandchecktheinformationdescribedinthischapteritwillsaveyouagreatdealofstressandtimeinthefuture.

Tip. Making requests for information is standard and provides no clue aboutyourhealthcondition.

This chapter refers to “you,” but also applies to your spouse or significantotherwhererelevant.

Section1.EmploymentBenefits

Employer.Youremploymentbenefitswillbedescribedinadocumentgenerallytitledsomething like“SummaryPlanDescription.”Thisdocumentsummarizesyourhealth,life,anddisabilityinsuranceplansaswellasyourpensionplan.Ifyoudon’thave thiskindofdescriptionofyourbenefits, askyouremployerorunion, or both if appropriate, for a copy. You are entitled to this informationfromyour employer under federal law, aswell as various state laws, and youdon’thavetogiveareasonforwhyyouwantit.Ifyouhavearetirementplan,

askhowmuchyourinterestisworth.Ifyouhaven’treceivedreportslatelythattellyouaboutthefinancesoftheplan,thiswouldbeagoodtimetoobtainthemaswell.

Short-termdisability benefits. Find out if your state law entitles you to anyshort-term disability benefits. Your state Labor or Insurance Department (seeresourcessection)aregoodsourcesofinformationaboutthetermsofthebenefitincludingwhatitcovers,howmuchitpays,andforhowlong.

Section2.OtherInsuranceCoverage

Assemble copies, or at least summaries, of all your other personal insurancepolicies, including all life, health, hospital, disability, and long-term-carepolicies.Also,pulltogetherallthepoliciesthatcoveryourpropertyorliability,such as homeowners and/or fire and liability, automobile, excess liability,umbrella,andworkers’compensationcoverageifyouhavein-homeemployees.Don’t worry about any business coverages. This book only deals with yourpersonalsituation,notanybusinessyoumayown.

Ifyouknowyouhaveapolicybutcan’tlocateit,youcanobtaincopiesfromyourbrokerordirectly fromthecarrier if it isacompany thatwritescoveragedirectly to the public. While waiting for the actual policies, your broker cansupplyasummaryofyourcoverages(usuallycalleda“scheduleofinsurance”).If you deal with companies that do not use brokers, you can get the basicinformation on the phone while waiting for copies of the policies. Mostcompanieshavetoll-freenumbersfortheircustomers.

Tip.Ifyoudonothaveanyofthelistedcoverages,pleasereviewchapter16todeterminewhatcoverageyoushouldobtainassoonaspossible.

Section3.SocialSecurityInformation

To find out how much disability, retirement, and survivor benefits you’reentitled to under the federal Social Security system, simply call the Social

SecurityAdministration(SSA)at800-772-1213andusetheautomatedsystem,orvisityourlocalSSAofficetorequesttheformknownas“PersonalEarningsand Benefits Estimate Statement” (form SSA-7004). The amount of yourbenefitsdependsonyourcontributions to the system throughoutyourworkinglife.Theformshowsyourearningsrecord,thetaxesyouhavepaidtotheSocialSecuritysystem,andtheamountofbenefitsthatyouoryoureligiblesurvivor(s)would receive if you retire, die, or become disabled in the current year.Onceyouhavesent in thecompletedform, itwill take three tofourweeks toobtaintheinformation.

Tip.AnimmediatemeansofaccessingtheseamountsisthroughtheInternetatwww.ssa.gov. After you complete a form on-line requesting the information,SSAwillE-mailyouapersonalcode(asasecurityprecaution).Youthenhaveto return to the Social Security site, complete the form again, and submit theactivationcode.Earningshistoriesarenotavailableatthissite,soyouwillstillhavetoobtainthisinformation,asnotedabove,toconfirmitsaccuracy.

When you receive the statement, check the numbers to see if they areapproximately what you recollect and review the rest of the statement foraccuracy.Evenaminorerrorcancomplicatecollectionofbenefits.Itcantakealongtime,andalotofworkonyourpart,tocorrecttherecord.Doitnowwhileyou’refeelinguptoit.Youwon’twantunnecessarydelayswhenyouarereadytoapplyforthebenefits.

Usually errors are noticeable, such as having no entry where you knowincomeshouldbe. If it iswrong,callSSA tohave the recordcorrected. If theerror isamisspellednameoran incorrectaddress,youmaybeable to resolvethematteroverthetelephone.Ifthewagesinthereportareincorrect,youmayneedtosubmitcopiesofyourW-2sandtaxreturnstogettherecordcorrected.Ifyoudon’thaveyouroldW-2s,youshouldbeabletoobtainconfirmationofthecorrectfactsfromthepertinentemployer.

Tip. It’s helpful to review your Social Security statement every few years to

make sure it continues to be accurate. According to a study by the GeneralAccountingOffice,earningsrecordsareincorrectforoneintenpeople.Isuggestalsodoing itwithinayearafterchanging jobsor if thecontinuedexistenceofyouremployerseemsshaky.

Section4.YourHealth

Switching conventional advice, your physical health rather than your age,maritalstatus,ordependentsbecomesthemostimportantpartofyourplanningfoundation.Twofactsareimportanttolearn:longevityonastatisticalbasisandanticipatedcosts.

“Onastatisticalbasis.”Yourlongevityisthenumberofyearsyouwouldliveif you were a statistic, instead of the unique person you are. By definition,statisticsonlytellwhathappenstoalargegroupofpeopleatasimilarpointwithasimilarcondition.Itdoesnot,Irepeat,doesnotpredictyourpersonaloutcome.I’vehadfriendswithadiagnosisthatindicatedtheyhadayeartolive,andtheyarestillalivetoday,almostsevenyearslater.Youshouldtreatthisnumberasnomore than what might happen. According to the doctors who study themind/bodyconnection,ifyoumistakenlyfocusonitasareality,itmaybecomeaself-fulfillingprophecy.

Tip. If research into this area is a problem for you, ask a familymember orfriendtodoitforyou.

Costs. The second fact we need is the “average” cost timetable for treatingconditionslikeyours,soyouwillknowhowmuchtopreparefor,andwhen.Forexample,withcancer,thecostcurveisgenerallylikeabarbell:costsareheavyjustafterdiagnosis,thensomewhatlowuntiltheendoflife,whentheytendtoincreaseagain.WithHIV/AIDS,thereisahighannualexpensefordrugs,whichmaybefollowedbyheavymedicalandhospitalexpensestowardtheendoflife.Alzheimer’sischaracterizedbyalotofexpenseforcustodialcare.Diabeteshas

awedge-shaped pattern: the directmedical expenses keep increasing until theendstage.

Your health care provider should be able to describe your statisticallongevity and possibly the average cost of treatment. If not, contact yourGuardianOrg.

Journal.Itishelpfultokeepadailyjournaldescribingyoursymptomsandhowthey affect your activities, includingwork.The journalwill help provide yourphysician with a complete picture of your health and the effect of varioustreatments;evidencenecessarytoleaveworkondisabilityifyouhaveachoiceas to the timing; and, if you receive disability income of any type, will helpprovide evidence of continuing disability if you are questioned. The journalshouldincludephysicalandemotionalreactions,andbothpositiveandnegativereactions todrugs.Thedescriptionsshouldbespecific rather thangeneral.Forexample,ifpainisinvolved,seethedescriptionsinchapter24,section5.

Section5.YourCreditStatus

Credit is an important source of cash when you need it, whether for medicalbills,travel,orotherexpenses.Ifyoudon’thavecreditaccountsnowbecauseofapriorimpairedcredithistory,skipthissectionandrefertochapter21forsomeadviceonhowtogetcredit.

Wheneveryouapplyforcreditoruseyourcreditaccounts,creditorsforwardinformationaboutyou tocreditbureaus.Because lendersmake thedecision toextend credit based on the information in the bureaus, and because errors arecommon,youwillwanttomakesurethatthisinformationiscorrect.Ina1991survey, Consumer Reports found that of 161 credit reports it examined, 48percentcontainederrors;19percentofthemcontainederrorsseriousenoughtoaffectemployment,credit,orinsurance.

Youhavetherighttocorrectanyinformationinyourfilethatisnotaccurateandcurrent.

Step1.Get a copyof your credit report. To reviewyour records, request acopyofyourreport.Therearehundredsoflocalandregionalcreditbureaus,butthemostimportantonesarethethreenationalcreditinformationbureaus:

ExperianP.O.Box2350Chatsworth,CA91313-2350800-682-7654

EquifaxWildwoodPlaza,P.O.Box740241Atlanta,GA30374-0241800-685-1111

TransUnionP.O.Box390Springfield,PA19064-0390800-916-8800

Acreditreportingagencycancharge$8foracopyofyourreport.Isuggestyou order all three. If you only order one, I recommend that you obtain thereportfromExperian(formerlyTRW).Youareentitledbyfederallawtoafreereport if a company has taken adverse action against you based on the creditreport and you request the report within sixty days of receiving the notice ofaction.Theactionagainstyoucanincludesuchactsasdenyingyoucredit,rentalofanapartment,or theopeningofa telephoneaccount.The letteryou receivenotifyingyouofadenialisrequiredtospecifythenameandcontactinformationofthebureaufromwhichitobtainedyourcreditreport.

Youarealsoentitledtoonefreereportayearifyoucanprovethatyouareunemployedandlookingforajob,plantolookforajobwithinsixtydays,areon welfare, or that your report is inaccurate because of fraud. Entitlement tootherfreereportsvariesfromstatetostate.

Whenrequestingyourreport, includeyourname,addressesforthelastfive

years,dateofbirth,socialsecuritynumber,andtelephonenumber.Also,includeany other names by which you have been known, such as maiden names orpreviousmarriednames.Incasethereisaproblemornoresponse,usecertifiedmail, return receipt requested, and pay for the report with a check or moneyorder.Keeptrackofthedatethatyoumakeyourrequest.Ifyoudonothearfromthe bureau within thirty days, send another request with a copy of the firstrequest.

Step 2.Review your credit report.When you receive your report, review itcarefully.

The following checklist is a guide for reviewing your credit report. Thereportmayincludecodedinformation.Ifitdoes,itshouldcomewithakeythatexplains the codes. Feel free to contact the credit bureau and request anexplanation for any information you do not understand. Check the followinginformation:

•YournameandSocialSecuritynumber.ItispossiblethatyourreportincludesinformationaboutsomeoneelsewhohasasimilarnameorSocialSecuritynumber.

•Makesurethereportaccuratelyreflectswhethertheaccountissingleorjointwithsomeoneelse.•Accountnumber.•Isanaccountstilllistedasopen,eventhoughyouclosedityearsago?•Typeofaccount—is the typeofaccountaccuratelyreflectedas installment, revolving,orsomeotherkind?

•Istheoutstandingbalanceontheaccountcorrect?• Highest credit—this is the credit limit on the account or the highest amount you have evercharged.

•Statusofaccount.Thiscanbeadifficultsectiontoreview.Thissectionrelatestoyourpaymenthistory on the account.Credit bureaus use codes to indicate the number of times youpaid theaccountontime,orthetimesthatyoupaid30,60,90,or120dayslate.

•Late-paymenthistory.Thisisasummaryofyourtotallate-paymenthistory.•Comments.Bothyouandyourcreditorsmaysupplycomments to thecreditreport. If thereareany,aretheyaccurate?

•Ifanysuits,judgments,taxliens,orsimilaritemsarelisted,aretheystilloutstanding?Ifso,arethefactscorrect?Thesefactsareimportantforyourfuturecredit.

•Are thereanyother claimsagainstyou listedon the report?Are theyaccurate? If so, considerclearing themup.At leastprovide the informationnecessary todefendagainst theclaim to theperson or people who would handle your affairs if you become incapacitated or die, “just incase.”

•Isthereanyotherinaccurateinformationinthereport?

Step3.Ifthereisanerror—fixthereport.Ifyoufindanerroronyourreport,contactboththecreditbureauandthecreditor.

Thelettertothecreditbureaushouldidentifywhoyouare,yourreasonforwriting,whatiswrongwiththereport,whyitiswrong(includinganystoryandproof),whyitwon’thappenagain(e.g.,itwasanaberration),andwhatyouwantthem todo. Includea request for confirmation that the actionyou requirewascompleted, thank them for their consideration, and sign the letter.Correspondence should be sent by certifiedmail, return receipt requested, andshouldincludecopies(notoriginals)ofdocumentsthatsupportyourposition.

Once the credit bureau receives your letter disputing information in thereport, the bureaumust investigate the items in question, usuallywithin thirtydays,unless theyconsideryourdispute frivolous.The investigationconsistsofthebureaucontactingthecreditorandforwardingallrelevantdatayouprovideabout the dispute. After the creditor receives notice of a dispute from theconsumer reporting agency, it must investigate, review all relevant facts youhave provided, and report the results to the consumer reporting agency. If thecreditor finds the disputed information to be inaccurate, it must notify allnationwideconsumerreportingagenciessothattheycancorrectthisinformationinyourfile.Whentheinvestigationiscomplete,theconsumerreportingagencymustgiveyou thewritten results anda free copyofyour report if thedisputeresults in a change. If the creditor says the information is correct, you willreceive notice from the bureau advising you that the information has beencheckedandisaccurate.

If a creditor fails to respond to an investigation, the law requires that thedisputediteminthereportberemoveduntilitisverifiedbythecreditor.

Finally,ifyoustillbelievethattheinformationprovidedbyacreditorisnotaccurate,andthecreditorwon’tchangeit,youmayexerciseyourlegalrighttohaveahundred-wordstatementincludedinyourfiletoexplainyoursideofthestory.

Tip. At your request, the credit reporting agency must send a notice ofcorrectiontoanyonewhoreceivedyourreportinthepastsixmonths.

Step 4. If there is an error—follow up. If you find an error in your report,chancesareitisincludedinotherreportsmaintainedbytheothercreditbureaus.If you haven’t already done so, I suggest you request reports from the othercreditbureausaswell.

Tip. Once all the errors in a report are supposedly fixed, request your creditreportagaintobesuretheerrorswerereallytakencareof.

Step 5. Periodic reviews. Consider requesting your credit report annually toinsureitscontinuedaccuracy.

Tip.Atminimum,orderanupdatedcreditreportbeforeapplyingforanycredit.It’sbettertoheadoffproblemsbeforetheyoccur.

Creditfix-itservices.Thereareservicesthatguaranteetofixyourcredit,forafee.Theyareawasteofmoney,sinceitissoeasytoinsurebyyourselfthattheinformationinyourfileisaccurateandcurrent.Neitheryounoranyoneelsecanlegally delete accurate, yet negative, information from your report, so don’twasteyourtimeandmoneyonservicesthatclaimthisispossible.

Section6.Life,Health,andDisabilityInsuranceInformation:TheMedicalInformationBureau

The Medical Information Bureau (MIB) is a nonprofit association that wascreated by and for insurance companies to protect against fraud by sharinginformation among member companies. When life, health, or disabilityinsurance isapplied for, theapplicant isusuallyasked tosignanauthorizationgrantingtheinsurancecompanybroadaccesstomedicalinformationconcerningthe applicant (including information from your doctor or hospital). Thisinformation, togetherwith the results of the company’s investigations, such astheresultsofaphysicalexam,aresubmittedtotheMIB.TheMIBhasrecordsonapproximately13millionpeople.

Asyouwillseeinchapters14and19,inspiteofyourcondition,youcanstillapplyforhealthandlifeinsurancecoverages.Ifyoudo,theinsurancecompanywill probably request that the MIB provide it with any information it hasconcerningyou.Theinsurancecompanycomparestheinformationprovidedbyyouwith the information in theMIB. If the twoarenotconsistent, the insurerwill seekclarification fromyouorothersources.Thus, it is inyour interest toinsurethatMIBinformationconcerningyouisaccurate.Ifyouhavenotappliedfor health, life, or disability insurance in the last seven years,MIB should nolonger have any information concerning you, as information is only kept forsevenyears.

TherearetwootheractivitiesoftheMIBofwhichyoushouldbeaware:

•TheMIBwilltellmembercompaniesaboutclaimsfiledagainstdisabilitypoliciesforthepurposeof “coordinating benefits” between different policies. The MIB does not, however, receiveinformationbasedonclaimsyoumakeagainstanyhealthorlifeinsurancepolicies.

• The MIB maintains an Insurance Activity Index: a report by each member company of allapplicationsfor thepurchaseof life insurance.Thefile iskeptfor twoyearssoacompanycancheck to seewhether youhave applied for other life insurance in that period. If you apply forseveralpolicieswithinashorttime,theactivitymaycauseacompanytoquestionwhyyouneedsomuchinsuranceand/orquestionyourhealth.

Toobtainacopyofyourrecord.ContactMIBat617-426-3660andaskthatitsendyoutheformnecessarytoobtainacopyofyourMIBrecord.Youcanalsomailarequest for theformtoMIB,P.O.Box105,EssexStation,Boston,MA02112.

Inmostcases,youwillbecharged$8foryourrecord.Therecordisfreeifwithin thirty days prior to your request, your application for life, health, ordisability insurancewasdeclined and the insurance company that declined theapplication provided youwith notice thatMIBwas an information source.Toqualifyforthefreereport,youwillhavetoprovidewithyourrequestacopyofthenoticedenyingcoverage.

CorrectinginformationattheMIB.Ifyoufindincorrectinformationinyourrecord,youcanrequestareinvestigationbytheinsurerthatprovidedthewrong

information.Youshouldalsosendastatementfromyourphysiciansettingforththe correct information. If theMIB agrees, that’s the end of the story. If theycontinuetolisttheinaccurateinformation,youhavetherighttohaveastatementincludedinyourfile.

IfyoufindinformationthatwascorrectbutwasinappropriatelyreportedtotheMIBasaresultofclaimsmadeonyourhealthinsurancecoverageinsteadofas a result of applying for insurance, you can request that the information beremovedfromyourrecord.

Section7.YourFinancialInformation

Itwillalsobehelpfultopulltogether

•statementsforallyourbankaccounts,includingcanceledchecks,aswellasyourcredit-cardandinvestmentstatementsfor thelast twelvemonths.Don’tworryifoneorafewaremissing: thisinformationisusedjusttoobtainyourgeneralfinancialpicture.Ifyourspendingpatternsdon’tfluctuate greatly frommonth to month, you can reduce your data-gathering to one six-monthperiodortoeveryotheroreveneverythirdmonthforthepastyear.Besuretoincludeonce-a-yearitemssuchasamajorvacationorannualandsemiannualbills.

•alistofallyourstocksandbondsandotherincome-producingitems.•alistofyourdebtsandotherobligations.•taxreturnsforthelastthreeyears.•expectationsoffutureincomeorlossthatareoutoftheordinaryforyou.•anyotherinformationconcerningyourfinancesyoumayhaveonhand.•acopyofyourlastwillandtestament.

PartIII

Income

Chapter6

LegalProtections—Employment

DebbieS.hadbeenanofficemanagerforagood-sizemedicalpracticeforeighteenyearswhenshewas diagnosedwith colon cancer.At first, her employers told her theywould do anythingtheycouldtohelpher.Sixmonthslatershefoundoneofheremployersaskingwhatshewoulddowhen she was on disability. Over the next fewmonths there were more hints that led her tobelieve they didn’t want her at the practice anymore. She was then terminated with theexplanationthatdecreasingprofitswerethecause.

Debbie’sstoryisnotunusual.Federal, state, and local disability laws offer protections to employees and

families facing life-challenging conditions. The laws address all aspects ofemployment, from preemployment through termination of work and jobchanges. The laws also protect against discrimination in housing, publicaccommodations, communications, transportation, and construction. Thischapterfocusesonemployment.

In general, you are considered to be “disabled” for purposes of coverageunder theAmericanswithDisabilitiesActof1990 (ADA)andotherdisabilitydiscrimination laws simply because of a diagnosis of a life-challengingcondition.Theunderlyingassumptionaboutdisability in these lawsis thatyoushould not be discriminated against merely because of a diagnosis. When itcomestowork,thelawassumesaworkercan,andshouldbeallowedto,workdespitethedisability.

Youareprotectedonlyif theemployerorotherpartyis informedabout,orhas reason to believe, you have been diagnosed with a life-challengingcondition. The employer and other covered person must maintain strictconfidentialityaboutyourcondition.

ThetermdisabilityforpurposesoftheADAandotherdiscriminationlawsisnotthesameasthetermdisabilityforpurposesofassessingeligibilityforSocial

SecurityDisabilitybenefitsordisabilityinsurancewhere,asyouwillseeinlaterchapters,aconditionthatpreventsapersonfromworkingisrequired.

Note.Theselawsarefairlynewandtheirmeaningisstillbeingdevelopedinthecourts.Thischapterisintendedtoprovideageneraloverviewofhowtheselawsapplysoastoassistyouinreachinginformeddecisions.Readerswhoencounterproblemsintheareasdiscussedareurgedtoseeklegalcounselonhowthelawappliestoindividualsituations.

Section1.Employment

Under the ADA and the Federal Rehabilitation Act, a covered employer (seesection 1.1 below)may not discriminate against a qualified individual with adisability because of the disability. The meaning of this prohibition will bediscussed at length throughout this section. Areas protected under the lawincludepreemploymentinquiries,reasonableaccommodation,leavesofabsence,tellingandconfidentiality,andaccesstobenefits.

Note:TheADAand theFederalRehabilitationActdifferonlyas towhichemployers are covered under each act. Otherwise the requirements andinterpretations are substantially similar. For purposes of this discussion, bothacts will be referred to as the ADA, except as to the questions of coveredemployers.

Whiletheselawsdonotapplytoallemploymentsituations,itisimportanttounderstand the scope of their protection because state and local disabilitydiscriminationlawsmayapplywhentheADAdoesnot,andmanyofthemrelyontheADAasasourceforinterpretation.

1.1CoveredEmployers•EmployerswithfifteenormoreemployeesarecoveredbytheADA.•StateandlocalgovernmentsmustalsocomplywithADArequirements.• Employees of theU.S. government, or a corporationwholly owned by the government of theUnitedStates,arecoveredby theFederalRehabilitationAct insteadof theADA.Themilitary,however,doesnothave toobeyeither theADAor theFederalRehabilitationAct, exceptwith

respecttocivilians.•Employerswithfewerthanfifteenworkersarecoveredbystateorlocallaws.Contactyourstateor local “equal employment opportunity” or “human rights” office. Check the state and localgovernment section of your telephone book. TheEqual EmploymentOpportunityCommissionPublicInformationsystemcanhelpyoulocatethecorrectagency(800-669-4000).Foradditionaladvice,contactyourGuardianOrg.

•Organizations exempt from taxationunder501cof the InternalRevenueCodearenot coveredunder the ADA. These organizations include charitable organizations that fit within 501c(3),“bonafideprivatemembershipclubs,”andlabororfraternalorganizations.

1.2DisabilityforPurposesoftheAmericanswithDisabilitiesAct

DisabilityforpurposesofADAmeans

•aphysicalormentalimpairmentthatsubstantiallylimitsoneormoremajorlifeactivities;oreven• theperceptionofdisability—whichcancome from thecurrentperceptionof an impairment aswellasahistoryofimpairment.Forpurposesofthelaw,themerediagnosisofalife-challengingconditionsuchasHIV/AIDSandcancercancreatetheperceptionof“havinganimpairment.”Inaddition to those currently battling an illness, the ADA also protects survivors from futurediscriminationbasedonpastillness.

As this book was going to press, the meaning of the term disability as itappliestosymptom-freepeoplediagnosedwithalife-challengingconditionwasunderconsiderationbytheU.S.SupremeCourt.Asapracticalmatter,formostpeopleinthiscategorytheneedforanaccommodationdoesnotarise.Ifyouareasymptomaticanddevelopaproblematworkrelatedtoyourcondition,consultyourGuardianOrgoranattorneyforadvicetailoredtoyourneeds.

1.3HiringandRehiring

Voluntaryinformation.Apreemploymentinterviewisnotaconfessional—youdo not have to volunteer any information about your health. The onlyinformationthatisrelevantrelatestoyourabilitytoperformtheessentialdutiesofthejobyouseek.

Questions from employers—before an offer is made. Before the ADA,

prospectiveemployersoftenrequestedmedicalinformationfromtheapplicantatthesametimeasotherinformation.Thoserejectedhadnowayofknowingifamedicalconditionwasthereasonfornotbeinghired.TheADAwasdesignedtoisolatetheemployer’sconsiderationofhealthinformation,enablingapplicantstoassess whether the employer unlawfully discriminated against them based ondisability.

Under the ADA, the only questions a prospective employer may ask youduringthepreemploymentprocessrelatetoyourabilitytoperformtheessentialduties of the job under discussion. Prospective employers may not ask anyquestionsthattendtoelicitmedicalinformationorrequiremedicalexaminationsuntil after a provisional offer of employment has been made. Thus, at thisinterview stage, it is illegal to ask you or your previous employer questionsrelated to your health, including what prescriptions or over-the-counter drugsyou take or even whether you’ve missed work in your previous job due toillness.

If yourdisability is somehowapparent, even if the employerhas reason tobelievethatthedisabilitymayinterferewithorpreventtheperformanceofjob-relatedduties,theemployermaynotaskabouttheexistence,nature,orseverityof the disability. On the other hand, the employer is allowed to ask specificquestions about your ability to perform the essential duties of the job. Forexample, an employer may ask an applicant with one leg who is seekingemploymentasahomewashing-machinerepairpersonhowshewouldbeabletotransportherselfandhertoolsdownbasementsteps.Itwouldnotbeappropriatefortheemployertoaskhowtheapplicantlostherleg,becausethelossofthelegmay indicate some underlying impairment that may be a disability under theADA. It is also inappropriate to askanapplicantwithaknowndisabilityhowshewouldaccomplisha tasknot related toherdisability,unless the inquiry ismadeofallapplicants.

Employers may not refuse to hire you now because they fear you willbecometooilltoworkinthefuture.Theonlyrelevantconsiderationishowwellyou can perform now. They also cannot take into account possible highermedicalinsurancecosts,workers’compensationcosts,orabsenteeism.

Employers may discriminate against people who pose a direct threat—asignificant risk of substantial harm—to the health or safety of themselves orothers,aslongasthatriskcannotbeeliminatedorreducedbelowthelevelofa“direct threat” through reasonable accommodation.An employermay not justassumethatathreatexists:theremustbeobjective,medicallysupportableproof.

Tip. If youwant toknowmore about thequestions an employer can askyou,contacttheEEOCat800-669-3302or202-663-4900.

For tips on what to say and what not to say during a job interview, seechapter7,section4.3.

Questionsfromemployers—afteranoffer ismade.Afteraconditionalofferof employment is made, the employer may request medical information andrequiremedicalexaminations,butonly

•ifsuchinformationisaskedofallapplicants,and•ifthereisalegitimatebusinessreasonforasking.

If information about a disability is revealed during this process, and theapplicantisnotofferedthepositionbecauseofthedisability,theemployermustbeable todemonstrate that theexclusion is (1) job-related, (2)consistentwithbusinessnecessity,and(3)thatnoreasonableaccommodationwaspossible.(Seethenextsectionforadiscussionof“reasonableaccommodation.”)

Reemployment inquires.Youremployer isallowed toseek informationaboutyourhealthwhenyoureturntoworkafteradisabilityleave.Again,thescopeofthe inquiry is limited to your ability to perform the duties of the job, nothingmore.

1.4ReasonableAccommodation:WhenaDisabilityInterfereswithWork

Onceanofferhasbeenmade,aswellasduringtheentireperiodofemployment,the ADA protects workers with disabilities (under the law, such a person isknownas“aqualifiedperson”)whocanperform theessential functionsof the

job theyhaveorseekwithorwithoutreasonableaccommodation.There isnorequirement tobeable toperformthejobperfectly,onlythatyouarequalifiedforitandthatyoucanperformtheessentialfunctions.

Essential functions.Essential functions refer to those tasks thatareabsolutelynecessary to the successful performanceof the job.Todetermine the essentialfunctionsofajob,considerthreefactors:

•Performanceofthetaskisthereasonthepositionexists.•Alimitednumberofemployeesareavailabletoperformthetask.•Thetaskmayrequirehighlyspecializedexpertise,limitinghiringtopersonswiththoseskillsortraining.

Forexample,theessentialfunctionsofasecretaryaretoanswerthephone,totakemessages,toworkonacomputeroratypewriter,tohandlepeople,andtoorganize schedules and paperwork. The ability to walk is an incidental ormarginaljobfunction,notanessentialone.

Reasonable accommodation.Withmany illnesses, there will be a disability-based limitation that will require some kind of an accommodation. The lawrequires that employers provide “reasonable accommodations” for employeeswithdisabilitieswhocanperformtheessentialfunctionsofthejob.AnemployermaydomorethanrequiredbytheADA,butmaynotdoless.

Thelawonlycomesintoplaywhenanemployerisawareofadisabilityandan employee seeks reasonable accommodation. In other words, you are notprotectedunlesstheemployerisawareofyourcondition.Thismeansthatifthelack of an accommodation is affecting your job performance, but you do notrequestaccommodationfromyouremployer,youwouldnotbeprotectedbytheADAifyouaredischargedforpoorperformance.

UndertheADA,“reasonableaccommodation”mayinclude• making existing employee facilities readily accessible to, and usable by, individuals withdisabilities.

• job restructuring; part-time or modified work schedules; reassignment to a vacant position;acquisitionormodificationof equipmentor devices; appropriate adjustmentormodificationofexaminations,trainingmaterials,orpolicies;providingreadersorinterpreters.

•somethingassimpleaspermittinganemployeetotelecommute(workathomewithatelephoneandperhapsacomputer).

Anyaccommodationwillbeaninconveniencetotheemployer.Thatdoesn’tmatter.Theemployermustprovideaccommodationsolongasitdoesnotresultinan“unduehardship”totheemployer.Unduehardship isarelativetermandmustbeexaminedineachinstance.Unduehardshipmeansanactionrequiringsignificant difficulty or expense when considered in light of various factors,includingbutnotlimitedto

•thenatureandcostoftheaccommodation.•theoverallfinancialresourcesoftheemployer.•thenumberofpersonsemployed.•theeffectontheemployer’sfinancesorresourcesorotherimpactoftheaccommodation.

A company like General Motors will clearly be required to do more toaccommodateitsemployeesthanasmalllawfirm.

Examplesofreasonableaccommodation.• Kathy B. is a schoolteacher who experienced problems with memory, coordination,concentration, and balance as a result of an automobile accident. A school district couldreasonablyaccommodateKathybyprovidingherwithateachingassistant.

•RhonaL.,achemistwithseveredepression,hadlimitedabilitytodealwiththepublic.However,only about 5 percent of her job involved communication with the public. Her employerreasonably accommodated Rhona’s condition by changing the job and allowing her tocommunicatebymail,oriftelephonecontactwasrequired,providingsomeonetotalkforher.

•Anemployerwithmanyofficesandlocationsmightberequiredtoconsidertransferringaworkertoalocationwherebettermedicaltreatmentwouldbeavailableifasimilarpositionisopenthere.

•JimW.workedasanight-shiftdata-entryoperator,butcouldnolongerworkatnightbecauseitmade his clinical depression worse. Since no accommodation could be made in his currentposition,hisemployercouldreasonablyberequiredtoaccommodatehimbytransferringJimtoaday-shiftdata-entryoperatorpositionifonewasavailable,orevenadifferentday-shiftpositionforwhichhequalifiedifnodaytimedata-entryoperatorpositionswereavailable.ThisdoesnotmeanthatJim’semployerisrequiredtobumpworkersfromotherpositionsorthattheemployermustcreateanewposition.

• An employer is not obligated to provide the accommodation that the employee desires. Theemployerisonlyrequiredtoprovidesomereasonableaccommodation.Thus,ahospitalwasnotrequired to offer a transfer to Peter N., a probationary hemodialysis nurse who was havingdifficulty mastering the tasks of his job because of his disability, where instead the hospitalofferedAlanadditionaltraining.Whiletransfermayhavebeenareasonableaccommodation,sowastheadditionaltraining,andtheemployercouldexerciseitsdiscretioninofferingitspreferredaccommodation.

•Requiringasmalllawfirmonthefourthfloorofawalk-upbuildingtoputinanelevatorisanunduehardship.

Tip. Be aware that if the accommodation involves doing less work, youremployer may pay you less. However, your insurance benefits may not bedecreased.

Ifyourequestedareasonableaccommodationsuchasrecoverytimeafterachemotherapytreatmentanditwasrejected,don’tjusttakethetimeoffandcallinsick.Writealettertohumanresourcesaswellastotheappropriatepersoninthechainofcommand,suchas thepresidentof thecompany.Explain thatyourequestedthedayoff,whichshouldhavebeengrantedundertheAmericanswithDisabilities Act (or other appropriate law), and that you would appreciatereconsideration.

Tip.Wheretheremaybeareactionthatwillpreventyourworkingforthenextday or two, schedule chemotherapy and other treatments for after work onFridaysorbeforeholidays.

Gettingareasonableaccommodationatwork.Youneed tomakeanhonestpersonal assessment ofwhatworkplace accommodation you require to enableyou to continue working. Talk to your physician(s) for advice about thelimitationsimposedbyyourillness.Thisisanassessmentthatyouwillhavetorevisitifyourhealthchanges.

Negotiating a reasonable accommodation from your employer involvesbalancing your needs against the financial resources of the employer. As youundertake the negotiation, think of your relationshipwith your employer as acooperativeproblem-solvingrelationshipratherthananadversarialone.

Tip. Start the negotiation by jointly reviewing your job description and theessential functionsof the job. Identifyandevaluatepotential accommodations.Lookfortheaccommodationthatworksbestforyouwithout“unduehardship”ontheemployer.

Ifyouareawareofothersinyourworkplacewhohaverequiredandreceivedaccommodation,youmightwanttotrytolearnfromtheirexperience.Youmight

alsowanttoaskforadvicefromtheJobAccommodationNetwork(JAN).JANprovides free information about job accommodation and the employability ofpeoplewithdisabilities.Withacallto800-526-7234(8A.M.to8P.M.ET,M–Th,and8A.M.to5P.M.onFridays),aprofessionalconsultantwillaskafewsimplequestions about the requirements of the job, you, and the work environment.Based on the information you provide, JANwill recommend accommodationsforyoursituation.

Where appropriate, JAN will provide the names and phone numbers ofemployers or workers who have made similar accommodations and provideother information, such as training programs, job descriptions, fundingresources,andtaxincentives.

1.5ConfidentialityandDisclosure

Whetherornottodiscloseyourdiagnosistoyouremployerandyourcoworkersisuptoyou.Legally

•youarenotrequiredtorevealanyinformationaboutyourhealthstatustoyouremployerunlessthereisalegitimatebusinessreason.

•youcan’tbediscriminatedagainstbecauseofyourdisability.However,thelawonlycomesintoplay when your employer is aware of your disability. The only way you can prove that theemployerhadsuchanawarenessisifyoucandocumentthatyouinformedyouremployer.Whenasking your employer for a reasonable accommodation, it isn’t sufficient to say, “I have adisability covered by the ADA that causes problems at work.” The employer has the right tomedicaldocumentationofyourdisabilityandthelimitationsresultingfromthatdisability.

The only exception to the rule that you don’t have to disclose your healthstatus is if thedisease issomehowrelevant to theperformanceof theessentialdutiesofthejob.Forexample,acourthasheldthatahospitalcouldrequire,aspartof its infection-controlpractices, that anHIV-infectedworkerdisclosehisHIVstatus.Dischargeforfailuretodosoisviewedasadischargeforfailuretocomplywithanemployerpolicy,ratherthandischargebecauseofadisability.

In addition to obtaining a “reasonable accommodation,” disclosing yourconditionmayelicitsocialsupport,care,andgenerosityfromyourcoworkers,as

wellasinformationfromotherswhohavebeeninasimilarsituation.Disclosure,particularlyifitisinwriting,mayevenpromptyouremployertofindoutwhathis/her legal rightsand/orobligationsare. Italso letsyouremployerknowthatyouknowyourrightsandwon’tacceptanyless.

Ontheotherhand,alotofpeopleviewthesituationasMichaelN.does:“Ifyoudon’thavetotell,don’ttelltheemployeruntilyou’rereadytojumpofftheboatintodisability.”Notonlydoyouavoidanyquestionsaboutmatterssuchaspay raises, you may also avoid subtle (or not so subtle) changes in workrelationships.Whilenottellingmaybethemostprotectivestrategytomaximizeyour income, there is the price in stress of keeping thismajor personal eventsecret.

Tip.ItishelpfultodoaLifeUnitsanalysishere.Disclosingyourconditionandgetting accommodation will mean making your job more doable—less time-consuming or tiring—resulting in an increase in Life Units available foranythingelseyouwant todo.Figureout if tellingwillcauseyoumoreor lessstress.Willithaveotherconsequences?Thebottomlineis,ifyouwantorneedsome accommodation at work, some disclosure of health information will berequired.

Whatyoudisclosetoyouremployerisconfidential.Anymedicalinformationthatyouprovidetoyouremployermustbemaintainedonseparateformsandinseparatemedicalfilesandmustbetreatedasaconfidentialmedicalrecord.Theonlyexceptionstotherequirementforconfidentialityarethat

•theemployermayproviderelevantinformationtosupervisorsandmanagersregardingnecessaryrestrictionsonyourworkdutiesandnecessaryaccommodations.

• supervisory and safety personnel may be provided with relevant information for emergencysituations.

• government officials investigating compliance with the ADAmust be provided with relevantinformationonrequest.

Whom you tell will vary depending on where you work. In a largeemployment setting, consider telling someone in the human resourcesdepartment rather thanyour immediatesupervisor.The larger thecompany the

morelikelythatsomeoneinhumanresourceswillhavetheknowledge,training,and/or experience with the law and company policies to secure theaccommodationyouneed,and tokeep the informationconfidentialas requiredbylaw.

Tip. The reality of most employment settings is that nothing is confidential.However,itissomeconsolationtoknowthatthelawprovidesaremedyifyouareharmedthroughyouremployer’sdisclosureofinformation.

Prepare what you will say. Before you talk to your employer, play out thediscussionsinyourheadandprepareyourselfforallconceivablereactionstothenews. Decide whom you will tell and decide whether you want any otherspresent.Youmayevenchoosetohavesomeoneelsetellyouremployer,suchasaunionrepresentativeorsomeoneinpersonnel.Decideupfronthowmuchyouwish to tell, but be flexible so that you can be prepared for any conversation.Carefullypreparesothatyoudonotdisclosemorethanyouhadplanned.

Whentotellyouremployer.Considerthetimingofyourdisclosure.Youmaynothaveanychoiceifyouneedsomeaccommodationimmediately.However,ifthere isno immediateneed todisclose,considernotdisclosingatallor timingyourdisclosuresothatitcomesatthebesttimeforyou—notduringacrisisandnotbeforearaiseorbonusisdue.Afterdisclosure,youshouldbepreparedforthepossibilityofajobandsalaryfreeze.

Tip.Iftimingwhenyoutellisimportanttoyou,andyouhavehealthinsurancecoverage throughyouremployer,considerwhether theclaimsyoumakeundertheplanwillresultinadisclosurebeforeyouareready.Underthelawofmoststates, information relating to your health is confidential. The insurancecompanyisnotsupposedtoinformyouremployeraboutyourhealth.However,a friendly relationship between the benefits person in your company and thecontact person in the health care company can lead to gossip. Under anindemnitypolicy,youcanchoose topay thecostsyourselfuntileitheryouare

readytotellorthedollaramountsbecomesolargethatyouarewillingtotaketherisk.

Whatyoudisclose tocoworkers isnotconfidentialunder theADA.Beforeproceeding, carefully evaluate yourmotives for telling a particular person andthebenefitsofsuchdisclosure.Itisalsoimportanttorecognizethattheremaybesomepeopleyoushouldnevertell.

Keep inmind thatwith respect to accommodation, coworkersmaywonderwhy your schedule has suddenly become flexible, or why you have receivedsomeotheraccommodation.Thiscanleadtonegativeattentionasopposedtothesupportthatyoumightgetifyourcoworkerswereawarethatyourschedulehasbeenmodified because of your life-challenging condition.Consider discussingwith your employer the possibility of providing coworkers with informationaboutyourillness.Infact,employereducationoftheworkforcecanbeapartoftheaccommodationnecessaryforyoutobeabletodoyourjob.

Reactionscanchangeover time.Keep inmind that reactionsmaychangeasinformationisprocessedandothersseetheextenttowhichyourconditiondoesordoesnotaffectyourperformance.Aninitialnegativereactionmaychangetoapositiveone.Ontheotherhand,whentheyfirstlearnofyourcondition,manyemployerswilltellyoutheywilldoanythingtheycantohelpyou,buttheymayhavesecondandthirdthoughtsastheylivewiththesituation.

1.6ProtectingtheFamilyandFriendsofaDisabledPersonfromDiscriminationatWork

Sometimesworkerswillbesubjectedtodiscriminationatworkbecauseafamilymember or someone with whom they are known to have a relationship orassociation suffers from a disability—even if the cause of the disability is notcontagious. Such discrimination can be caused by a variety of motivationsincludingignorance,prejudice,orafearthatthedisabilitywillincreasethecostsof family health benefits coverage for everyone. In addition to prohibiting

disability-based employment discrimination, theADAalso prohibits excludingorotherwisedenyingequaljobsorbenefitstoaqualifiedindividualbecausethepersonisknowntohavearelationshiporassociationwithanindividualwhohasadisability.

1.7AdvancementIssuesandBonuses

Anemployerisprohibitedfromlimitingyourdutiesbasedonabeliefitisbestforyouorbasedonapresumptionofyourabilities.As inotherareas, the lawrequiresthatanindividualizedassessmentbemadeastotheemployee’sabilitytoadvance.

Your employer is also prohibited from demoting you, denying you payraises,orlimitingyourbonusesbasedonyourcondition.

Tip.Obtaincopies(oratleastmakejournalentriesastheyoccur)ofpositivejobactions such as a performance evaluation. They can help prove you werequalifiedforthejobintheeventyouarelaterdiscriminatedagainst.

1.8IfYouAreDiscriminatedAgainst

Discriminationcanbedifficult toprove.Discrimination isgenerallynot like acarcrash: itdoesn’tusuallyhappenallofa sudden. It’s seldomasovertasanemployertellingyouyoursalaryisbeingcutoryourraiseisnotbeinggivenoryouarebeingterminatedbecauseofyourcondition.Adiscriminatoryemployeris more likely to blame your job performance or economic conditions for adecisiontodemoteorterminateyou.

Assoonasyoubelieveyoumaybesubjecttodiscrimination:

1. Immediately start keeping a journal of the events that appear to bediscriminatory.Updatethejournaldaily,atnightrather thanatworksopeopledon’tseewhatyouaredoing.Includedates,adescriptionofwhathappened,andlist thenamesandaddressesofallparticipantsandwitnesses, if thereareany.Preferably,thejournalshouldbehandwrittensoitshowsithasn’tbeenaltered.

Don’t “fix it up” later, that hurts the value of the journal. Be sure to includepositiveperformancecommentsorevaluationsthatmayhelptoproveyouwerequalifiedforthejob.

2.Youdon’twanttosaysomethingthatcouldjeopardizeyourlegalrights.Consultalawyerfamiliarwithemploymentdiscrimination.Thelawyerwillalsoknowthestatutorydeadlinesyouhave tokeep inmind,someofwhichcanbeveryshort.

3.Withtheadviceofalawyer,trytoresolvethematterwithyouremployer.•Useyouremployer’spoliciesandproceduresforresolvingemploymentissues.•Perhapsoneofyoursupportteammemberscanhelpnegotiateareasonableaccommodation.•Enlistthecooperationofcoworkers—theymayneedsimilarhelponeday.•Considerrequestingthatyouremployeruseathird-partymediator.

4.Gethelpfromfederal,state,orlocalagenciesthatsafeguardtherightsofpeople with disabilities, including the federal Equal Employment OpportunityCommission.

Tip.Ifyoubelieveyouhaveaclaimagainstyouremployerandleaveyourjobforwhatever reason, signing a release to the employerwill prevent you fromdoinganythingaboutthatclaim.

Before you can sue. If your state does not have antidiscrimination laws, youmust file a complaint with the EEOC within 180 days after the allegeddiscriminatoryact. Ifyour statehasanantidiscrimination regulation,youmustfileacomplaintwiththatagencyfirst.Youcanfileacomplaintonyourown,butIsuggestseekinglegaladvicefirst.

Also,thinkabout•whatyouwant to achieve in a lawsuit.Doyouwantyour jobback?Money?Achange in theemployer’spoliciestobenefitotherworkers?Somethingelse?

•theadvantagesanddisadvantagesofasuit.Iswhatyouwanttoachieveworththestressandthealienationofyouremployerand/orpossiblyyourfriendsatwork?

DamagesundertheADA.IfyouwinaclaimforviolationoftheADA,youwin•yourcosts.•damages to theextent thatyouwerenotable tomitigate(reduce) them.Forexample, ifyou’refired,youhavetolookforanotherjob,evenonethatmaypayless.Keepalogofwhatyoudidto

mitigateyourdamages.Ajournalofyoursubsequentjobsearchwouldincludewantads,phonecalls,interviewsandresults—withnamesanddates.Yourdamagesmayinclude•backpay(whatyouwouldhavereceived).•benefits.•frontpay(wagesyou’lllosebecauseyoucan’tgetanotherjob,orcompensationifyoudogetoneforlessmoney).

•compensatorydamagestomakeupforanyotherdamagesyoumayhaveincurred.•injunctivereliefsuchasreinstatement.• punitive damages up to $300,000 to punish the employer and deter it from future illegaldiscrimination.

•attorneyfees.

CollectingdisabilitybenefitswhilepursuingasuitundertheADA.Inseveralcourtcases,workerswhoweredischargedbecauseoftheirdisabilitieshavefiledsuit against their employers, alleging disability discrimination, and in themeantime have sought disability benefits under Social Security. There is aconflictbetweenallegingdiscrimination that indicatesyouareable tocontinuetoworkwhile at the same time requesting benefits under Social Security, forwhichyouhavetostateyouaredisabledandcannotwork.

Some courts have recognized that workersmay be “disabled” for benefitspurposes, but could work if reasonable accommodation were provided. Othercourts have held that seeking disability benefits is inconsistent with seekingprotection under the ADA. Officials of the Equal Employment OpportunityCommission and Social Security are attempting to resolve this matter as thisbookisbeingwritten.Ifthismatterisofconcerntoyou,askyourGuardianOrgoranattorneyforthelatestinformation.

Federal Rehabilitation Act. If your employer receives federal funds, youshouldfilethecomplaintwiththefederalagencythatprovidesthefundstoyouremployer. Remedies are the same as under the ADA, except there are nopunitivedamageawards.

Tip. Consider filing a complaintwith each relevant enforcement agency.Youcanputacomplaintonholdordropitafteryouseewhichagencyisresponding

best.

Section2.LeavesofAbsence:FamilyandMedicalLeaveActandtheADA

If you need to take a leave of absence because a serious health conditionpreventsyoufromperformingoneormoreoftheessentialfunctionsofyourjob,youmaywanttoconsiderwhetheryouareentitledtoaleaveundertheFamilyand Medical Leave Act (FMLA) before you request a leave as part of areasonableaccommodationundertheADA.AleaveofabsenceisalsoavailableundertheFMLAtocareforyourspouse,child,orparentwithaserioushealthcondition.

2.1LeavesofAbsenceUndertheFMLA

Eligibility.TobeeligibleforaleaveundertheFMLA•youmustworkforanemployercoveredbythelaw.AllstateandlocalgovernmentemployersarecoveredbytheFMLA,butthelawonlycoversprivateemployerswithfiftyormoreemployeeswhoworkwithinaseventy-fivemileradiusofyourjobsite.

•youmusthavebeenemployedbytheemployerforatleasttwelvemonthsandaccumulated1,250hoursofservicewiththecoveredemployerforthetwelve-monthperiodpriortotheleave.

•youmustprovideareasonfortheleavethatiscoveredunderthelaw.• you must earn less than the employees in your company’s top 10 percent salary range ofemployeeswithinaseventy-five-mileradiusofyourjobsite.

Tip. Ifyouarenotcoveredunder theFMLA,check todetermine ifyour statehascomparableprovisionsunderwhichyoumaybecovered.

Amountofleaveofabsence.AnemployeeentitledtoFMLAleavemaytakeuptotwelveweeksofleaveinatwelve-monthperiod.Anemployercanchoosetocountaccruedpaidbenefitssuchasvacation,sickleave,andpersonalleavedaysaspartoftheleaveoraddthemtotheleave,dependingonthecompany’spolicy.Forexample,ifanemployeealreadytooktwoweeks’vacation,theremightonlybetenweeksofprotectedjobleaveleft.

Special rulesapply toemployeesof“localeducationalagencies,” includingelementary and secondary schools, but excluding colleges, universities, tradeschools,andpreschools.

Continuityofleaveofabsence.Iftheleaveisforanemployee’sowncondition,theleavedoesnothavetobecontinuous.Itcanbebrokenupovertheyear,andonlythetimeactuallytakencounts.

Continuationofhealthcoverageduringleaveofabsence.Employersarenotrequiredtopayanemployeewhileonleave.However,amajorprotectioninthelawisthattheemployermustmaintaintheemployee’sexistinglevelofcoveragein a group health plan, including a continuation of the pattern of payingpremiums.Thus,ifanemployerpayspartorallofanemployee’spremiums,itmustcontinuetodosowhiletheemployeeisonleave.

Iftheemployeepaysforpartofthehealthbenefit,theemployer’sobligationtocontinuehealthbenefitsinforceendsif

•theemployeedoesn’tmakepremiumpaymentswhendue(includingthegraceperiod,ifany);•theemployeequitsordoesn’treturntowork;or•theemployeehasusedallthetimepermittedundertheact.

Intheseinstances,theemployeeshouldlookatthediscussionaboutCOBRAtodetermineifthereisarighttocontinuecoverageunderthatact(seesection4ofthischapter).

Employmentafterleaveofabsence.Anothergoodfeatureofthelawrequirestheemployertoreemploytheemployeeinthesameorasimilarpositionattheendofaleave.Iftheemployeeisnolongerabletoperformanessentialfunctionofthejobattheendoftheleave,reinstatementisnotrequired.Iftheinabilitytoperform the essential function is due to a disability covered by theADA, theADA’s reasonable accommodation requirements come into play as outlinedbelow.

Noticeofleaveofabsence.Ifleaveisrequested,theemployermustbegivenatleastthirtydays’noticeunlessthesituationwasnot“foreseeable,”inwhichcase

noticemustbegivenassoonaspracticable.

Proof ofmedical condition. If leave is requested, the employermay request,and the employee must provide, proof about the physical condition of theemployeeorthepersontobecaredfor.

Complaints.IfyoubelieveyourrightsundertheFMLAhavebeenviolated,youmayfileacomplaintwiththeEmploymentStandardsAdministration,WageandHourDivision,oftheU.S.DepartmentofLabor.

2.2LeavesofAbsenceUndertheADA

IfyouremployeriscoveredbytheADA,leavemaybeavailableasareasonableaccommodation,so longas leavedoesnotcause theemployerunduehardship.The undue hardship concept also governs the available length of ADA leave.DuringanADAleave,theemployeronlyhastomaintainbenefitscoverageforanemployee if itmaintainscoverage forother employeeson similar leave.Atthe endof anADA leave, the employee is entitled to reinstatement unless theemployercanestablishthatkeepingthepositionopenisanunduehardship.Theemployer must then consider placing the employee in available equivalentpositions.Ifnoneexist,thentheemployeemustbeconsideredforpositionsatalowerlevel.Thedutytoaccommodateendsafterthat.

Tip.TherequirementsoftheFMLAandADAareonlyminimumrequirementsand,asyouhaveseen,onlygovernincertaininstances.Itisworthwhiletocheckyouremployer’spolicies:theymaygowellbeyondthelegalminimum.Eveniftheydon’t,youmaybeabletonegotiatebetterforyourself.

2.3CombiningYourRightstoaLeaveofAbsenceUndertheADAandtheFMLA

Leavesofabsenceforyourself.•IfyouworkforanemployersubjecttotheFMLAandyoumeettheleaveeligibilityrequirements,

you are entitled to a leave upon request to your employer. If, however, your employer is notcovered by the FMLA, but is subject to the ADA, you can request a leave as a reasonableaccommodation,solongastheconditionforwhichyouseekleaveisadisabilityundertheADA.Youremployer,however,isnotrequiredtoprovidetheleave,ifsuchleaveposesunduehardshiporifsomeotherreasonableaccommodationisavailableandtheemployeroffersit.

•IfyoutakealeaveundertheFMLAandstillrequiremoretimeoffaftertwelveweeks,youmayrequest that your employer consider leave as a possibleADA reasonable accommodation.TheconditionforwhichyouseekleavemustbeadisabilityundertheADA,andtheundue-hardshipanalysiscomesintoplay.

•If,duringatwelve-monthperiod,youhavetakenaleaveasanADAreasonableaccommodation,youwouldonlybeabletotakeanFMLAleaveduringthatsameperiodtotheextentthatthepriorleavedidnotexhaustthetwelve-weekFMLAmaximum.

Leavesofabsencetocareforothers.Whileaworkermaybeentitledtoaleaveunder the FMLA to care for an ill child, spouse, or parent, such leave is notavailable as a reasonable accommodation under the ADA. Reasonableaccommodationonlyappliestoaworker’sdisability-relatedlimitations.

2.4TheFMLAand“Nontraditional”FamilyRelationships

TheFMLAonlyallowsa leave tocare forahusband,wife, father,mother,orchild.Ifyouneedtotakealeavetocareforsomeonewhodoesnotfitintooneof theFMLA“family” categories, consider requesting such a leave fromyouremployer, pointing out that the relationship you have with the ill person issimilar to one of the FMLA categories. Unmarried heterosexual or same-sexcouples in such a situation should determine whether local law or employerinternal policy prohibits discrimination based on marital status or sexualorientation.Ifsuchaprohibitionexists,youcouldsuggesttoyouremployerthatfailuretoprovideleaveviolatesitbecauseleaveisconditionedonbeingmarried.Youmightwanttodiscussthisissuewithalawyershouldyouwishtopursueit.

2.5UnprotectedLeave

EvenifyouremployerisnotcoveredbytheFMLA,youmayrequestthatyoubeprovided with an unpaid leave to care for a loved one. For many employers,

providing unpaid leave is preferable to losing an experienced worker. Inaddition,whiletheyarenotrequiredtodoso,manyemployersallowworkerstousetheirownsick-leavetimetocareforanillfamilymember.

Section3.BenefitProtectionsWhileYouAreEmployed

When an employer becomes concerned about increasing insurance costsassociatedwith employee illnesses, itmay attempt to take steps to limit costs.An employer’s ability to do so may be limited by the Employee RetirementIncome Security Act (ERISA), by the ADA, and by the Health InsurancePortabilityandAccountabilityActof1996(HIPAA).

3.1ERISA

ERISA prohibits an employer from discharging or discriminating against aworker for exercising rights under an employee benefit plan. Thatmeans thatyoucannotbefiredorotherwisediscriminatedagainstbecauseyouareusingtheemployer’shealthplan.

3.2ADA

UndertheADA,itisunlawfulforanemployertodiscriminateonthebasisofadisabilitywith respect to the benefits it provides to its employees. ThisADAprohibition does not affect preexisting-conditions clauses in health insurancepolicies offered to employees unless a preexisting-conditions clause can beshown to be a cover for discrimination. To illustrate, a preexisting-conditionsclausethat limitscoverageonlyforadiscretegroupofrelateddisabilitiessuchashemophiliaorleukemiaisanunlawfuldisability-baseddistinction,unlesstheemployercanshowthattheexclusionisnotdiscrimination.

Similarly,capsonthedollaramountofcoveragearelawfulsolongastheydonotdiscriminatebasedonaparticulardisability.Forexample,an insuranceplanthatcapsbenefitsforallphysicalconditionsexceptAIDSat$500,000,yetprovides a $50,000 cap for AIDS, would be an unlawful disability-based

distinctionunlesstheemployerwasabletoprovethatitwasnotasubterfugefordiscrimination.Butanemployer’splandoesnotviolatetheADA,forexample,if it provides a lower level of benefits for the treatment of mental/nervousconditionsthanitdoesforphysicalconditions,orifitlimitscoverageonmedicalproceduresthatarenotexclusively,ornearlyexclusively,usedforthetreatmentofaparticulardisability.

Section4.BenefitProtectionsAfterLeavingYourJob:COBRA

Thereareseveralwaystocontinuecoverageafterterminatingemployment.Themost commonly used method isCOBRA, the federal Consolidated OmnibusBudget Reconciliation Act, under which certain former employees and theirbeneficiaries continue health insurance coverage under the prior employer’sgroupplanforuptoeighteenmonths.Ifyoubecome“disabled”duringthefirstsixty days of your COBRA coverage, COBRA can continue coverage for anadditional eleven months to a total of twenty-nine months. The continuationperiodwas set in a 1989modification toCOBRAknownasOBRAsopeoplewouldcontinuetobecoveredbyhealthinsuranceuntilMedicarestarts,whichistwenty-nine months after leaving work for disability (a five-month waitingperiod, plus twenty-four months of Social Security Disability benefits). IfCOBRAdoes not apply, state laws generally provide the same coverage. It isalso usually possible to continue coverage to some extent by the terms of theemployer’splan,suchasbymeansofconversiontoindividualcoverage.

EmployerscoveredbyCOBRA.Thelawgenerallycoversgrouphealthplans(including self-insuredplans)maintainedby employerswithmore than twentyemployeesduringatleast50percentoftheprioryear.Thelawappliestoprivateemployers and to state and localgovernments. It doesnot apply to the federalgovernment andcertain church-relatedorganizations.Many stateshave similarlawsthatapplytoemployerswithfewerthantwentyemployees.Ifyouworkforanemployerwithfewer than twentyemployees,contactyourstateDepartmentof Insurance formore details (see the resources section). Some employers not

required by state or federal requirements to offer continuation coverage do soanyway, and some employer plans offer continuation for more than eighteenmonths.

Coveragethatiscontinued.Health,dental,andvisionbenefitscontinueunderCOBRA.Lifeanddisabilitybenefitsdonot.Thehealthcoveragetobecontinuedis required tobe thesameasoffered to theemployer’sothersimilarlysituatedemployeescoveredundertheplanforwhomaqualifyingeventhasnotoccurred.Thiscanbeadouble-edgedsword.Ifthegroupcoverageforcurrentemployeesisexpanded,soisthecontinuedcoverage.Ontheotherhand,iftheinsuranceiseliminated or the company goes out of business, the right to continue thecoverageislost.

When former employees are entitled to seek continued coverage. UnderCOBRA,formeremployeesmaycontinuehealthcoverageifitwouldotherwisebelostduetoaqualifyingevent.Qualifyingeventsinclude

•voluntaryorinvoluntaryterminationofemployment,includingterminationduetodisability—solongastheterminationwasnotdueto“grossmisconduct.”

•reductioninthenumberofhoursofemployment.•forpeopleoveragesixty-five,Chapter11bankruptcyfilingbytheemployer.

TheCOBRA disability continuation. The COBRA disability continuation isnotautomatic.Itmustbeappliedfor.Toqualifyforthecontinuation

• youmust apply for and receive an award of Social SecurityDisability Insurance benefits (seechapter8,section8.1)priortotheendoftheeighteen-monthCOBRAperiod.Evenifyouarenoteligible for thisgovernmentbenefit,SocialSecuritywill still review theclaim forcontinuationpurposes,althoughyoumayneedtoseeasupervisor.

• thedateofdisabilityonsetasdeterminedbySocialSecurityandstated in theNoticeofAwardLettermustbebeforeorwithinsixtydaysafterthedateyourCOBRAcoveragestarted.

•acopyoftheNoticeofAwardLettermustbesenttotheCOBRAadministrator(usuallywhoevercollectsthepremiums)withinsixtydaysofreceivingtheAwardletter.

An employee’s spouse or dependent—continued coverage. An employee’sspouseordependentmaycontinuecoveragesubsequentto“qualifyingevents,”whichwouldotherwiseresultinterminationofcoverage,including

•terminationofthecoveredemployee’semploymentforanyreasonotherthan“grossmisconduct.”•reductioninthehoursworkedbythecoveredemployee.•coveredemployeesbecomingentitledtoMedicare.•divorceorlegalseparationfromthecoveredemployee.•deathofthecoveredemployee.•inthecaseofa“dependentchild,”lossofdependentchildstatusundertheplanrules.

Lengthoftimeyouoryourbeneficiariesarecovered.Asyouwillseeinthechartbelow,theperiodvariesdependinguponthequalifyingeventunderwhichtheemployeeortheemployee’sbeneficiarybecameentitledtoseekcontinuationcoverage.

COBRAcoveragemayberetainedevenafteryouobtainnewgroupmedicalinsurance to the extent the new employer’s health plan limits coverage withrespecttopreexistingconditions.

Tip. Consider asking your employer to continue you as part of the groupindefinitely.Youremployermayagreeandmayevenagree tocontinue topayyourpremiums.There seems tobe little, if anything, to loseby asking.Tobesure thisdoesn’tbecomeaproblem for theemployer (andyourcoverage), theemployershouldinformtheinsurancecompanyofthearrangement.

Notice requirements. Notice requirements are triggered when a qualifyingeventoccurs.

•Youremployer is legally required toprovideyouwrittennoticeofyourCOBRArightswithinfourteendaysofleavingthejob.

•Employeesmustnotifyplanadministratorswithinsixtydaysofaqualifyingeventorthedateyouwerenotifiedofyourrights,whicheverislater.

• If a qualifying event affects a qualified beneficiary, the employee must notify the planadministratorwithinsixtydaysafterthequalifyingevent.Theemployerthenhasfourteendaystonotify the beneficiary of the right to continue coverage. The beneficiary has to notify theadministratorifthebeneficiarywantstocontinuecoveragewithinanadditionalsixtydaysofthedatenoticeissent,orsixtydaysoftheevent,whicheverislater.

If you qualify as disabled under Social Security, and you plan to exerciseyour right to the additional elevenmonths of coverage, youmust notify youremployerortheplanadministratorduringtheinitialeighteen-monthperiodandwithinsixtydaysoftheSocialSecurityAdministration(SSA)determinationof

disability. The notification must state that you have been determined to bedisabled by the SSA and request continuation of your health coverage for theentiretwenty-nine-monthperiod.

Tip. The notice to your employer should state the date on which the SSAdetermined youwere disabled and that you plan to exercise your right to anycontinuation of coverage authorized under applicable law. Send the notice insuchamannerthatyoureceiveareceiptprovingthenoticewasreceived.Keepacopyofthereceiptandacopyofyournoticewithyourimportantpapers.

Tip. If you do not receive COBRA notification, contact your employer’spersonnel officeor plan administrator and request aCOBRAelection form.Acheck payable to your employer for an estimatedmonthly premium should beenclosed with the letter. Send the letter in a manner that provides a receiptshowingitwasreceived.

Payment for the continued coverage. In most cases, the employee or otherbeneficiary pays the cost of premiums.The employer can voluntarily agree topay for continued coverage. The premium charged to an employee cannotexceed102percentofthecosttotheplanfor“similarlysituatedindividualswhohavenotincurredaqualifyingevent.”Thereisusuallyathirty-daygraceperiodafter theduedate topaypremiums,but it is best not to take advantageof thegraceperiodbecause if thepremium is late, thecoveragecanbecanceledand

willprobablynotbereinstated.Ifyoucannotaffordthepremiums,theremaybealocalprogramtopayforthem.AskyourGuardianOrg.

During the additional eleven months permitted for employees who leavework for disability, the premium may be increased to a maximum of 150percent. Since this “disability” is determined by the Social SecurityAdministration,becarefulwhenyoucompleteyourSocialSecurityapplication(seechapter10).

Note: You (and your beneficiaries) have forty-five days after the initialCOBRAelectiontomaketherequiredpremiumpayment.Thepaymentshouldbeforthefullpremiumretroactivetothestartdate.

TerminationofCOBRA.Cobraendsif•premiumsarenotpaidasdue,orwithinthethirty-daygraceperiod.•youbecomeeligibleforcoverageunderanothergrouppolicy(suchaswithanewemployer)—even if thecoverage isnotasgoodas thecoverage that is terminating.Asanexception,underHIPAA, if the new coverage has a preexisting-condition exclusion that applies to you, theCOBRAcoverage continues until the preexisting-condition exclusion expires or the endof theCOBRAcontinuationperiod,whicheverisearlier.

•theemployerstopsofferinggrouphealthinsurancetocurrentemployeesorgoesoutofbusiness.• you qualify for Medicare coverage. If this is the reason for termination, and you anticipatesubstantialunreimbursedcostsunderMedicare,considerconvertingyourCOBRAcoveragetoanindividualpolicyoraMedicareHMO.

Section5.ProtectingYourBenefitsAfterLeavingYourJob:OtherRights

5.1Conversion

Ifyoudonothavea legal right tocontinueyourhealthcoverageandhavenoothermethodofobtaininghealthinsurance(seechapter14),lookatyourgroupcoveragetodetermineifitcontainsarighttoconvertitintoindividualcoveragewithout evidence of insurability. If it does, the individual coverage is usuallyexpensiveandisseldomasgoodasthecoveragefromwhichyouareconverting,butitisbetterthannothing.Generally,theconversionmustbeappliedforwithinthirty-onedaysofcoveragetermination.

Itispreferabletohavebothconversioncoverageandadisabilityextensionofbenefits (see section 5.3 below) simultaneously. The disability extension paysformedicalconditionsthatcausedthedisability,whiletheconversioncoveragepaysforclaimsnotrelatedtothedisability.Theconversionpolicybecomesyourprimarycoveragewhenthedisabilityextensionexpires.

When plans are converted, employees are usually offered several planoptions.Itispreferabletochoosetheoptionwiththebestbenefits,eventhoughitisprobablyalsothemostexpensive.

5.2ChangesintheBenefitPlanWhileYouAreExercisingContinuationRights

Manyworkerscontinuetobecoveredbyaformeremployer’splanaftertheyarenolongeremployed.Ifanemployerchangesplanswhileaformeremployeeisexercising continuation rights, the former employeewill be covered under thenewplanliketherestofthegroup.Sometimesanemployerattemptstomakeadisability-basedchange(eitherbychangingplansorwithinaplan),whichcouldviolate theADA.At least one court hasheld thatbecause someoneexercisingcontinuation rights is no longer an employee, he cannot rely on the ADA tochallengesuchachangesincetheADAonlyprotectsemployees.Thisdecisionis not consistent with other civil rights laws, which have been interpreted toprotect former employees. Ifyouhaveaproblem like this, you shouldconsultyourGuardianOrgoranattorney familiarwithemployeebenefitanddisabilitylaw.

5.3DisabilityExtension

Under your plan or state law, if you are disabled at the time your groupinsuranceends,nomatterwhatthereasonfortheterminationofcoverage,yourhealthinsurancecoveragegenerallycontinuesasan“extension”(usuallyforoneyear).Coverage is typically limited tomedical expensesdirectly related to thedisabling condition.The disabling condition is the underlying condition, not a

resulting condition. For example, if PCP resulting from HIV/AIDS is theimmediate cause of disability, health matters relating to the underlyingHIV/AIDSwouldbecovered,notjustPCP.Ontheotherhand,ifyoudevelopedmedicalproblemsnotrelatingtoHIV/AIDS,theywouldnotbecovered.

Thereisnochargeforcoverageduringtheextension.While theextensioncanstart anytimeafteryourgroup insuranceends (not

justwhen you leave your job), it can be particularly useful if you obtain newhealth insurance that has a preexisting-condition exclusion, such as with anemployernotcoveredunderHIPAA.Thenewpolicywouldprobablyexcludeapreexisting condition for up to a year, but you would be covered for theconditionduringthatyearbytheextensionofyourpreviouscoverage.

Disability extensions are different fromCOBRA.COBRAmust be electedpriortoexercisingadisabilityextension.However,disabilityextensionsmaybeavailableafterCOBRAterminates.

Thedisabilityextensionshouldberequestedinwritingfromyouremployerorplanadministrator.Sincetheextendedcoverageisonlyformedicalexpensescaused by the disability, the physician should describe the exact cause of thedisability as broadly as possible. All disability-related conditions should beincludedinthediagnosis.

Tip.Ifyouhavetoconvertyourcoverage,youmaywanttoexerciseyourrightto a disability extension at the same time. It does not cost anything to extendcoverage in thismanner,andanyexpensespaidby the insurancecarrierunderthe extension are not applied against any maximum payment that may beincludedintheconvertedpolicy.

Section6.HealthInsuranceProtection:HIPAA

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)—alsoknownastheKassebaum-KennedyAct—helpspreventjob-lockforpeoplewith life-challenging conditions by limiting the use of preexisting-conditionlimitationsinemployerplans.Thelawdoesnotforceanyemployer toprovide

grouphealthcoverage—itonlyprovideswhathappensifanemployerdoesoffersuchcoverage.

Coverage in a new job.UnderHIPAA, no employer group health policy fortwoormoreemployeescanrefuseanotherwiseeligiblepersonhealthcoverageifallofthefollowingfactorsaresatisfied:

•Youhaveat leasteighteenmonthsof“creditablecoverage”andnotmore thansixty-threedayshave elapsed between the end of that coverage and commencement of the new coverage.Creditable coverage means health insurance of just about any kind, including group orindividual, COBRA,Medicare, andMedicaid, provided there is no gap in coverage that lastsmorethansixty-threedaysbetweentheendofthelastcoverageandenrollmentinthenewplan.To assist in proving coverage, the law requires employers to provide departing employees, inwriting,thenumberofmonthscoveredundertheplan.

•Themostrecentpartofthecreditablecoveragewasunderagrouphealthplanofanemployer,thegovernment,orachurchplan.

•Yourlastcoveragewasnotterminatedduetononpaymentofpremiumsorfraud.•Youarenotcurrentlyeligible forgroupcoverage,Medicare,orMedicaidandyoudonothaveanyotherhealthinsuranceinplace.

•IfyouhadachancetocontinueyourformercoverageunderCOBRAorasimilarstateplan,youselectedthecoverage,anditisexhausted.

Ifyouqualifyunderthislaw,youarealsoguaranteedtherighttorenewthecoverage.Theinsurancecompanycanaskhealthquestions,buttheinformationcan only be used for rating purposes. The new planmust apply the time youwerecoveredunderyourpriorplantowardthenewplan’spreexisting-conditionswaitingperiod.Thesixty-threedaysmeasuredforpurposesofpriorlapsesdoesnotcountanyprobationaryperiodatthenewemployer.

Thelawalsoprovidesadditionalprotections:•Yourhealthstatusandmedicalconditioncannotbeconsideredindetermininginitialorcontinuedeligibilityforhealthcoverage.

•A“health status–related factor” cannotbeused to chargeone employeehigherpremiums thanotheremployees.

•Theamountornatureofbenefitsmayonlybelimitedorrestrictedif itappliestoall“similarlysituatedindividuals.”Forexample,acaponcoveragewouldaffectpeoplewithahealthconditionmorethantheaverageworker,butitispermissibleifitdoesnotdiscriminate.

• For employeeswho sign up at the commencement of a new job, the period of a preexisting-condition exclusion cannot be greater than twelve months from the commencement ofemployment. This limitation ties in with the twelve months’ extension that most people havewhen they leave previous employment (see section 5.3 above). This preexisting-condition

exclusionperiodcanbeextendedtoeighteenmonthsiftheemployeesignsupfortheplanaftercommencementofthenewjob,sodon’twait.

•Thelengthoftheexclusionaryperiodisreducedbythelengthofpreviouscreditablecoverage.Toillustrate,ifKristyhadhealthcoverageforsixmonthswithherpreviousemployer,andonlythirtydays lapsed between her old and new jobs, and her new employer’s plan has a twelve-monthexclusionperiodforcoverageofpreexistingconditions,Kristy’spreexistingconditionwouldbecoveredunderthenewplanstartingsixmonthsaftershestartsthenewjob.Ifshehadcoverageinheroldjobforatleasttwelvemonths,therewouldbenopreexisting-conditionexclusionatall!

IfHIPAAdoesnotprovidetheprotectionyouneed,checktoseeifthereisasimilarlawinyourstate.

Preexisting conditions. HIPAA limits “preexisting conditions” to conditionsthatrequired“medicaladvice,diagnosis,careor treatment…recommendedorreceived”within the sixmonthsprior to thenewemployment. If treatment foryourconditionwasnotrecommendedorreceivedwithinthattime(nomattertheextent of treatment prior to that time), an exclusion cannot be imposedby thenewemployer.

Enrollmentperiods.The lawalso provides for special enrollment periods foremployees with health conditions who did not sign up for the coverage oncommencementofthenewjob.

Self-employment/Newemployerwithoutcoverage. Ifyou leaveanemployerwithagrouphealthplanandbecomeself-employedorgo toanemployer thatdoesnotofferhealthinsurance,inadditiontoyourrightsunderCOBRA,iftherewaspriorcoverageforatleasteighteenmonthsandyouobtainthenewcoveragewithinsixty-threedaysafterterminationofcoverage,youwillbeabletoobtaincoverage from any company writing individual health insurance in your statewith no preexisting condition exclusion. The law requires the insurancecompanies tooffer at least twoof theirmostpopularplansbasedonpremiumvolume.Thelawdoesnotsetanyratelimitsonthiscoverage.

Tip: Ifyouaregoing fromgroup to individualcoverage,anticipate theendofcoverage and start applying for the individual insurance prior to the end of

COBRAor the state continuation if the group you are leaving is notCOBRAeligible.Itoftentakesmorethansixty-twodaystoidentifythecompanyandtheplanyouwantandtohavethepolicyissued.

Chapter8

DisabilityIncomeReplacement—PrivateandGovernmentPrograms

IneverreallypaidattentiontowhatwouldhappentomyincomeifIgotsick.I’mgladthoseguysinWashingtondid.It’sthefirsttimeIrememberfeelinggratefultopoliticians.

—AlbertoV.

Perhaps your condition or the treatment of your condition is interfering withyour ability to do your job. Or maybe you and your doctor(s) believe thatstoppingworkismedicallynecessary,eitherpermanentlyortemporarily.

Thediscussioninchapter6coveredatemporarydisabilityleavefromwork.This chapter focuses on permanent disability, which, for purposes of thisdiscussion,isadisabilitythatisexpectedtolastmorethansixortwelvemonths,or until death. The discussion includes private income replacement aswell asgovernment programs such as Social Security Disability and SupplementalSecurityIncome.

Youmaythinkthesectiononprivatedisabilityincomecoverageonlyappliesto you if you have the coverage. It is indeed unlikely that anyone with adiagnosisofalife-challengingconditionwouldbeabletoqualifyforindividualdisabilityinsurance.However,youmaystillbeabletoobtaindisabilitycoveragefromsourcesthatdonotrequiremedicalexams,tests,orquestionnaires,suchasindividual nonmedically underwritten insurance, credit disability insurance, orgroup disability insurance. You may also be able to find disability insurancecoverage that excludes your current condition but covers any other disablingevent.

Tip. When thinking about your cash flow, keep in mind that all disability

payments,governmentandprivate,arepaidattheendofaperiod,neveratthebeginning.

Section1.PrivateInsurance:IndividualDisabilityIncomeInsurance

Disability insurance is “lost-income insurance.” It provides you and yourfamilywithmonthlybenefitstoreplaceallorpartoftheworkincomethatmaybe lost due to illness or injury.Disability insurance provides coverage that isusuallyequal toapercentageofyourbasesalary.Typically, itdoesnotcoverlost income from commissions, bonuses, or retirement fund contributions.Benefits are paid regardless of your assets, your non-work-related income, oryour spouse’s income. Disability income policies can be purchased on anindividual or a group basis, such as through an employer, a union, or anassociation.

Evaluating a disability income policy. The chart beginning here reviews thebasic features of this type of coverage and provides a standard of evaluation.Features that need to be explained are described on the pages immediatelyfollowingthechart.Thechartcanbeusedtoevaluatebothindividualandgroupdisabilitycoverages.Thecolumnsheaded“PlanA”and“PlanB”areforyoutocomplete for any coverages you may be considering obtaining. If you arecomparingmorethantwoplans,youhavemypermissiontophotocopythechart.

Qualifying definition of disability. The first consideration to review withrespect to any disability income policy is,what is the qualifying definition ofdisability?Therearetwogeneraltypesofqualifyingconditions:

•adisabilitythatpreventsyoufromperformingyourownoccupation.•adisabilitythatpreventsyoufromperforminganyoccupationforwhichyouarequalified.

Some policies combine the two. For example, the policy could provide that itwillpay ifyouareunable todoyour jobforagivenperiodofyears,andthenbenefitsonlycontinueifyouareunabletodoanyjob.

The best is “own occupation” coverage because it is easier to qualify for

benefits,eventhoughyourpremiumswillbehigher.Theonlyquestionincaseofdisabilityiswhetheryoucanperformtheworkyoudo,notanyotherkindofwork. For example, with “own occupation” coverage, Philip T. receiveddisability income when a spinal injury prevented him from continuing toperformneurosurgery. Ifhehadhad“anyoccupation”coverage,hewouldnothavecollectedunderhispolicysincehecouldstillactasageneralpractitioner.

Extentofdisability.Doesthecoverageincludetotaland/orpartialdisability?Inmany policies, certain pre-specified conditions are considered total disability,suchaslossofsight,speech,hearing,oruseoflimbs.Lossofabodypartthatisnotacompletebartoworking(e.g.,thelossofonearm)isapartialdisability.Somepoliciesdonotcoverpartialdisabilityatall,whileothersrequireaperiodoftotaldisabilitybeforepartialdisabilityisrecognized.

Extent of benefits. Benefits can either be full or residual. Full benefits areprovidedonlyifdisabilityresultsinfulllossofyourincome,whereasresidualbenefits are provided if the disability results in partial loss of income. Forexample, if you lose one-third of your income, you receive one-third of thebenefit.Thiskindofclausewouldalsopayasalespersonwhogoesbacktoworkbut losesmoneyinthebeginningbecauseof thetimeoff.Shewouldreceiveacontinuing but reduced income, until she makes up the slack. The policydescribesthedollaramountofbenefitsineachinstance.

Rehabilitationbenefit.Aprovisionthatpaystorehabilitateyou.

Illness and injury coverage. “Illness” covers disability due to any cause,includingillness,while“injury”onlycoversifthedisabilityisduetoinjury.

Amountanddurationofcoverage.Allindividualpoliciespayapredeterminedamounttiedtotheamountofyourincomefromworkatthetimeyoupurchasethe policy, generally as a percentage of that income, such as 60 percent. Thepolicy will also set forth the period during which you are eligible to receive

disabilitybenefits,suchas,untilyourecoverordie,untilretirementage(sixty-five),orforanotherpredeterminedperiod.

Integration-of-benefits provision. There are three different integration-of-benefits provisions to consider. The first is the “offset” provision generallyfound in group policies (not generally in individual policies), which providesthat any other income benefits towhich you are entitled (most notably SocialSecurity Disability payments) are deducted from the amount the insurancecompany pays. The second type of integration provision is usually found inindividual policies. It provides a maximum percentage of income that can bereplaced by disability coverage when you add together all private disabilitycoverages,includinggroupcoverages.Themaximumisusually80percent.Thethird typepaysapredeterminedamountwithoutconsideringanyotherpoliciesyouhave.

Tip. If you are self-employed orwork for an employer that does not providedisability coverage, to get the most coverage possible, purchase individualcoverage first. When the individual insurer asks if you have other disabilitycoverage, you can then honestly say no, and you will be able to purchasecoverageinwhatevermaximumthecompanyallowsbasedonyourincome.Youcan then acquire coverage for a total of more than the individual insurancecompanywouldallow ifyou thenpurchasegroup insurance suchas throughaprofessionalassociation.

Waiverofpremium.Thisprovisionwaivesyourobligationtopaypremiumsinthe event of your disability. Without such a waiver, your obligation to paypremiumscontinuesduringdisability.

Tip. If your policy contains a waiver-of-premium clause and you becomedisabled,until the insurancecompanyconfirms thewaiver inwriting,continueto pay the premiums on time and write on the check, “Contested premium,shouldbeonwaiver.”

Waitingor eliminationperiod.Alsoknownas a timedeductible, this is theperiod between the onset of your disability and the receipt of benefits. This

periodcanrangefromthirtydaystooneyear.Tocollectdisabilitybenefits,youmust demonstrate that you have a disability that prevents you from workinglongerthanthiswaitingperiod.Undergroupcoverage,thelengthofthewaitingperiodmayrelate toyouremployer’ssick leaveandothershort-termdisabilitypolicies. Generally, policies with shorter waiting periods will have higherpremiums.

Tip. Do your best to accumulatemoney in the Just in Case Fund (chapter 4,section4)tocoverthewaitingoreliminationperiod.

Tip. If you’re lucky enough to have both employer and individual disabilitycoverage, and if your employer coverage provides benefits during the earlymonths of your disability, consider increasing the waiting period under yourindividualpolicysoastoloweryourpremiums.

COLAprovision.ACOLAprovisionisanelectiveprovisionthatadjustsyourdisabilitybenefitsforcost-of-livinginflation,withoutwhichthebuyingpowerofyourmonthlybenefitswoulddeteriorateoverthelongterm.

“Noncancelable” and “guaranteed renewable” provisions. As their namesimply, these provisions mean that the coverage cannot be canceled by theinsurance carrier, and that itmust be renewed fromyear to year regardless ofyourhealthso longasyoupayyourpremiumson time.Theseprovisionsalsogenerally ensure that the insurance company cannot increase your premiumsunlesspremiumsarechangedforanentireclassofpolicyholdersofwhichyouarepart.

Tip. Don’t rely on the insurance company to remind you of a renewal date.Make a note in your calendar each year, or even better, find out if yourpremiums can automatically be deducted from your bank account. It is notuncommon for an insurer to “forget” to send a bill, particularly if thepolicyholderhassubmittedsignificantclaims.

“Guaranteeof insurability”provision.This electiveprovision allowsyou topurchaseadditionalcoverageatanytime,regardlessofyourhealth.

Insurance company ratings and insurance agent licensing. Be careful tochoose an insurance company that will be around to pay your benefits. Fiveagencies rate insurance companies: Standard & Poors, Moody’s, A. M. Best,Duff&Phelps,andWeiss.Eachusesaroughlyequivalentratingsystem(highestratingswitheachcompanyareAAA,A++,andA+,respectively).Fordisabilityinsurance,selectaninsurancecompanythathasconsistentlyreceivedtopratingsfromatleasttwooftheratingsagencies.

Incontestable. Generally disability policies become incontestable two yearsafter the issue date. Some policies provide that the right to contest coveragecontinuesindefinitelyforfraud.Theinsurancecompanyisprimarilyconcernedwithyourhealthandyourincomewhenyouapplyforcoverage.

Premiums. Your premiumswill depend on the basic provisions of the policyyouchoose,anyspecialridersyouelect,youroccupation,yourhealth,yourage,andsometimesyourgender.

Applying for disability income insurance. When you apply for privatedisability insurance, you will have to fill out an application disclosing any“preexistingmedicalconditions”youmayhave.Never lieonyourapplication.The insurerwill takeyour premiums, butwhenyou file a claim, itwill checkyour medical history with your physicians, prior insurers, and the MedicalInformationBureau(MIB).Anymistakes,omissions,ormisstatementsonyourapplicationthatinitiallygoundetectedwill,oncediscovered,probablyresultindenialofyourbenefitclaimsand/orthecancellationofyourpolicy.

Tip.Ifyouhavealife-challengingconditionandhavebeenasymptomatic,youmay be able to obtain disability coverage by answering questions on anapplication positively and truthfully—provided the carrier does not request a

physicalexam. Insomestates, the insurancecarriercanarguewhenaclaim issubmitted thatyouarenotcoveredbecause itonlycoversdisablingconditionsthatdidnot exist at the time thepolicywas issued (i.e., the carrier admits thepolicyisvalid,butstillwigglesoutofpayment).

If you think there is a chance of qualifying for a disability incomepolicy,submit a trial application that is informally reviewedby the agent/brokerwiththecompanyunderwriterstoseewhetherapolicymightbeissued.Alsoreviewthe discussion about theMedical Information Bureau in chapter 3, section 6.Make sure the information contained in your file is accurate, since inaccurateinformationmayaffectyourabilitytogetcoverage.

Taxonindividualdisabilityincomepolicies.Disabilitybenefitsreceivedunderindividualpoliciesaretax-freeifyoupaythepremiumswithafter-taxdollars.

Section2.GroupDisabilityIncomeInsurance

Group long-term disability coverage can be obtained through your employer,professionalassociation,orpossiblythroughaunion.Evenifyouhavedisabilitycoveragethroughemployment,itisalsoworthwhiletoexamineanyothergroupcoverageavailablethroughprofessionalassociationsthatyoualreadybelongtoor thatyoumaybeable to join. Ifyouare self-employed,youmaybeable toobtain group disability coverage through trade associations, small-businessorganizations,oryourlocalchamberofcommerce.

Premiumsforemployercoveragearetypically“levelpremiums”(premiumsremainthesameforthedurationofcoverage),whereaspremiumsforassociationcoverageare typically“step-ratepremiums” (premiums increaseas the insuredgrowsolder).Ifyouareconsideringassociationcoverage,makesureyourpolicycontains a protective provision that guarantees that the insurer cannotdiscontinueormodifyanyindividual’spolicywithoutmakingthesamechangestoallpoliciesinthegroup.

Thestandardprovisionsofgroupdisabilityincomecoverageandindividualdisability income coverage are the same. See the chart in section 1 of this

chapter and the discussion that accompanies it.Unlike individual policies, thebenefitsingrouppoliciesaretiedtoyourincomeattheonsetofdisability.

Youshouldconsiderseveralbenefitsanddrawbackstogroupcoveragewhencomparingthedifferenttypesofdisabilitycoverageavailabletoyou.Benefits:

•Groupcoverage iseasier toobtain thanother typesofcoverage—typicallyyouqualifywithoutproofofyourmedicalcondition(insurability).

•Groupdisabilitycoverageislessexpensivethanindividualdisabilitycoverage.•Groupdisabilitybenefitsmaybetax-free.Seethediscussionbelow.

Drawbacks:•Groupcoverageisnot“portable”—ifyouchangejobsorterminateyourassociationmembership,youloseyourdisabilitybenefitsregardlessofthepremiumsthathavebeenpaidin.Thereisnorighttoconverttoindividualcoverage.

•Groupcoveragegenerallydoesnotstartassoonasapersonstartsworkinginthenewjob.Thewaitingperioduntil coverage commences canbe as limited as sixmonthsor in somecases aslongasfiveyears.

•Groupcoverageistypicallylesscomprehensivethanindividualcoverage.•Groupcoverageistypicallyreducedbyanybenefitspaidunderworkers’compensationorSocialSecurity.Groupcoveragemayalsohaveamaximummonthlylimitofperhaps$3,000.

Tip.Ifyouareconsideringleavingyourjobanddisabilityisarealpossibilityinthe future, consider staying with your job for the disability income if thecoverageisreasonable.

If you believe you may be terminated from your job and could possiblysatisfythedefinitionofdisabilityinthepolicy,considergoingondisabilityrightaway.

Taxongroupdisabilitypolicies.Disability incomeis taxable ifpaymentsaremade directly by the employer or if payments are attributable to employercontributionstoafundedplan.Incomebenefitsarenottaxableiftheemployeepaysthepremiumswithafter-taxdollars.

Tip. If your employer has been paying the premiums for your disabilitycoverage,while you are stillworking, consider askingwhether your employerwillallowyoutoreimbursethepremiumpaymentsatleastforthepolicyyearin

whichyougoondisability,andpreferablyforthetwoyearspriortothataswell.While there have been no cases on point, this should allow you to receivedisabilitypaymentincome-tax-free.Thesuggestiontogobacktwoyearsinsteadofone is fromabenefits tax expertwho suggests that the additional period ismorelikelytoprovidethedesiredtaxresult.Donotattempttodothiswithoutconsultingwithataxadviserpriortospeakingwithyouremployer.

Tip. If you are still working, consider asking your employer to changeprocedurestoreflecttheideathattheemployerpaideachemployeeanadditionalamount equal to the premium and the employee paid the premium himself orherself. The employer would have to start withholding taxes to reflect theadditional income. The other employees will probably grumble at thewithholding,buttheyshouldbeplacatedwhentheyrealizethemuchgreaternetamounttheywouldreceiveiftheybecamedisabled.

Taxwithholding.Federalincometaxwithholdingisrequiredonemployer-paiddisability benefits. Disability payments attributable to employer contributionsareconsideredtaxableincometotheemployeesubjecttoSocialSecuritytaxfora limitedperiodat thebeginningofdisability,generallysixmonths.After thattheyarenotconsideredwagessubjecttoSocialSecuritytax.

If thebenefits arepaidbya thirdparty suchasan insurancecompany, theemployeemayelectwithholding.

Section3.OtherTypesofGroupDisabilityCoverage

3.1GroupShort-TermDisabilityCoverage

In contrast to group long-term disability coverage, group short-term coverageprovideslowerbenefits,overashorterperiod(uptofifty-twoweeks),andwithashorter waiting period (up to twoweeks). Tax treatment is the same for bothtypesofcoverage.

3.2EmployerSalary-ContinuationPlans(SickPay/Leave)

3.2EmployerSalary-ContinuationPlans(SickPay/Leave)

Employersmay provide employeeswith short-term disability benefits throughsalary-continuation plans, also known as sick pay or sick leave. Salary-continuationplansprovideemployeeswiththeirfullsalaryattheonsetoftheirdisability, typically for aperiodof severalweeksdependingon their lengthofservice.Generally,employeesarenoteligibleforsalary-continuationbenefitsiftheyareeligibleforworkers’compensation.

Tip. Be aware that taking sick paymay adversely affect your other disabilitybenefits(forexample,byincreasingtheeffectivewaitingperiodbeforeyoucanbegin to collect other group disability benefits) since the waiting period fordisabilityisoftentiedtohowlongyouareoutofworkduetothatdisability,notduetosickleave.

Tax.Salary-continuationbenefitsaretreatedaswagesandthereforearesubjecttoincometax.

3.3Workers’Compensation

Workers’ compensation is an employer-sponsored program,mandated by stateand federal laws, that provides employees with limited coverage for work-relateddisabilities.Itdoesnotcoverdisabilityduetoillness,unlesstheillnessisworkrelated.

Workers’compensationcoverslostincome,medicalexpenses,rehabilitationservices, and survivor benefits for total/partial and permanent/temporaryoccupationaldisabilities.Disabilitybenefitsvarywidelyfromstatetostate,withmaximumbenefitsupto662⁄3percentofgrosswagesforamaximumofuptotenyears. Employers may cover their workers’ compensation exposure eitherthroughprivateinsuranceorcompetitivestatefunds.

Tax.Disabilitybenefitsreceivedunderworkers’compensationareexemptfromincometax.

3.4GroupLifeInsurance

3.4GroupLifeInsurance

Grouplifeinsurancepoliciesmayprovidethefollowingdisabilitybenefitsifthefeatureisbuiltintothespecificpolicy:

•Waiver of premium: The obligation to pay policy premiums is waived in the event of yourdisability,althoughyourcoveragecontinues.

•Accelerateddeathbenefits:Permitsyoutoreceiveaportionofthedeathbenefitpriortodeath(discussedindetailinchapter19,section2).

• Chronic or terminal illness benefit: In the event you are disabled, you receive monthlypaymentsoverafixedperiodbasedonthefacevalueofyourpolicy.

3.5GroupIndividualRetirementPlans

Although retirement plans are traditionally designed to provide a retirementincome,manycontainspecialprovisionsthatpermityoutotapyourretirementfundsasasourceofdisabilityincome.Forexample:

•Undermostemployerretirementplans,yourretirementaccountbecomesfullyvested(inclusiveofanyemployercontributions)intheeventofyourdisability.Becausecontributionsceaseduringdisability, your future retirement income could be significantly reduced. However, somedisability policies provide “retirement funding benefits” that replace these contributions duringdisability.

• Some employer pension plans may permit early retirement or may permit pension credits toaccumulateduringdisability.

•Withdrawalsfromqualifiedretirementplans,althoughsubjecttoincometax,areexemptfromthe10percenttaxpenaltyforpreretirementwithdrawalsintheeventofdisability.

•Evenifyouarenotdisabled,withdrawalsfromretirementplansmadetofundmedicalexpensesthatexceed7.5percentofyouradjustedgross incomearealsoexempt fromthe10percent taxpenaltyforearlywithdrawals.

• Disability benefits received under a qualified retirement plan that also serves as a health oraccidentplanmaybeexemptfromincometax.

Dependingonthetypeofretirementplanyouhave,otherspecialprovisionsmay apply that allow the conversion of your retirement funds to disabilityincome. Check the specific provisions of your plan, along with current IRSguidelines.

Tip. Unless you need to access your retirement funds immediately, roll themover to an IRA and wait to take distributions until you are unemployed andthereforeinalowertaxbracket.

Section4.IndividualRetirementAccount(IRA)

Justaswithgroupretirementplans,manyIRAscontainspecialprovisions thatpermityoutotapintoyourretirementfundsasasourceofdisabilityincome(seesection3.5above).ThetaxtreatmentforwithdrawalsfromordisabilitybenefitsreceivedunderanIRAisthesameasdescribedforgroupretirementplans.

Aswithgroupplans, check to see if there areother specialprovisions thatmay permit the conversion of your retirement funds to disability income. Becareful to coordinate anydistributions fromyour retirement accountwithyourSocialSecuritybenefits.

Seechapter12formoreonretirementfunds.

Section5.CreditDisabilityInsurance

Typicallysoldbycreditcardcompanies,creditdisability insuranceeitherpaysoffyourcreditcarddebtdirectlyorpaysyouamonthlyincomeintheeventofdisability. Although this type of insurance is expensive, it can usually beobtainedwithoutamedicalevaluationandis,therefore,aworthwhileoptionforthosewhoanticipateadisabilityinthefuture.Itshouldbenotedthatifyoudogoondisabilityandmakeaclaimunderacreditdisabilityinsurancepolicy,yourdoctormaybecontactedbytheinsurancecompanyeachmonthtoconfirmyourcontinuing disability. You should at least warn the doctor to expect theserequests.Thedoctormaybeable tostopconstantquestioningbygivingyouapermanentdisabilityopinionfor the insurancecarrier.Seechapter21formoreinformationoncreditdisabilityinsurance.

Tip.Gettingcreditdisability insuranceisquitesimple.Oftenthere isaboxonyourcreditcardstatement thatyoucancheck tobegincoverage.Youcanalso

callthecustomerservicenumberforyourexistingcreditaccountsandfindouthowtoobtaindisabilitycoverage.

Section6.IndividualLifeInsurance

Individuallifeinsurancepoliciesmayprovidethefollowingdisabilitybenefits:

•Waiver of premium: The obligation to pay policy premiums is waived in the event of yourdisability,althoughcoveragecontinues.

•Accelerateddeathbenefits:Thisoption,whichcanbesoldasanintegralpartofyourpolicyorissometimesaddedasarideratacostorforfree,permitsyoutodrawonthefacevalueofyourlifeinsurancepolicyduringthefinalmonthsofyourterminalillness.Seechapter19,section2,formoreinformation.

•Critical illnesspolicy: In lieuofa traditional insurancepolicywithaccelerateddeathbenefits,this type of policy pays a lump sum upon diagnosis of certain predefined “critical illnesses.”Don’texpecttoobtainthiskindofcoveragetoinsureaconditionyoualreadyhave.

•Chronic illnesspolicy: Provides incomepermonth in the event of chronic illness,which canincludelife-challengingconditions.Thebenefitisapercentageofthedeathbenefit,andbenefitspaidaredeductedfromthedeathbenefit.

Formoreonlifeinsurance,seechapter19.

Section7.CoverageforSelf-EmployedProfessionalsandSmall-BusinessOwners

7.1DisabilityIncomePolicies

Ifyouareaself-employedprofessionalorsmall-businessowner,youwillneedmoredisabilitycoveragethantheaveragepersonbecauseyouwillneedtocoverbusiness as well as personal expenses. Disability can be covered by thetraditional group and individual disability income policies we have beendiscussing, through various business-type coverages, or some combination ofboth.

Disabilityincomepoliciesthatrequirenomedicalunderwriting(i.e.,havenomedicalquestions)canprovidepersonalcoverageforsmall-businessownersandtheiremployees(minimumofthreetofivepeopleneededinordertoqualify).

To enhance the basic coverage offered, small group policies may alsoprovideupgradeoptions that employees canpurchase at theirowncost.Whenreviewingthesepolicies,particularattentionshouldbepaidtothedefinitionsofdisability,whichareoftenlimited.

Talkwithyour taxadviser about thepossibilityof avoiding income taxonbenefits by eithernot deducting thepremiumsor asking employees topay thepremiums,whichtheemployercanreimbursethroughyear-endbonuses.

Tip. Itmaybeworthwhile fora small-businessowner topay thepremiums tocovertheentiregroupifitmeanstheownerwhohasapreexistingconditioncanobtaincoveragethatwouldotherwisebeunobtainable.

Tip.Anemployee/ownerwhocannotobtaindisabilityincomecoverageforhergroup may be able to obtain the coverage by transferring employment of allemployees including herself to a leasing company with disability incomebenefits.Thesecompanies“lease”employeestootherbusinesses.Forexample,a doctor makes an arrangement with a leasing company whereby the leasingcompany employs the staff, but they work in the doctor’s office, under thedoctor’scontrol.Thedoctorpaysamonthlycheckto theleasingcompanythatcoverssalaries,taxes,andbenefits,aswellasafeefortheleasingcompany.

7.2OtherCoveragestoConsider

Businessoverhead insurance. In theeventof thebusinessowner’sdisability,fixedmonthlypaymentsaremadetothecompanytocoveroverheadandothercontinuing business expenses for a limited time until the company can bereorganizedorsold.Thistypeofcoverageisexpensiveandlimitedindurationbecauseyoucandecidewhethertoreturntothejobortakeanotheractionwiththe business. This coveragemay be difficult to purchase by a business ownerwithapreexistingmedicalcondition.

Businessrecoveryinsurance.Providesbenefitstotheowneronceshereturnsto

workfull-timeandwhilesheisreestablishingacustomerbase.

Key-person insurance. Protects a business against loss of income resultingfromtheabilityofakeyemployee.

Disability buyout policy. For jointly owned businesses, this type of coverageprovidesfundstobuyoutadisabledpartner’sshareofthebusiness.

Taxes.As noted above, disability benefitsmay be subject to federal and stateincome tax, although many states exempt these benefits from taxation. AnybenefitsthataresubjecttoincometaxarealsosubjecttoSocialSecuritytax.

Section8.FederalDisabilityPrograms

Social SecurityDisability Insurance (SSD) andSupplemental Security Income(SSI) are both federal programs that provide income to people who becomedisabled.BothprogramsareadministeredbytheSocialSecurityAdministration(SSA).

SSDismuchlikeprivatedisabilityinsurance:youareentitledtothebenefitsbecause you paid “premiums” for them in the form of Social Security taxes.Insteadofaprivate insurancecarrier, thebenefitsarepaidby thegovernment.Entitlement to SSI is means based and is intended to provide incomereplacementandmedicalcaretothedisabledpoor.Bothprogramsarebasedonthesamedefinitionofdisability.

8.1SocialSecurityDisabilityInsurance(SSD)

Eligibility.TobeeligibleforSSD,youmust•meettheSSA’sdefinitionofdisability,and•youmustbe“fullyinsured.”

Undocumented residentsmay be eligible for SSD, but Social Securitywillnotpaybenefitsuntil they legalize their residence in thiscountryoruntil theyreturntotheircountryoforigin.

Disability. Generally speaking, disability under SSD means an inability toengageinanysubstantialgainfulactivity(notjustyourownjob)byreasonofamedicallydeterminablephysicalormental impairmentoracombinationof thetwothatisexpectedtoresultindeathorthathaslastedorcanbeexpectedtolastfor a continuous periodof not less than twelvemonths.For purposes ofSSD,youarenot considered tobe engaged in “substantial”work if youare earninglessthan$500amonthafterallowabledeductions.

Fully insured. Inmost cases, to be “fully insured” for purposes of SSD, youmusthaveworkedincoveredemploymentforaminimumnumberofquarters(three-monthperiods).Thenumberdependsonyourageatthetimeyoubecomedisabled.Theminimumnumber required is sixoutof the last thirteenquarterspriortoyourdisabilityifyouareundertheageoftwenty-four,andthemostistwentyoutofthelastfortyquarters(whichistheequivalentofatleastfiveofthepast ten years). There is “covered employment” when Social Securitycontributions are deducted from earnings or aremade by separate payment ifself-employed.

Benefits.Benefitscontinueforthedurationofyourdisability,butdonotbeginuntilthesixthfullmonthafterthe“onset”ofdisability—inotherwords,thereisafive-monthwaitingperiod.Thedateoftheonsetofyourdisabilityisimportantfor various purposes, such as determining the time during which notificationmustbegiventoextendCOBRAcoverage(chapter6,section4),aswellasthetime until Medicare kicks in. Chances are the onset date of your disabilitypredatesyourapplicationforSSDpaymentsandthefive-monthwaitingperiod.Inthatcase,benefitscanbepaidretroactivelyforuptotwelvemonths.

Monthlybenefitratesdependuponyourpastearningsandfamilystatus.Theaveragemonthlybenefitin1997forasinglepersonwas$720.Forapersonwitha wife and child it was approximately $1,200. Benefits are larger if you aremarried. Benefits are paid regardless of your assets or your spouse’s income.After twenty-four months of receipt of SSD, recipients automatically becomeentitledtoMedicarebenefits.Medicarebenefitsarediscussedindetailinchapter

15.Ifyouhavenotalreadydoneso,youneedtocontactSSAtomakesurethattheinformationthattheyhaveaboutyourearningsovertheyearsiscorrect.Seechapter3forfurtherdiscussionofthatprocess.

SSIandSSD—Qualifyingforboth.WhenyouapplyforSSD,youalsoapplyforSSI,unlessyoutellSSAyoudonotwanttoapplyforSSI.

Presumptive disability. During the five-month waiting period, you may beconsideredtobepresumptivelydisabledbytheSSAifyoumeetpoverty-levelincome and asset requirements and are deemed disabled. This permits you toreceivetemporarycashpaymentsuntilthewaitingperiodisover.Medicaid,andinmanycasesfoodstamps,areofferedwhenthereisapresumptionofdisability.Statedisabilityprogramsmayalsoprovidepaymentsduringthisperiod.

Thereceiptofothertypesofdisabilitybenefits,includingthosefromprivatedisabilitypolicies,doesnotaffectSSDpayments.

Tip. It is better to go on disability at the end of the month instead of thebeginningsince themonth inwhichyouapplydoesnotcount toward thefive-monthwaiting period.Keep inmind that youwill not receive your first SSDcheckuntilmonthseven.

You can arrange direct deposit of Social Security benefits into your bankaccount. This can save you Life Units and ensure safety. Contact SSA forinformation

Benefitstochildrenandspouses.Monthlydisabilitybenefitscanbepaidtoadisabledworker’sunmarriedchildrenunderageeighteen(ornineteeniffull-timehighschoolorelementaryschoolstudents); tounmarriedchildrenageeighteenorolderwhowereseverelydisabledbeforeage twenty-twoandcontinue tobedisabled; toawifeorhusbandagesixty-twoorolder;and toawifeunderagesixty-two who is caring for the worker’s child who is under age sixteen ordisabledandreceivingbenefitsbasedonthedisabledworker’searnings.

Tax.Benefitsarenottaxable(onbothfederalandstatelevels)untilyoureceiveor earn a certain amount of other taxable income in the tax year. Theapproximate calculation is: if half your annual SSD benefits plus your othertaxableincome(includinginterestonmunicipalbonds)equals$25,000ormore($32,000 formarriedcouples filing joint tax returns), thenhalfofyour annualSSDbenefitistaxedatthesamerateasyourotherincome.Ifhalfyourbenefits,plus your other taxable income, equals $34,000 ormore ($44,000 formarriedcouples), then 85 percent of the SSD is taxable. This formula also applies todisabilitybenefitsforrailroademployees.

Lump-sumbenefitpayments(forinstance,alargesettlementfromSSA)canbe included in your current tax year’s income or, if the payment covers pastyears,canbedistributedoverthosepasttaxyears.Thetaxpayerhasthechoiceofwhateverworksbest.Ifyouhavequestionsabouttaxes,calltheIRSoryourtax adviser, not SSA. SSA employees are only allowed to discuss taxes in ageneralway.

8.2SupplementalSecurityIncome(SSI)

SSI isa“means-basedentitlement” fordisabledpeoplewith limitedassetsandincome.

Eligibility.Thereisnorequirementofminimumpaymentsintothesystemnorisit necessary that you stopworking if your income is under $500 amonth. Inadditiontotherequirementthatarecipientbedisabled,aged,orblindwithinthemeaningoftheSocialSecuritylaw,SSIrecipientsmusthavelimitedincome(itcannotexceedtheamountoftheSSIbenefitplus$20)andfewresources.

Help from friends or family such as free rent may be included in yourincome.

To determine whether income is sufficiently limited (“net countableincome”)SSA“disregards”(deducts)

•$20ofanyincomepermonth;then•ifyouareworking,$65andone-halfoftheremainderofanyearnedmonthlyincome.•Ifyouwork,medicalexpensespaidfromyourownmoneytodirectlysupportyourworkattempt.

Forexample, ifyourconditionrequiresthatyoutakeataxi toworkinsteadofpublic transport,thecostisdeductedbeforedeterminingnetcountableincome.

•Ifyouareastudentandunderagetwenty-two,another$400amonthisdisregarded.•Ifyouareblind,work-relatedexpensesofanykindnotalreadydisregardedaredisregarded.

The net effect of the disregards is that aworking person can earn a bitmorethantwicetherequiredlevelandstillqualify.

When a husband andwife share a common household, a spouse’s incomeandassetsaredeemedtobelongtotheapplicantspouse.Thisisthecaseeveniftheyprovetheyarenotsharingincomeandassets.Ifahouseholdisnotshared,onlyactuallyproventransferredincomeorassetsarecounted.

In determining eligibility, exempt assets are disregarded. Exempt assetsincludeavehicleofanyvalue(ifusedtogotomedicalcareatleastfourtimesayearortowork),businessequityandequipmentworthunder$6,000,reasonablehousehold goods, and your lived-in-home no matter how valuable. The onlyresidences thatqualifyare thoseoccupiedbyapplicants, their spouses,or theirminor or disabled children. Second houses are not included as exempt assets.Also exempted are a separate bank account of up to $1,500 for “burial” and$2,000 cash or cash equivalent for individuals and $3,000 formarried peoplelivingwiththeirspouses.

Generally,theprogramdoesnotcareifanapplicantsellsassetsforlessthanfairmarketvalueorevengivesthemawayinordertoqualifyforSSI.

Agedanddisabled legalaliens in theUnitedStatesasofAugust22,1996,are eligible for SSI. With a few exceptions, most legal aliens who enter thecountry after that date are no longer eligible for SSI unless and until theybecomecitizens.IllegalaliensarenoteligibleforSSI.

Todeterminetheeligibilityrequirements inyourstate.ContactSSIat800-772-1213.

Benefits. The amount of the benefit from the program is determined by theamount by which your income is below the standard. For example, if thestandard is $500permonth andyour income is $400permonth,SSIwill pay$100permonth.In1997,theSSIstandardforonepersonlivingalonewas$484

monthly. Some states raise the standard and pay the difference between theamountandtheirownstandard.Forexample,in1997,thestandardwas$570inNewYorkand$640inCalifornia.

Inadditiontoaminimalmonthlyincome,recipientsofSSIareautomaticallyentitledtoMedicaidinmost(butnotall)statesandfoodstamps(althoughthey’llalso have to visit the welfare office to complete processing). Medicaid isdiscussedindetailinchapter15.

Dependent children may also qualify for assistance from governmentprogramsadministeredbyeachstate.

Many states provide a “home and community basedwaiver” program thatprovides a supplemental income to recipients living in assisted-care facilities.Some states extend theprogram topeople livingathomewhoneedassistance(seechapter15,section2).

SSIapplicantsareeligibletoreceivepaymentthefirstdayofthemonthaftereither the month in which they apply, or the month they become eligible ifeligibilityiswithheldpendingaspenddownofassets.SSIchecksareissuedonthefirstofeachmonthforthatmonth.

Applicantswithasevereenoughconditionmaybeeligibleforpresumptivedisability underSSI.Presumptiveallows for immediate access toSSIbenefitswhileyourapplicationisbeingprocessed.SocialSecuritycanmakepresumptivepaymentsforuptosixmonthswhileyourclaimisbeingprocessed,orwhileyouwaitforSSDpaymentstobegin.

If you have a presumptive disability, in many Social Security offices anemergencyadvancepaymentcanbemadethedayofapplication.Theapplicantmustpresentacaseofdireneed,whichusuallymeansthathealth,nutrition,orhome is endangered because the applicant does not have any income. Theadvance checkwill bededucted in sixpayments from the subsequentmonthly“presumptive”checks. Ifyou receivepresumptivepayments,butyourclaim isultimatelydenied,youwillnothavetopaybackthemoney.

Tax. SSI income is never taxed by the federal or the state governments,regardlessofanyotherincomeearnedorreceivedduringthepastyear.

8.3Veterans’Pensions

Veteranswhohave served for at leastninetydaysonactiveduty, includingatleastonedayduring“wartime” (even if theyneverentered thewarzone), canreceivewhatthegovernmentcalls“pensions”fordisabilitiesifbothincomeandassets are belowcertain levels.The “pensions” are actually payments to bringtherecipient’sincomeuptothelevelof$700permonthforsingleveterans.Thisamount increases for each additional dependent and for out-of-pocketmedicalcosts. Pensions are also increased for housebound veterans or thosewho need“aid and attendance”—a broad term for almost anyone with limitedmobility.The VA rules for disability are somewhat more liberal than those of SSA.Surviving spouses and certain grown children of wartime veterans can alsocollectpensionsif theyarepoorenough.Forinformation,contactVABenefitsInformationat800-827-1000.

Section9.StateCoverage

9.1DisabilityInsurance

California,Hawaii,NewJersey,NewYork,RhodeIsland,andPuertoRicohavestate-mandatedshort-termdisabilityinsuranceprograms(knownasSDI),whichweredesignedtobridgethegapfromthetimeapersoncannolongerworkuntilSSD starts.Under these programs,workers suffering from a non-work-relateddisabilitycollectweeklybenefitsfordifferingperiodsoftimesetbythestate(uptosixmonthsinNewYorkoreighteenmonthsinCalifornia).Youshouldchecktheeligibilityrequirementsinyourstate.Generally,theseprogramsarebasedonhavingworkedforaminimumnumberofweeksforanemployercoveredbythesystem. The part of SDI attributable to the employee’s contribution prior todisabilityisnottaxable.

Self-employed people can generally elect to be covered under SDI as abridgebetweenworkandSSD,orforshortperiodsofillness.

SSAsometimesreducestheamountSSDpaysifyouarealsocollectingSDI.Thisoccursifthetwoawardsequalmorethan80percentofyourformeraverage

monthlywage.When SDI ends, take theNotice of Exhaustion of Benefits toSSA toget yourSSDaward increased to its full amount.Get a signed receiptfromSSA.

ItispossibletocollectSDIandSSItogetheriftheSDIincomeisunderthemonthlySSIpaymentlevel.SSIadds$20extrapermonthtoitsregularpaymentifanindividualisalsocollectingdisabilitybenefitsfromeitherSDIorSSD.

IfasanSDIrecipientyouareeligibleforSSIwhenyourstatedisabilityrunsout,youcanfileyourSSIapplicationbeforeyourSDIexpires.Youwillhavetowait to show SSA the Notice of Exhaustion of Benefits before SSI can startpaying,buttheprocessingwillbecomplete.

9.2Workers’Compensation

Workers’compensation(mandatedbyorwrittenthroughastatefund)providesbenefitstopeoplewhosufferon-the-jobinjuriesordisablingconditionscausedbywork,ratherthanahealthcondition.Onceaworkers’compensationclaimisfiled,aclaimforfederalorstatedisabilitycoverageisusuallyprecluded.

9.3UnemploymentInsurance

Unemploymentinsuranceisabenefitprogramforpeoplewhohaverecentlylosttheir jobs, are not disabled, and are actively seeking employment. It may beadvantageous to collect unemployment and then switch to SDI if you needincomeforlongerthanSDIwillcoveryoubutyouarenotmedicallyeligibleforSocialSecurity.However, unemploymentproceeds are subject to tax, andyouwould not be able to claim disability benefits such as a disability waiver ofpremiumsonyourlifeinsurancepolicy.

Chapter9

PreparingforthePossibilityofNotBeingAbletoWork

Thepeoplewhogeton in thisworldare thepeoplewhogetupand lookfor thecircumstancestheywantand,iftheycan’tfindthem,makethem.

—GeorgeBernardShaw

Thinkingaboutbeingdisabledandnolongerabletoworkatsomedistanttimeisnot easy—especially when you’re feeling healthy. But, any life-challengingconditioncanleadtothiskindofsituation,anditisbesttobeprepared“justincase.”

Section1.PreparingtoGoonDisability—Long-RangePlanning

Thereisnobettertimethanthepresenttostartmakinglong-rangepreparationsforthepossibilityofdisability.

Budget.Inchapter4,youlookedatwhatyourfinanciallifecouldbelikeifyoubecamedisabled.Ifitappearsthatyouwon’thaveenoughmoneytomeetyourgoals, lookatchapter17, to startworkingonways todecreaseyourexpenses.Forinstance,ifyou’regoingtoneedtodownsizeyourlivingarrangements,thisisthetimetostartthinkingaboutwhatyouwoulddoandwhereyouwoulddoit.

Documentingyour“disability.”Theearlieryoubegindocumentingchangesinyourhealth,abilitytowork,anddailyfunctioning,theeasieritwillbeforotherstoagreeyouare“disabled”ifyoueverwantthemto.Keepadailyjournalthatincludes

• information concerning all physical symptoms, major and minor, as they occur—particularlypain, loss of appetite, and energy level.Note howany symptoms interferewithyour ability tofunction, particularly atwork. Social Security asks that you describe the type of pain (aching,

burning,cramping,crushing,stabbing,stinging,throbbing,orother),howlongthepainlasts,andhowoftenitoccurs.

•informationaboutmedications(whatyoutake,inwhatdosage,whenyoustartedtakingit).•doctor’svisits,hospitalstays,andemergencycarevisits.•mentalandemotionalsymptoms.

Tip. If you expect that youwill need the help of a therapist to be considereddisabled,youneedtostartseeingthetherapistforanappropriatetimebefore.Itisunlikelythatyouwillbeabletoseeapsychiatristandhaveyourselfdeclareddisabledthefollowingweek.

Yourphysician.Asktoreadthedoctor’snotesinyourchart tobesureall theinformationisaccurate.Provideanyadditionalrelevantinformationthatmaybeuseful to have included in your chart. Include specifics indicating how yourcondition affects your ability to work and other activities. (See chapter 24,section4.)

Check the records periodically, say once every sixmonths, to be sure therecordscontinuetobeaccurate.

Your benefits. Now is the time to review your insurance coverages andgovernmententitlements,aswellasanybenefitstowhichyouwillbeentitledatwork. It is also the time to obtain replacement for your income in case youbecome disabled (see the discussion in chapter 8). Obtain life and healthcoverages,ifyoudon’talreadyhavethem,andincreaseall thebenefitsyoudohavetothemaximum.

•Onemethodofaccomplishingthesegoalsistofindoutwhatjobsinyourcompanyhavethebestbenefitplansandtotrytomovetooneofthosejobs.

•Anothermethod is to examine the corporate benefit plans and figure outwhat you can do tomaximize the coverage you can takewith you. For example, amarried employeemay have amorelucrativebenefitpackage.Ifso,considergettingmarried.TheplansI’veseenonlyspeakofmaritalstatus,notwhetherthecouplelivestogether.Caution:ifthisisanoptionforyou,consultanattorneywithrespecttorightsandobligationsthataccompanymarriage.

•Ifyourcorporatebenefitplanhasdisabilitycoverage,andyouseehowitcanbeimprovedtogiveanaddedbenefit toemployees thecompanycaresabout (ofcourse, includingyou), speakwithyouremployeraboutchangingit.Changesinaplancanoccurontheannualrenewaldate.Stayawareoftherenewaldatesoyoucanpresentyourideastotheemployerwellbeforethattime.

•Addcreditdisabilityinsurancetoyourcreditcards.Itgenerallyhastobeinforcesixmonthstoayeartoeliminatethepreexisting-conditionexclusion.

•Ifyouhaveyourowncompany,reviewtheinformationinchapter8.Youcanexpectthatgroupdisabilitypoliciesforsmallgroupswillalwayshaveapreexisting-conditionexclusion,butthat’swhyyou’replanningahead.

•Ifyoulocateapossiblesourceforindividualdisabilityincomecoverage,besuretocompletetheapplication truthfully.Youcanprobablyfindabrokerwhowillbeglad towrite thepolicyandmake the commission. However, be aware that most disability carriers do their primaryunderwritingwhentheyreceiveaclaim,notonreceiptoftheapplication,andthemoretheyarelikelytohavetopayout,themoretheyexaminetheclaim.

•SSIandMedicaideligibility: It ispossibletotransferassetsorsetuptruststoqualifyforSSIand Medicaid, even Medicaid long-term care. Advance planning is required. See chapter 15,section2.3.

Estateplanningissues.Anytimeisagoodtimetogetyouraffairsinorder.Seechapter33.

Atwork.• Identify a person or several people who are in a position to make things happen at youremployer’sincaseyouneedsomespecialconsideration.Forexample,asupervisormaybeinaposition to request, andget, anexception foryou fromvariouscompanypolicies,or to letyoukeep company assets like your laptop computer. It would also be helpful to find a person(possiblythesameone)togiveyouinsideinformationandadvice;someonewhocanstrategizewithyou.Thispersoncanbecriticaltoachievingwhatyouwantwhileyoucontinuetowork,andespeciallywhenyougoondisability.

•Sockasmuchasyoucanintoyourretirementplan,especiallyifthecontributionsarematchedbyyouremployer.Taxonthesecontributionswillbepostponedtoatimewhenyourtaxbracketwillbelower,andtherewillbenopenaltyforwithdrawal.Moneyinaretirementplanisalsoexemptfromcreditors’claims.

•Speakwithpeopleatyour jobwhoareondisability,orwhohavebeenondisabilitybefore, tolearnaboutthepracticalaspectsofbeingondisabilitywithyouremployerandinyourstate.

•Reviewallplansasdiscussedunder“Yourbenefits”immediatelyaboveanddowhateveryoucantomaximizeyourbenefits.

Tip. If you need information about your employer’s benefit plans, the entry-levelpeopleinhumanresourcesarenotthemostreliablesourceofinformation.If your question is detailed, or individual to you, ask for the opinion of asupervisor.Getanyopinioninwriting.

Debt.•Dowhatyoucantoreduceyournoninsureddebttominimizeexpensesifyoubecomedisabled.•Ifyouhaveunmanageabledebt,findoutif,inyourstate,yourcreditorscanforceyoutosellyourlife insurancepolicy inaviaticalsettlement transactionoraccelerate thedeathbenefit fromthelife insurance company (see chapter 19). If you will probably qualify for a means-basedentitlement, find out if your state agencywill require acceleration or a sale. If either of thesesituations permit access to your life insurance coverage, talk to a lawyer about transferringownership now to a trusted friend or relative so the coverage won’t belong to you anymore.Trustedistheoperativeword,sincethatpersonwillnowbetheactualowner,abletodowiththecoveragewhateverheorshewants.Theremaybeagifttaxtoconsider.

•Ifyoucan’tpayyourcreditorstheirfulldue,findoutwhetherinyourstateyourdisabilityincomeisexemptfromcreditorclaims.If it isnotexempt,findoutifbankruptcywouldeliminateyourdebtbutpermityoutokeepyourdisabilityincome.

Youremotionalwell-being.•Startthinkingaboutwhatyouwilldoifyougoondisability.Ifyouwouldbeanythingshortofbedridden,youwillhavethetimeandabilitytoaccomplishmanythingsyou’vealwayswantedtodo,ornewthingssuchasworkingasavolunteer.

•Haveaconversationwithpeoplewhoareonorhavebeenondisabilityabouthowtheylearnedtocope—particularlypeoplewhoshareyourcondition.Learnfromtheirexperiences.Ithelpsmetomakenotesofmultipleconversationssoinformationdoesn’tblendtogether.

• Start the dialogue with your support team (family, friends, therapist, support group, spiritualadviser,and/orGuardianOrg)aboutthekindofemotionalsupportyouwillneedorcanobtainforyourselfduringthetransition.

Section2.PreparingtoGoonDisability—Short-RangePlanning

Ifyouarenolongerasable todoyour jobasyouoncewere,youshouldlookobjectively atwhether any reasonable accommodations (see chapter 6, section1.4)wouldpermityoutoperformtheessentialfunctionsofyourjoborifyouarequalified for any other jobs that you could still perform. If not, the questionbecomeswhetheryourconditionwouldqualifyyouas“disabled.”

Keepinmindthatforpurposesofemployerleavepolicies,privatedisabilityinsurancepolicies,andSocialSecuritybenefits,disabilityisatermofart,anditmayhavedifferentmeaningsdependingupontheparticularcontext.Readeachpolicyorgovernmentsummarycarefullyandunderstandtheirtermsbeforeyouactsoyoucanbepreparedtopresentyourcaseinlightoftherelevantcriteria.

Ifyour situation isn’t clear, speakwithyourGuardianOrgor socialworkerwhohashadexperienceinthisarea.Theycangiveyouanideawhetherpeoplewithasituationsimilartoyoursqualifyornot.ItwouldalsobehelpfultoobtainacopyofSSA’swrite-upabout impairmentsnecessarytoqualifyfordisabilitywithyourparticularlife-challengingcondition.Don’trelyontheseguidelinesasdefinitive. You may still qualify for disability if an unlisted impairment or acombination of impairments is at least as severe as those described in theguidelines.

Morality. Ingeneral, thedecisionwhetherornot togoondisabilityshouldbeaboutyourhealthandyourfinances.Itshouldnotbeamoraldilemma.Therearenomoral issues around disability. If you become disabled, you are entitled tostopworkandtoreceivethemonetarybenefitsforwhichyou’vebeenpaying.

Emotions. Ideally,youshouldbeprepared for theemotions thatwillcomeupduringthetransition,buttheyshouldnotbeanoverridingfactorintheequationofwhether,orwhen,togoondisability.

Timing.Youcangoondisabilitytoosoon,toolate,orrightontime.Earlierisprobablybetter than later, because it givesyou the advantageofbeing able toplaninadvance—anadvantagethatyouloseifyouwaituntilyoubecomesoillthatthetimeandchoicesavailabletoyouareseverelylimited.

Tip.Alwaysbeawarethatfromthepointofviewofemployers,insurers,andtheSocial Security Administration (SSA), disability is not something that youchoose. You either are or you are not disabled. Therefore,when dealingwithemployers, the SSA, and insurers, do not (and because it is so important, Irepeat),donotdiscussdisabilityasifitwereachoice.

Atwork.• Talk with the person in the company you’ve already chosen to help you in the process (seesection1).Whenyoutellthemyouplantogoondisability,bepreparediftheyask,“Whatcanwedohereatworktohelpyou?”

• Ideallyyouwantyour full salary tocontinueas longaspossible—orat leastuntil long-termdisability incomeorSocialSecuritystarts.Youwouldalso like thecompany topayforyourcontinuingmedicalinsurancepremiums.

•Anincreaseinsalarywillprovideyougreaterdisabilityincomeandmoneyinyourretirementaccount,soitwouldbe“nice”ifafriendlyemployerwouldincreaseyoursalaryforaslongasyou’reonthepayroll.Iftheemployerdoesn’tagreetotheraise,merelyrequestingitmaymakeyouremployermorewillingtogiveyouotherassistance.

•If therearenodisabilityincomebenefits,perhapsyoucannegotiateacontinuationofsalary.JeffB.workedasanassistanttotheheadofasmallbutsuccessfulcompanythatdidnothavedisabilitycoverageforemployees.Heconvincedhisboss,thepresidentofthecompany,thatitwas theboss’s responsibility tohaveobtained thiscoverage.Thebossagreed tocontinue60percentofhissalary(theamountthatwouldnormallybepayableunderagroupdisabilityplan)forlife.

• Be prepared to initiate the disability leave process at a moment’s notice. This is particularlyimportantifthereisapossibilityofbeing“downsized.”Havereadilyavailableanundatedletterinformingyour employeryou aregoingondisability. If you are called into ameeting atworkwhere there’seven theslightestpossibility thatdownsizingoryourbeing laidoff foranyotherreasoncouldbediscussed,have the letter inyourpocket.Hand it toyour employerbefore theemployerhasachance to letyouknowyou’rebeing laidoff.Onceyou’re laidoff, there isnooptionunderyouremployer’sbenefitplanstoclaimthatyouleftworkduetodisability.

•Determinewhetheryouareentitled toa leaveunder theFamilyandMedicalLeaveActand/orwhether you are entitled to leave or accommodation at work under the Americans withDisabilitiesActorstateorlocaldisabilitylaw.IfboththeFMLAandtheADAapply,whatisthebetter option for you right now? (See chapter 6, section 2.3.) If there is no duty to provide a“reasonableaccommodation”orleave,canyounegotiatea leaveorsomeotheraccommodationwithyouremployer?

•Considerthetimingoftheleave.Ifyoutaketheleavenow,willyouloseanyyear-endorotherbonusesoranimpendingpayraise?

• Consider going straight from full-time employment to total disability in order to maximizedisability benefits. If you begin to work part-time and receive a part-time salary, disabilitycoveragemaybebasedonthepart-timesalary,ratherthanyourhigherfull-timesalary.Thismaynotbeanissueifyoucontinuetoreceivefull-timewageswhileonareducedschedule.However,youshouldalsolookatwhetherpart-timeworkwoulddisqualifyyoufromtotaldisabilitystatus,whichitwouldundersomedisabilitypolicies.

Yourinsurancecoverages.•Reviewthedisabilityinsurancediscussioninchapter8,section1,anddeterminewhatdisabilitybenefitsyouwillbeentitledto,whentheywillbegin,andhowlongtheywilllast.

•Determinewhathealthinsurancecoveragewillbeineffectwhileondisabilityleave.•Willyoubecoveredunderyouremployer’splan?•Stateorfederallawmayrequirethatyoubeallowedtocontinuecoveragebypayingpremiumsyourself. The law may also include a maximum you can be charged for the coverage (see

chapter6,section4).•Ifyou’renotcovered,canyougetcoverageunderaspouse’spolicy?•Ifyouaredisabledwithin themeaningof theSocialSecurity lawandhavefewassets,otherthanthehouseyouliveinandacartogotothedoctor,whichareexcludedfromconsideration(seechapter8,section8.2),itmaybeworthspendingwhatyouhavelefttoqualifyforSSI,andthusMedicaid. If this is a possibility, be sure to read chapter 15, section 2.3, before acting.Medicaid,notSSI,careswhetheryougivedisqualifyingassetsaway.Keepinmindthatifyouare eligible for SSD, Medicare coverge does not begin until twenty-four months after firstreceiptofSSDbenefits.

•Will you be able to return to your present job at the end of the leave?Does theADAor theFMLAapply?Ifneitherlawapplies,canyounegotiatewithyouremployeronthispoint?

•Ifyouareconsideringshort-termdisabilityleave(andtherefore,arenoteligibleforSSDorSSI),but lack available coverage privately or throughwork, and are not eligible for state or federalcoverage, consider unemployment benefits.Your employerwould have to cooperate by layingyouoffandnotcontestingyoureligibilityforbenefits.Beawarethatinseekingbenefitsyouhaveto declare that you are “ready, willing, and able” to work. This is contrary to eligibility fordisabilitybenefits,inwhichyouhavetodeclareyouaredisabledandthereforenotabletowork.Also,keepinmindthatwithunemploymenttheCOBRAcontinuationofyourhealthinsuranceisonlyeighteenmonths.Youwouldnotqualifyforthecontinuationbeyondeighteenmonths,whichmayleaveadangerousgapincoverageuntilyouareeligibleforMedicaretostart.

•Lookatyourinsurancebenefitsanddeterminethedeadlinesbywhichyouhavetoaccessanyandall benefits you can takewith you.Don’t rely on your employer or the insurance company tonotifyyouoftheserightsordeadlines.Forexample,ifyouwon’thavetopaypremiumsforyourlife insurancepolicybecauseofaprovisionpermittingawaiverofpremiumsdue todisability,whatistheperiodaftertheonsetofdisabilityduringwhichyouhavetorequestthewaiver?Ifthepolicy is tobeconverted,duringwhat timeframedoyouhave to initiate theconversion?Asareminder,sinceyoucanprobablysellyourpolicy,itisgenerallyworthwhiletoconvertandpaythehigherindividualpremiumsuntilyounegotiateasaleratherthanlettingthecoveragelapse.

Tip. If you do have a premium waiver included in your disability policy,continue to pay the premiums and do not assume they are waived until youreceiveawrittennoticetothateffectfromthecompany.

Physician. Tell your primary physician that you are considering going ontodisabilityandfindouthisopinion.Itisnotwisetoapplyfordisabilityandthenfindoutyourdoctorwillnotsupportyourapplicationor,evenworse,mayevensayyouareabletowork.Considerdiscussingsuchquestionsas:

•DoeshethinkyouwillfitwithintheSSAdefinitionofdisabilityintheforeseeablefuture?•Doeshethinkleaveismedicallynecessaryatthistime?•Howmuchchoicedoyouhavemedicallyspeaking?

•Howlongaleaveisnecessary?•Couldachangeinyourjobdutiesorworkaccomplishcomparablehealthresults?

IfthedoctoragreesthatyouqualifyforSSAdisability,thismaybeagoodtimetorequesttheletterdiscussedinchapter10,section4.3.

Ifyourdoctordoesnotsupportyourdecisiontopursuedisabilityleave,youwill have to decidewhat’smore important, your doctor or the leave.Whetheryouareapplyingfordisabilitybenefitsfromaprivateinsurancecarrier,SSA,oranother governmental body, you will need evidence of disability from aphysician. Carefully evaluate your physician’s opinion in this regard. Get asecondopinionifnecessary.

Mentaland/oremotional.•Disability can be caused, inwhole or in part, by amental or emotional condition. If you arealready seeing a mental health provider, ask that person if your condition would help in adeterminationofdisability.

• If you are consideringworkingwith amental health provider, remember that for purposes ofdetermining whether a person is disabled under Social Security and insurance standards,therapistsinorderofpreferenceare(1)apsychiatrist, anM.D.witha specialty inmentalhealth.Note thatonlyapsychiatrist can

prescribemedicationssuchasProzacorothermood-enhancingdrugs.(2)apsychologistwithaPh.D.(3)apsychologistwithamaster’sdegree.(4)asocialworkerorsimilarperson—thegreatertheeducationalbackground,thebetter.

Ifyouneedhelpdeterminingwhetheryoumayqualifyas“disabled.”Seekout an experienced socialworker or attorney.Since “disability” canbe such agrayarea, themoreexperience thepersonhaswith thedefinitionofdisability,themorelikelythatyouwillobtaintheinformationyouneed.

Tip.Asmuchasyoumayneedtheimmediateincome,planasifyouwillnotgoon sick pay but will go directly onto disability. COBRA coverages plus thedisabilityextensionextendyourgrouphealthcoverage for twenty-ninemonthsuntil the startofMedicare. Ifyoustartdisabilitywith sickpay, therecanbeagap in health coverage equal to the period you are on sick pay. Also, lesserpayments for sick pay may become the base for disability income payments

insteadofyourfullsalary.

Chapter10

ApplyingforSocialSecurity:TheProcess

Desiretohavethingsdonequicklypreventstheirbeingdonethoroughly.

—Confucius

Only about one-third of applicants for Social Security Disability income arefoundeligibleonfirstsubmissionoftheirapplication.Thischapterprovidesthenecessarybackgroundtoincreaseyourchancesofdoingitrightthefirsttime.

Keepinmindthatfromthepointofviewofemployers, insurers,andSSA,disability is not something that you choose to do. You either are or are notdisabled(i.e.,unabletodoanykindofworkforwhichyouaresuitedforatleastayearoruntildeath).Donotdiscussdisabilityasifitwereachoice.

The following discussion is specifically about filing a Social SecurityDisabilityclaim.However, theprocess is the same foreach situation inwhichyouhavetoprovedisability.Ifyouarefilingaclaimforanyotherreason, theprocedureismuchsimpler.

Section1.BeforeYouBegin

DeterminingwhetheryouaredisabledundertheSocialSecuritylawstartswithadetermination of whether you are insured or have recently worked. Thosedeterminations are straightforward matters of mathematics. However, whetheryou are sufficiently disabled within the meaning of the law is subject tointerpretation.

Unless it is obvious that you are disabled, you should seek advice andassistance from your GuardianOrg or an attorney before you seek SocialSecuritybenefits.YourGuardianOrgmayhaveadvicetailoredtoyoursituation

based on information about others with your illness who have sought SocialSecurityinyourarea.Therulesandregulationsarenational,buteachofficehasitsownwayofdoingthings.YourGuardianOrgcanprobablyprovideareferraltoabenefitsspecialistorlawyerwhocanprovideassistanceshouldyouneedit.

Section2.ACaseStudy

Experience has shown that it is not just the reality of your condition thatdetermineswhetheryouareapprovedfordisability,buthowthirdpartiessuchasthepersonnelatSSA interpret the facts.Forexample,onLewisL.’sdisabilityreport he stated he had AIDS. He described his job as physically taxing. Hestated that hewas in charge of the local office for his national firmwhere hesupervisedfortyemployeesandwasresponsibleforlocatingandkeepingclients.Hestatedthathehadtoworklonghours,sixdaysaweek,andhadtobeonhisfeet most of the time. In answer to every question, he repeated hisresponsibilities and that the illness caused “fevers, fatigue, body aches, andfungal infections” thatmade it“impossible towork.”He indicated thathewasalreadyapprovedfordisabilitybythefirm’sgroupdisabilitycarrier.

Lewisnotedthathisdoctorsuggestedhereducestressand“takecareofmyhealth.”Hementionedthathedoes“shopping…ondaysIhavethestrengthtodoso[and]itemsaredeliveredtoreducestress.Mywife,whoworks,cleans.IdosomewhenIhavetheenergy.”Answeringquestionsabouthobbieshestated,“IpaintathomeandtakewalkswhenIhavetheenergy.”Elsewherehestated,“Ihave frequent visits from friends and relatives when I am feeling able.” Nosupportingdocumentationwasrequested,andnonewasattached.

Lewis sounds like a person who is “disabled,” but the SSA didn’t agree.From their point of view, the answerswere too generalized. They could haveappliedtomanypeoplewiththeconditionwhocontinuetowork.

An attorney specializing in helping peoplewith life-challenging conditionsrewroteLewis’s“RequestforReconsideration.”HewasmorespecificandtiedtheconditionstotherequirementsofthejobthatLewiscouldnolongerfulfill.Thenewformstated thatsinceLewishadfiledhisclaim,“hissymptomshave

continuedorintensified.Fatiguerestrictshimtobedanaverageofonedayperweekonwhichdaysheoftencannotmaintainbasicpersonalgrooming.Onotherdayshe requires frequent restandnaps.Severediarrhea2 to3daysperweek,regular chronic gastric bloating and pain, and occasional constipation greatlyimpairhisabilitytofunction;sporadicsleepatnightfurtherreduceshisenergy,as do2–3daybouts of low-grade fever (100–100.5degrees), accompaniedbynight sweats every other week. Furthermore, fungal infections in his feet andpain in his left quadriceps make standing or walking for prolonged periodsimpossible.…Theseverediarrheaandgastricpainheexperiencedatthetimeofhis claim continues to circumscribe the amount of time he can be away fromhome.Thepaininhisfeetandleftlegcontinuetomakestandingorwalkingforprolongedperiodsimpossible.Certainly,standingorwalkingforeventwohoursoutofthedayisbeyondhiscapacity.…Hecandobasicfoodshoppingondayshe feels well.… Aside from making his bed, his wife performs all otherhouseholdtasks.…”

The request for reconsideration was accompanied by a letter signed byLewis’s wife repeating this information and stating specifics of more thingsLewis could not do in his personal and social life. It was stated that Lewis’ssocial life was practically nonexistent due to his condition. This time around,LewisreceivedhisSSD.

Learn from the case study. While describing your symptoms, state themgraphically and indetail so any reader canunderstandwhyyou areunable toworkdue toyourmedicalor emotional condition.Although it isnotgenerallythecasewithSSApersonnel,assumeforpurposesofcompletingtheformsthatthereviewerisbiasedagainstawardingadisability.Stateyourcaseasstronglyas possible, but don’t be overly optimistic or unrealistic about your work orpersonalcareabilities.Don’tleaveoutanydetails,nomatterhowembarrassingyoumayfindthemtobe,orhowdistastefulyouthinkthereviewerwillfindthesubject.

Tip.AsLewisfoundoutthehardwaywhentheSSAcalledtocheckonsomeof

hisanswers,it’sagoodideaduringthetimeSSAisconsideringyourrequesttokeepasetofyourpapersnearyourphoneincaseSSAcalls.Besuretorepeatthe key phrases that indicate why you can’t work. Don’t volunteer additionalinformation.Anddon’t talk as if youhave a choice about goingondisability.Whenindoubt,hireaprofessionaltohelp,oratleastcontactthesocialworkersatyourGuardianOrg.

Section3.PreparingthePaperwork

KeepingLewis’sexperienceinmind,takethefollowingstepsinpreparationforfilingyourclaim:

•ObtaintheappropriateprocedureandformsfromtheSocialSecurityAdministration(SSA).•IdentifysomeoneexperiencedwithyourtypeofillnessandwithyourlocalSocialSecurityofficetoprovideyouwithadviceandassistanceshouldyouneedit.Itisbesttofindsomeonewhohasworkedwithseveralotherswithyourconditionwhohavesuccessfullyobtainedbenefits.

•DecidewhatdateyouwilluseinanswertotheSSAquestion“Whendidyourconditionfinallymakeyoustopworking?”Thedateiscriticalfor thecommencementofSSI, thewaitingperiodforSSD,MedicaidandMedicare,andeventhecontinuationofyourhealthinsuranceunderyourCOBRAcoverage.KeepinmindthatSSDwaitingperiodsstarton the firstdayofamonth,sounlessyouapplyonthefirstdayofamonth,thefive-monthwaitingperiodwillnotstartrunninguntilthefirstdayofthesucceedingmonth. SinceSocialSecuritywillpaySSDretroactivelyforamaximumoftwelvemonths,youcanand should backdate the onset of disability as far into the past as your medical records willsubstantiate.Onsetdatescanbebackdatedtocoverperiodswhenyoucollectedunemployment,statedisabilityincome,whenyouwerenotworking,orevenoverperiods(generallyuptothreemonths)whenyouwereworking,aslongasyouwereoutsickmorethanyouwereatwork.YoucanalsobackdatedisabilityoverwhatSocialSecuritycalls“closed”periodsofdisability.Forexample, ifyou leftwork forayearbecauseofacondition, then returned towork for twomonths,thenleftpermanently,SSAmayacceptthatyearasa“closed”periodofdisabilityandsettheonsetdateatthestartofthatyear.

•Besureyourjournalisup-to-date(chapter9,section1),andthatitincludeshowyourconditionaffectsyour jobperformance.Thisrecordcanbe important,particularly ifyourclaimisdeniedandyouhavetoappeal.SocialSecuritywillaskforacopyofthejournalifyouhaveone.

• When you apply for SSD, SSA will automatically request information to determine youreligibilityforSSI.Thisisdonesothatyouwillreceivethebenefit(aswellasMedicaidcoverage)assoonasyouaredeterminedeligible.IfitiscleartoyouthatyouarenoteligibleforSSIbasedonyourassetsand/or income,youcan informtheSocialSecurityclaimrepresentative thatyouarenotinterestedinpursuingSSI.IfyouarepursuingSSI,seebelowforadditionalinformation

youwillneedtogather.• As illustrated in the case study above, one of the main areas about which SSA requestsinformation concerns how your illness interferes with your ability to work. Thus, in yourapplication,keepinginmindLewis’sexperience,describethedutiesofyourjobandfocusonthespecificsofhowyourillnessmakesitimpossibleforyoutodoyourjobratherthanhowyourjobisinterferingwithyourhealth.•Tohelpidentifyyoursymptoms,thinkaboutyourworstdays.•Tohelpyoufocusonhowyourhealthhasinterferedwithyourjob,comparehowyoudoyourjobnowtohowyoudidittwoyearsagoorevenoneyearago.Alsolookathowyourjobdutiesmayhavechangedsincetheearlierdate.

•SocialSecuritywillaskforinformationaboutchangesinyourabilitytofunctionineverydaylife including personal care, cooking, housekeeping, bill paying, ability to do errands,recreationalactivity,physicalmobility,andabilitytousetransportation.Asyoudidwithyourjob,focusonthespecificsofhowyourillnessinterfereswiththeseactivities.Comparetodaytotwoyearsagoandthinkofyourworstdays.

•Itwouldbehelpfultoobtainlettersfromfriends,family,neighbors,and/orformeremployersabout your functional limitations. They should include how your symptoms keep you fromperformingnormaldailyactivities,includinghouseholdchores,yournormalsocialfunctioning,orcontributetolossofmemoryorconcentration.

•Beginassemblingtheinformationdescribedinsection4.3below.

Tip. Always use your ownwords when completing SSA forms. Analysts aresuspiciousofcannedanswers.

Qualifying for SSI. If you may qualify for SSI, in addition to the aboveinformation,youwillalsoneedtoassembleinformationrelatingtoyourincomeandresourcesincludingbankrecords,taxrecords,W-2s,insurancepolicies,carregistration,andifyouaremarried,informationaboutyourspouse’sincomeandresources

Youwill also be asked about your living arrangements since youmust bepayingyour“fairshare”ofrent, food,andutilities. Ifyourentaroom,a letterfromyour landlordshouldbesufficient. Ifyouhaveone,makeacopyofyourleaseorproofofownershipsuchasevidenceofamortgage. If someonegivesyoumoneyforyourexpenses,orifyouarelivingrent-free,areasonableamountmaybedeductedfromyourbenefit.However,ifsomeoneloansyoumoneyforrentandthe like, itwillnotcountagainstyou(althoughyoumaybeaskedforsigned loan statements indicatingyoumustpayback themoney).Government

andnonprofitassistanceforrentorfoodarenotcountedagainstyou.It isalsoagoodideatoresearchthecriteriainyourstateforqualifyingfor

SSI.Ifyouareovertheincomeorassetlimitbyevenasmallamount,youwillprobably be disqualified. It’s better to know the criteria up front and planaccordingly.

Presumptive disability for SSI. If you fit the criteria for “presumptive”disability,youmaybeawardedSSIimmediately.SSApublishesguideswrittenfor laymendefiningpresumptive disability for several conditions, aswell as aguide geared toward medical professionals known as “Disability EvaluationUnder Social Security.” SSA uses these guides to determine “presumptive”disabilitybenefits. If youdonot fit thepresumptivedescription, youmay stillqualifyifanimpairmentoracombinationofimpairmentsisatleastassevereasthosedescribed.Ifitisfinallydeterminedthatyouarenotdisabled,youwillnotberequiredtorefundthepayments.

YoucanstillreceiveSSDevenifyourdisabilitydoesnotqualifyunderthecriteriaofapresumptivedisability.

Section4.StartingtheProcess

Fileyour request forSocialSecuritybenefitsat anySSAoffice in thecountryimmediatelyuponbecomingdisabledand leavingwork.Whendecidingwhichfilingofficetouse,consider

•convenience,sincetheprocesswillprobablytakeseveralmonthsandyoumaywanttostopintheofficeasnecessary.

•ifitisnotclearthatyouaredisabled,whethertheofficehandlessituationssimilartoyoursanddoessofavorably.

4.1In-PersonorTelephoneInterview

The request forbenefits startsbymakinganappointmentwithSSAbycalling800-772-1212,7A.M.to7P.M.,M–F.SocialSecuritywillsendyouformstobe

completedpriortoyourappointmentifyoudon’talreadyhavethem.You can choose a telephone interview (so you can do everything by

telephoneandmail)oran in-person interviewata localSSAoffice.Doing theinterview in person means that you will not have to send vital documentsthrough themail. Italsomeans that ifyoumakeamistake,youhaveapersonsitting in front of you who can help correct it. If you schedule a telephoneinterview,youcanprovidetheinformationfromthecomfortofyourhome,butthenyoudon’thavetheoptionofcorrectingmailed-inmistakes,whichbecomepart of your permanent record.Many advocates advise that it’s best to do theinterview

•inperson;•inthemiddleoftheweek;and•inthemiddleofthemonth.

Ifyouareeligibleforadeterminationof“presumptivedisability”underSSIor an SSI emergency payment, do an in-person interview. Be sure to requestthosebenefitsduringyourinterviewratherthanrelyingontheSSAemployeetobringthemup.Iftheclaimsrepresentativedoesnotfileforpresumptive,andifthe claim leaves the office and goes to a disability analyst, then the SocialSecurity office may have to defer to the analyst for a presumptive decision,whichaddsweekstotheprocess.

Askfora“receiptofclaim”whenyou initiallysubmityourpapers.This isproofthatyouapplied.

Tip.AlwaysbepreparedforalongwaitattheSocialSecurityoffice.

4.2ARepresentative

IfyoucannotphysicallygototheSSAofficeordonotwantto,youcanaskafriend or familymember to handle your Social Security business for you.Alltheyneed is yourwritten consent on theSSA formused for appointment of arepresentative.Ifthepersonisalsotoreceivebenefitsforyou,thepersonmust

registerwithSSAandbequalifiedasarepresentativepayee.Apersonwithyourpowerofattorneydoesnotautomaticallyqualifyasarepresentativepayee.

4.3Documentation

Whether you apply over the telephone or in person at your local SSA office,there will not be a review until all the required documentation is supplied toSSA. Since the burden is on you to prove your disability, it is important tocompiletheinformationdescribedbelowtothebestofyourability.

Ifyou’remissingdocumentation,askyourSSArepresentativewhetherthat,inandofitself,isenoughtodisqualifyyoufromadisabilitydetermination.Ifitis,thenfillinthegapbeforeturninginyourapplication(unlessyoubelieveyoucanqualifyforSSI,inwhichcaseyouwanttoturninyourapplicationassoonaspossible because SSI awards never predate the date of the application, whileSSDdatesbacktothebeginningofthedisability).

Tip. The key to a successful SSD/SSI claim is well-documented, carefullywritten formsandattachments, allofwhich together showhowand inexactlywhat way a claimant’s condition and symptoms prevent ongoing, sustainedwork.

Social Security Disability Insurance. The following documentation will berequiredtoprocessyourclaimforSSD.Ifyouhaven’talreadydoneso,obtainform7004fromSSAandbesuretocheckitforaccuracy(seechapter3,section3).

Medical.•Letterfromyourdoctorsettingforththefollowinginformation:•Detaileddiagnosisandprognosis—detailsareimportant;makesureallofyoursymptomsareincluded(suchasweightloss,fatigue,headaches,anddepressionaswellasmajorinfectionsordiseases).

•Resultsofsupportingmedicaltestsincludingbiopsies,Xrays,andthelike.• A description, preferably based on the information you have been providing, that statesspecificallyhowyourconditionaffectsyourabilitytoworkandengageinotheractivities.

•Astatementthatyouwillbeunabletoworkforatleastayearduetoyourillness.

Tip.IfyourdoctorisnotfamiliarwithSSArequirements,askSSAforacopyofits current publication describing the information needed fromyour physician,whichyoucangivetoyourdoctor.Checktheletteragainstthesecriteria.Iftheletter isnotadequate,don’thesitate tospeakwith thedoctorandpointout theareas that need improvement. Let her know that you recognize the differencebetween her real optimism about your condition and your needs for SocialSecuritypurposes.

• Copies of medical records relating to your disability. Don’t rely on SSA to obtain thisinformation. Overworked SSA employees can take an endless amount of time to obtaininformation from overworked staffers in your doctor’s office, clinic, or hospital. For absolutesafety,don’t relyon themails:pickupyourmedical recordsbyhand.Besure tomention,andsecure,recordsandreportsaboutcurrentorpastphysicalormentalconditionsthatcouldpossiblyrelatetotheconditionthatpromptsyourdisability.

• Copies of medical records relating to any other ongoing or past condition, physical orpsychological,thataffectsyourabilitytofunction.

Workrelated.•Letter fromyour employer setting forthwhenyou stoppedbeingaproductive employee (eventhough the employermayhave left youon thepayroll for other reasons, such as compassion).Thisdateshouldcoincidewithyourdoctor’sstatementrelatingtotheonsetofthedisability.

•Asummaryofwhereyouworkedinthepastfifteenyearsandthekindofworkyoudid.•Allpaystubsfromthecurrentyear(toproveyourearningstodateforthecurrentyear).•W-2statements(orifyouwereself-employed,yourfederaltaxreturnforthelasttwoyears).

Other.•Yourjournal.•Birthcertificate(originalorstate-certifiedcopyonly).Ifyoucan’tfindit,contactthehospitalinwhichyouwereborn.Ifthatdoesn’twork,trythecitygovernmentorasalastresortthestate’sdepartmentofhealth.

•Greencard,passport,immigration/naturalizationpapers.•Copyofdriver’slicenseorotheridentificationwithpicture.•AcopyofyourSocialSecuritycardoratleastyourSocialSecuritynumber.• Documentation relating to any other government programs for which you may be receivingbenefits.

SupplementalSecurityIncome.IfyouareapplyingforSSI,prepareallofthedocumentation requested for SSD. In addition, compile the documentationdescribedhere,undertheheading“QualifyingforSSI.”

Section5.DeterminationofDisability

OnceSSAdeterminesyour file is completeand thatyousatisfy thecredit andwork criteria, your file is then sent to a state agency known as DisabilityDetermination Services (DDS), which is responsible for the initial disabilitydetermination.Thedeterminationismadebyatwo-personteamconsistingofamedicalorpsychologicalconsultantandadisabilityexaminer.

If DDS determines that you are disabled for purposes of Social Security,SSAthenlookstoseeifyouareotherwiseeligibleforSSIand/orSSD.Iftheyagree, and you are eligible for SSI, your monthly benefits and Medicaidcoveragewillstartimmediately,withthefirstcheckcoveringfundsbacktothedateoftheapplication.Youwillalsobeeligibletoapplyforfoodstamps.Attheend of the sixth fullmonth from the date determined to be the onset of yourdisability (i.e., inmonth seven), anSSDpaymentwill bemade toyou for thesixth month only. Keep in mind that with SSD, there is no payment for thewaitingperiodof thefirstfivefullmonthsafter theonsetofdisabilityandthatchecksarethenwrittenattheendofamonthinwhichyouaredisabled—notthebeginning.

Tip.Whenyoufileyourclaim,TomMcCormack,authorofTheAIDSBenefitsHandbook,suggests,“AsktheSSAclaimsrepresentativeforthename,address,andtelephonenumberoftheDDSworkerorbranchtowhichtheclaimwillbesent for review.…After adecent interval, call theDDSworkerorbranchandinquire what additional information, records, files, or statements you mightsubmittoassistinprocessingyourcase.”

Tomalsoadvises, “Nevermailyouronlycopy of anydocument, report,orformandalways[ifpossible]hand-deliversubmissionstoSSAortheDDS.”

Tip. During the period from submission of your disability claim until it isapproved,medicalfilesfromnewdoctor’svisitsshouldbesentastheyoccurtoSSAortheDDSanalystasthecasemaybe.

Ifyouaresentto“consultative”exams,asktheanalystifreportsfromyourowndoctorwouldbesatisfactoryinstead.

If yourhealth insurance is still on aCOBRAeighteen-month continuation,remember to send a copy of yourAward letter to yourCOBRAadministratorwithinsixtydaysofreceivingittoqualifyfortheeleven-monthcontinuation.

Tip. If you’re not satisfiedwith theway thatSocialSecurity is handlingyoursituation, call one of the following: your state or local office on aging; theNationalCommittee toPreserveSocialSecurityandMedicare(800-966-1935),anadvocacygroup;or theofficeofyourU.S. senatoror representative.Everymember of Congress has a caseworker whose sole job is to help constituentswhoarehavingproblemswithSocialSecurityorotherfederalprograms.

Section6.IfSocialSecurityDeniesYourClaim

IfSSAdeniesyourapplication,youhavetherighttoappealthedecision.Whiletheappealisongoing,whichcantakefromseveralmonthstoayear,thereisnoautomatic right to Medicaid or any other benefits that would accompany afindingofdisability.Evenworse,anypresumptivebenefitsyoumayhavebeenreceivingwouldstop.

It is preferable to appeal rather than withdraw your application and startagain.WhileanyeventualawardofSSDwilldatebacktothecommencementofthedisability,whether theaward is throughanappealoranewapplication,anawardofSSIcanonlyrefertothedateofthefilingoftheapplication.

If your application is turned down, ask SSA for the current form thatdescribestheappealprocessaswellasthedatesbywhichappealsmustbefiled.In general, appeal rights must be exercised within sixty days of any adversedecision. Follow the dates precisely or youmay inadvertenly lose the right toappealandwillhavetostartalloveragain.Theappealprocessconsistsoffour

stagesofreview.

1. Reconsideration: A DDS reconsideration of disability determination ismade by a different team in the DDS from the one that handled the caseoriginally.DDSagencies seldom reverse themselves, but you should still treatthisappealseriouslyandrequestareconsiderationassoonasyourapplicationisturneddown.TheDDSreconsiderationbecomespartoftherecordthatispassedontothenextappeallevel.

2.Administrativehearing:Thenextlevelofappealisahearingbeforeanadministrative law judge who works in the SSA’s Office of Hearings andAppeals. Practically speaking, this is themost important level of appeal. Thejudgeactsasajudge,jury,andinasense,thelawyerfortheSSA,sinceitisthejudgewhowillask thequestions (inaddition toyourown lawyer, ifyouhaveone). If you have not done so before, consider submitting affidavits fromprofessionals,friends,andneighborsaboutyourdisability.Also,considerhiringanattorneytohelpyou.YouhavearighttoreviewandcopytheSSAfilepriorto the hearing. Consider submitting a prehearing memorandum outlining theevidenceandidentifyingtheissuesforthehearing.

3. Appeals council: Makes a decision based on the record, with no oralargument.Appealsarenotusuallysuccessfulatthislevel.

4.Federalcourt:Thejudgesdonotrevisitthequestionofwhetheryouaredisabled, but only questionwhether the SSA followed its own rules and gaveyou appropriate “due process,” or whether there are any constitutional issues.Thisvenueisoflittlevaluebecauseofthelimitednatureofthereview.

UnderthePrivacyAct,youmayasktoseealltheevidenceusedtoevaluateyourapplicationfordisabilitybenefits.

Tip.Duringtheappealprocess,makesureyourmedicalrecordsarecontinuallyupdatedandthatanychangesinyourcondition,includingnewfacts,arebroughttotheattentionoftheappealingbody.

Tip. If, as part of the appeal process, you are required to submit to anexaminationbyaconsultingphysician,reviewyournotesand/ormedicalfilesoyouwillbeabletodiscussallyoursymptoms.

Section7.HiringanAttorney

If you follow the suggestions contained in this book, you should not need thehelpofalawyertofileforSocialSecuritybenefits.However,itisagoodideatohaveanexpertatyourGuardianOrg,yoursocialworker,orotherknowledgeablepersonatleastreviewyourapplicationbeforesubmittingit.

If you don’t have an attorney by the time you have to appeal, you shouldconsiderhiringone tohelpwith theprocess.Asidefromreducingthestressofthesituationbyhavinganexperiencedrepresentativeworkingonyourcase,youwill receivehelp in framingyourcase inaway thatenhancesyourchance forsuccess. Firms that specialize in these matters work for a percentage of theamount you receive fromSSA for retroactive benefits—from the date you aredeterminedtohavebeendisabledtothedateofthedetermination.Thestandardfeeis25percentoftheamountawardedyou.ArepresentativecannotchargeafeewithoutfirstgettingwrittenapprovalfromSSA.

If your GuardianOrg, your friends, support group, local bar association,and/or legal aid program cannot recommend an attorney, contact theNationalOrganizationofSocialSecurityClaimants’Representativesat800-431-2804forsuggestions.Seechapter36,section3,forhowtochooseanattorney.

PartIV

ProtectionAgainstIncreasedExpenses

Chapter15

Medicare,Medicaid,andOtherGovernmentPrograms

Theoneadvantageofbeingbroke is Ican letUncleSamcovermymedicalexpenses.NobodycaredwhenIwasmakingmy$25,000ayear.

—JerryR.

Whilewedonothavehealthcareforeveryone,youmaybeeligibleforoneofthe health coverage programs provided by our federal and state governments.Medicare and Medicaid are the largest and best-known programs. There aresimilar programs for government employees and veterans, and other stateprograms.

Section1.Medicare

Medicareisafederalhealthinsuranceprogram.Medicarepremiumsarepaidbythe taxes on your salary or on self-employment income. Like any healthinsuranceplan,yourother incomeisnot relevant (i.e.,Medicare isnot“meansbased”). Unlike most private health plans,Medicare does not have a lifetimemaximum.

1.1Eligibility

Medicare is not available merely because you paid premiums (taxes). To beeligibletoreceiveMedicarebenefits

•taxes(premiums)mustbepaidforaminimumnumberofquarters—thesamenumberofquartersasarenecessarytoqualifyforSocialSecurityDisabilityInsurance(seechapter8,section8.1)—and

•youmusthavebeenreceivingSSDfortwenty-fourmonthsbecauseyouaredisabledor•youareagesixty-fiveorolderandreceivingSocialSecurityretirementbenefitsor

•youareblindandaSocialSecurityrecipientor•yousufferfromkidneyfailureandareaSocialSecurityrecipientor•youareatleasttwenty-twoyearsofage,yourdisabilitystartedbeforeageeighteen,andyouhaveadisabled,elderly,ordeadparentwhoreceivesorwouldhavequalifiedforSSDor

•youareawidoworwidowerat least fiftyyearsofage,withoutenoughquarters toqualify forSSDonyourown,whowasmarriedforaminimumoftenyearstoadeceasedworkerwhowouldhavequalifiedforSSD.

Applicants for benefits who are over sixty-five years of agemay purchaseMedicarecoverage if theydonothave sufficientquarters toqualify forSocialSecuritybenefits.

EligibilityforMedicarecancontinueforalifetime,nomatterhowmuchyouearnorforhowlongyou’vereturnedtowork,providedyoucontinuetohavetheconditionthatactedastheentrypointforMedicareeligibility.

1.2Benefits

Medicareisdividedintotwoparts,PartAandPartB.Part A is hospital insurance. In general, it covers inpatient hospital care,

skilled nursing facilities, physician-prescribedhomehealth visits by nurses, orphysicalandoccupationaltherapistsworkingforalicensedagency.PartAevencovershospicecare.Theinsuredmustpayvaryingdeductiblesandcoinsuranceamounts.

Part A is paid for through your payroll taxes, so you don’t have to keeppayingforitwhenyoustartreceivingbenefits.

PartBismedicalinsurance.Ingeneral,PartBpaysforvisitstophysicians,outpatient hospital services, and somemedical supplies and equipment. If youwantPartB,youmustpayforit,evenafteryoustartreceivingbenefits.

MedicarePartA.Coverageisdescribedinthecharthere.

MedicarePartB—medicalinsurance.Onceyoupayadeductibleof$100percalendaryear,MedicarePartBpays80percentofthecostofapprovedservicesincluding

• physician’s and surgeon’s services, whether furnished in a hospital, clinic, office, home, orelsewhere.

•emergencyroom.•outpatienthospitaldiagnosticservices.•diagnostictestsincludingXrays.• outpatient physical therapy and speech-language pathology services furnished by participatinghospitals, skilled nursing facilities, home health agencies, and therapy clinics, or by othercompaniesthatcontractwithandaresupervisedbyparticipatingentities.

• outpatient physical therapy and occupational therapy services furnished by a licensed,independently practicing physical or occupational therapist in the therapist’s office or in thepatient’shome(nottoexceed$900inacalendaryear).

•prostheticdevicesincludingbreastprosthesesandsurgicalbrassieres.•homedialysissuppliesandequipment.•chiropractor’streatments.•podiatrist’sservices.•certainambulanceservices.•oralcancerdrugsiftheyarethesamechemicalentityasthosedrugsadministeredintravenouslyandcertainothercancerdrugs.

•outpatientpsychiatricservices,butthecopaymentis50percentratherthan20percentandthereisayearlylimitof$1,000.

•homehealthcarevisits,whichyouwouldexpecttofindinPartB,arecoveredbyPartA.MedicarePartBdoesnotcover

• outpatient drugs. It will, however, cover many outpatient infusion drugs and IV nutritionalsupplementswhenadministeredbylicensedhomehealthpersonnel.Itmayalsocoversomeoraldrugsthataretheequivalentofinfusiontherapies.

•dentaloreyecare.•hearingaids.•routinephysicalexaminations.

Physicians’bills.Howmuch thedoctormaychargeMedicare,andhowmuchhe can also charge you, and whether payments for your deductible andcopayments go to the doctor or to Medicare are determined by whether thedoctorisa“participating”ora“nonparticipating”doctor.

AparticipatingdoctoracceptstheMedicareapprovedrateasfullpaymentforallservicesheprovidestopatientswithMedicare,includingyou.Thedoctorsubmits the bill directly toMedicare.Medicare pays the bill in full.Medicarethenbillsyouforanydeductibleandcopaymentthatyoumayowe.

AnonparticipatingdoctormaychargemorethanMedicareallows,butonlyto a maximum of 115% of the Medicare-approved rate. A nonparticipatingdoctor sends the bill directly to you. You have to pay it and then seekreimbursementfromMedicare.Medicarewillonlyreimburseyoufor theshareMedicareistopay.Youwillbeoutofpocketforanydeductibleandcopaymentplus theextrapercentageover theMedicare-approvedrate.Forexample, if thedoctorusuallycharges$150foraparticularservice,andMedicareonlypays$90forthatservice,themaximumthedoctormaychargeis$103.50(115percentof

$90).Youwillberequiredtopaythedeductibleof$18(20percentof$90),plusthedifferencebetween$90and$103.50or$13.50—foratotalof$31.50($18+$13.50). In some states, the permissible extra charge is less than 15 percent.Doctors can be fined for chargingmore than these limits. Some surgeries areexemptfromthelimit.

If your doctor is nonparticipating, but accepts assignment for servicesrendered to you, the procedure and rules apply as if he were a participatingdoctor.

Tip.Ifyourdoctordoesnotacceptassignment,toavoidpayingthedoctormorethanisallowable,sendthebillon toMedicare,butdonotpay thedoctoruntilyou receive money and an Explanation of Benefits from Medicare or yourinsurancecompanyifyouhavehealthinsuranceinadditiontoMedicare.

Voluntarywaiver.Undera lawpassed in1997,adoctormayaskapatient tovoluntarilywaiveMedicare.Ifthepatientagrees,thedoctorcanchargeanyratethatisnegotiatedbetweenthedoctorandthepatient.Toassurethatdoctorsdonot take unfair advantage of patients, if the doctor negotiates a higher fee foreven a single service to a single patient, the law requires that the doctordiscontinuereceivingMedicarereimbursementforanyservicetoallpatientsforaperiodoftwoyears.

Outpatient services. Under Part B, outpatient services at a hospital are notsubjecttoanyMedicare-approvedrate.Youmayberequiredtopay20percentof an outrageous sum. It is advisable to determine the cost before agreeing tooutpatientprocedures.

Tip. To determine whether you are being billed correctly when you receiveMedicaretreatments,keeparecordofallyourmedicalvisitsandanyproceduresthatweredone.Thiswill alsoprovidea record incaseyouhave toappeal formoremoneydueyou.Ofcourse,revieweverybillforerrors.

Tip.Medicare provides to allMedicare recipients a directory of participatingdoctors. Even if your doctor is not a participating doctor, he might acceptassignmentofMedicarefortheservicesrenderedtoyouifyouask.

Ifyoualsohaveprivateinsurance.Therearenolimitsontheamountoffeesyourdoctorcanbillyourprivateinsurancecompany.Whether,andhowmuch,theinsurancecompanywillorwillnotpayisaddressedinsection1.5below.

If you have a complaint about charges, call theDepartment ofHealth andHumanServiceshotlineat800-447-8477.

Travel.Generally,MedicaredoesnotpayforcareoutsideoftheUnitedStates.However,

•ifyouliveintheUnitedStatesandneedmedicalcareandaCanadianorMexicanhospitalwhereyoucouldgettreatmentismuchcloserthanthenearestU.S.hospital,youcangotoahospitalinMexicoorCanada.

•ifyouaretravelinginCanadaorcomingfromAlaskatooneoftheotherstates,youcanreceiveemergencycareataCanadianhospital.

Veterans.VeteranscangetbothMedicareandveterans’benefits.Medicarewillnot pay for services veterans receive from VA facilities except for certainemergency hospital services or if the VA pays for VA-authorized servicesreceivedinanon-VAhospitalorfromanon-VAphysician.

Appeals. Medicare has an administrative appeals system if a claim isinappropriately denied. If you go to a participating doctor or to anonparticipating doctor who accepts assignment, the doctor will handle theappeal. Otherwise,Medicare’s notice of denial should include instructions onhowtoaskforareview.Ifyou’redissatisfiedwiththeresultsofthereview,andthe amount in dispute is at least $100, you can request a hearing before aMedicare insurance-carrier hearing office. If you are still dissatisfiedwith theoutcomeafter thehearing, and theamount indispute is at least$500,youcanrequestahearingbeforeanadministrativelawjudge.

IfyouareamemberofMedicare+Choice (seebelow), the informationyou

receivefromthecompanyshouldalsoincludedetailsoftheappealsprocess.Note: If you are in the hospital and a decision would force you to leave,

whether you are inMedicare orMedicare+Choice, youmay be entitled to anexpeditedreview.

Abuses. The Department of Health and Human Services runs the InspectorGeneral Hotline (800-772-1213) to answer complaints concerning fraud,overcharging,orotherabusesrelatingtoMedicareorMedicaid.

1.3MediGap

Thecoinsurancepayments(your20percentshare),prescriptioncosts,andothercosts not covered byMedicare can become quite expensive for peoplewith aserious condition. Insurance policies known as MediGap policies cover thesegaps.MediGappoliciescomeintenstandardizedcategories,whicharetitledAthrough J. “A” MediGap policies have the least coverage, and “J” MediGappolicieshavethemost,includinglimitedprescriptiondrugs.

Ifyouareyoungerthansixty-five.Inmoststates,insurersarenotrequiredto,anddonot, provideMediGappolicies toMedicare recipientsunder the ageofsixty-fivewhoqualifyforMedicarebecauseofadisability.Afewstatesrequirea limited MediGap open-enrollment period for Medicare beneficiaries undersixty-five,anda fewstatesofferMediGap through theirhealth insurancepool.It’sworth a call to your state’sDepartment of Insurance to findout about theavailabilityofMediGappoliciestodisabledMedicarerecipientsunderagesixty-five.Alsoaskaboutstate-sponsoredhealthinsurance.Some,butnotall,oftheseplansareopentodisabledMedicarepatients.

Tip. Some employers will continue to provide some kind of medical benefitevenafteradisabledemployeequalifiesforMedicare.Checkyourbenefits.

Ifyouaresixty-fiveorolder.Foraperiodofsixmonthsfromthedateyouarefirst enrolled inMedicarePartBandare age sixty-fiveorolder, youhave the

right to purchaseMediGap insurance.You cannot be turned down or chargedhigher premiums because of your health if you purchase a policy during thisperiod.

If you have Medicare Part B but are not yet sixty-five, your six-monthMediGap open-enrollment period begins when you turn sixty-five. Apreexisting-conditionexclusionispermittedforuptosixmonths.If,duringopenenrollment, you change coverage from private insurance toMediGapwith nogap,thepriorcoveragecountsagainstthesix-monthMediGapexclusion.

If youneed assistance in findingor decipheringMediGappolicies, contactyourlocalSocialSecurityofficeorcalltheMedicarehotlineat800-638-6833.

1.4Medicare+Choice

Medicare+Choice provides another alternative for eliminating the deductible,copayment, and other gaps in Medicare—and possibly even for increasingcoverage.

Medicare+Choice provides private-sector alternatives to traditionalMedicare.SinceitispartoftheMedicaresystem,theeligibilityrequirementsarethesame.

Medicare+Choice plans must cover people with a disability the same aspeoplewhoqualifybecauseofage(withtheexceptionthattheydonothavetoacceptkidneypatientsorpeoplealreadyinhospicecare).Theyarepermittedtolimit coverage to a lowoptionplan, a plan thatmust at least equalMedicarebenefits without deductibles or copayments. Emergency services must beavailabletwenty-fourhoursaday.

AnamountequaltotheMedicarePartApremiumispaidbyMedicaretotheMedicare+Choicecompany.ParticipantsinMedicare+Choicecontinuetopayanamount equal to Part B premiums. The private insurance companies offeringMedicare+Choice coverage can charge premiums in excess of the Part A andPart B premiums, but cannot charge a higher fee or impose a differentpreexisting-conditionclauseorwaitingperiodsolelyduetoadisability.

YoucanterminateyourparticipationinaMedicare+Choiceplanandreturn

totraditionalMedicareatanytimeeffectivethefirstdayofthemonthafterthemonthinwhichyounotifyMedicare+Choiceofyourintenttoleave.

Medicare+Choice includes all the types of managed care organizationsdescribedinchapter14,section3.1,medicalsavingsaccounts(MSA)describedin chapter 18, section 2.4, and traditional indemnity-type health insurancepoliciesdescribedinchapter14,section2.

Managedcare.Managedcarecompaniesarerequiredtoofferabenefitpackagethat includes whatMedicare itself would cover. In addition, plans can (butdon’thaveto)offer

•coverageofalloralmostallof theMedicaredeductiblesandcoinsurancesituations thatwouldotherwisebecoveredbyMediGap.

• services that aren’t even usually found inMediGap coverages, such as outpatient prescriptiondrugs; preventive dental; hearing and eye tests; durable medical equipment; hospital, home-health, skilled-nursing, andhospicedaysover theMedicare limits.Theycanalsoofferheavilydiscounteddental andvision services.Readplanmaterials carefully to be sure youunderstandthese“extras”andanylimitationsonthem.

WhileitwouldappearonthesurfacethataMedicare+Choicemanagedcareplan that eliminates deductibles and extends coverage to such items asprescriptions would always be better than traditional Medicare, consider theissuesdiscussed inchapter14,section3, relating tomanagedcarecoverage ingeneral.Alsolookatwhetherthereareanyannualorlifetimelimitsintheplan.

In addition to the quality and accessibility of the specialists in yourcondition,lookatwhethertheMCOisariskcontractorcostcontract,whichrefers to how the government pays the plan. The type of contract determineshow,what,andwhereyourplancovers.

•Underariskcontract,theMCOispaidafixedfeefromMedicareforallcareprovided.TheMCOpromisestoprovideallmedicallynecessarycoveredservicesforthecapitatedamountMedicarepays.Ifyougooutsidetheplanforanyservices,youhavetopayforthoseservicesyourself.

•Underacostcontract,theMCOispaidaccordingtowhattheplanspendsoneachpatient.Thus,there isno incentive toprovideyouwith inadequatecare. Ifyougooutside theplan,MedicarecoversservicesyoureceivethatarecoveredbyMedicare,subjecttotheregularcopaymentsanddeductibles.

Wherecharged,theextrapremiumsforthesepackageshavegenerallybeenlow(e.g.,$35permonth),withsmallcopaymentssubjecttoayearlymaximum.

Tip.Ifyoutravel,requesta“guestmembership”toaMedicareMCOintheareatowhichyouaretravelingforthemaximumperiodyouexpecttobeinthearea.

Participants in Medicare MCOs have specific rights of appeal. You canrequest an “expedited” review. If you ask for a review by a “peer revieworganization”(PRO)assoonasyourcoverageisdenied,youareentitledtostayinthehospitalatnochargeuntiladecisionismade.IfthereviewisconductedinternallybytheMCO,youcanalsostayinthehospitalduringareview,butyoumayhavetopayfortheextradaysifyoulose.

Medical SavingsAccount (MSA). Under theMSA alternative, each year thegovernmentwillpayintoyouraccountanactuariallydeterminedamountequalto what SSAwould have spent on you during the year. You are expected topurchaseprivatemedicalcoverageandpayfromyourownfundsforanymedicalexpenses up to the deductible. After that, the insurance coverage would takeover.To illustrate, ifSSAgivesyou$5,000 foryourmedical savingsaccount,you buy a policy for a premium of $2,000 to cover all medical expenses inexcessof$10,000.Youthenspendthenext$3,000fromtheaccountformedicalexpenses, then the next $7,000 in expenses from your personal funds. Anymedicalbillsinexcessof$10,000wouldbecoveredbytheinsurancecompany.

Unlike a traditionalMSA, (see chapter 18, section 2.4), anymoney in theMSAnotspentby theendof theyearcanbewithdrawnforyourownuse taxfree. If you die and there is money left in theMSA or that originated in theMSA,itisalsofreeofestatetaxes.

Indemnitycoverages.Sinceasofthiswritingthelawisstillnew(itwaspassedin1997),itisuncertainwhattherequirementswillbewithrespecttoindemnity-typecompanies.Theonlycertaintiesarethattheywillhavetoacceptbothagedand disabled Medicare patients regardless of preexisting conditions and mustoffer,ataminimum,thebasicMedicarebenefitspackage.

Information. Ifyouwant informationonMedicare+Choiceplansinyourarea,

contact your local Social Security office. TheOffice ofManagedCare of theHealthCareFinancingAdministrationpublishes“TheMedicareManagedCareDirectory”free.Call800-638-6833.

1.5TheRelationshipBetweenMedicareandPrivateHealthInsurance

Medicarepermitsyoutoobtainadditionalprivatehealthinsurance.IfyouhaveMedicare and can obtain additional health insurance through an employer orotherwise,youwillreduceoreliminateyourdeductiblesandcopayments.Ifyoucanobtainbothcoverages,Iurgeyoutodoit.

Tip. If Medicare is your primary coverage and you have additional privatehealthinsurance,youmayhaveaccesstoexpertsinyourconditionunwillingtotreatMedicare-onlypatientsduetotheplan’sreimbursementrates.

Tip. You can probably convert continued group coverage to an individualpolicy. If the policy the carrier offers on conversions is too limited, look atpurchasinghealthcoverageonyourown.If thenewcarrierwon’t letyouhavetwo private coverages, in month twenty-eight from the date you went ondisability, don’t pay the premium for your private coverage on time. Yourprivatecoveragestopsifnotpaidontheduedateanddoesnotstartagainuntilthepremiumispaidwithinthegraceperiod.YoucannowcorrectlystatetothenewcarrierthatyoudonothaveinsurancesincetheprivateinsurancedoesnotexistandMedicarehasn’tstarted.Reinstateyourformercoveragebeforetheendofthegraceperiod.

Billing. Medicare has specific rules for whether it or private coverage is theprimarypayerwithrespecttoallservicesandtreatments.Medicareissecondaryfor

•disabledpeoplewithgroupcoveragethroughtheircurrentemploymentorahealthplanbasedoncurrentemploymentofafamilymember if theemployeremploysonehundredormorepeople,or, iffewerthanonehundredemployees,ispartofamulti-employerplaninwhichatleastoneemployerhasonehundredormoreemployees.

• people age sixty-five or overwith coverage through employment or spouse’s employment for

employerswithtwentyormoreemployees.• eighteen months for people with permanent kidney failure and with group health coveragehimselforherselforthroughafamilymember.

• people with work-related illness or injury or if no-fault insurance or liability insurance isavailabletocover.

Asapracticalmatter,thismeansthatifyourdoctor,hospital,orotherserviceproviderdoesnot takeanassignmentofMedicare,youmust send thebillyoureceive to the primary provider first. If the primary provider isMedicare, yousend the bill to theMedicare carrier (the company hired by Medicare toprocessclaims)ontheMedicareclaimformthatthelocalMedicarecarrieruses;the carrier then sendsyou anexplanationofbenefits form (EOB).Then, youtakethatformandmailittoyoursecondarycarrier.Ifyourprivatecoverageisprimary,theprocessworksinreverse—sendthebilltotheprivatecarrierfirst.Ifyou’relucky,anelectronicdatabaseconnectionbetweenthetwocompanieswilleliminatethepaperworkforyouoncethebillissubmittedtotheprimarycarrier.BesuretoshowyourMedicareandotherhealthinsurancecardstoyourdoctor’sofficestaffandtellthemwhichisprimaryandwhichissecondary.

1.6HowtoApplyforMedicare

YouareautomaticallyenrolledforMedicareafterreceivingSSDfortwenty-fourmonths. You will receive a notice in approximately month twenty-eightinformingyou thatMedicare is inplace foryou, includingAandBcoverage.The notice also informs you how much will be deducted from your SSDpaymentsforBcoverage.ItisthenuptoyoutoelecttorefuseBcoverageifyousodesire.

IfyouchoosetorefusePartBcoverage,youmustnotifytheSSAinwriting.ThelettershouldincludeyourSocialSecuritynumber,statethatyouareeligibleforMedicare,andthatyoudonotwantPartBcoverage.

Tip. An election with respect to B coverage is not permanent. You candiscontinueitwheneveryouwant.YoucanrecommenceBcoverageeveryyear(atamuchhigherthannormalrate),butonlyifyousoelectbetweenJanuary1

andMarch 31.Even then coverage does not start until July 1 of the year youenroll.Thereare special enrollmentperiods forPartBcoverage ifyouqualifyforMedicare for reasons other than disability. It is always essential to takeBcoverage.

OtherswhomaybeeligibleforMedicareshouldapplyat their localSocialSecurityoffice.

1.7IfYouNeedAssistancetoPayforMedicarePartBPayments,Fees,andDeductibles

Three federal programs assist low-income Medicare recipients pay Medicarepremiumsand/ordeductiblesandcopayments:QualifiedMedicareBeneficiary(QMB), Specified Low-Income Medicare Beneficiary (SLIMB), andQualifiedWorkingDisabledIndividual(QWDI).

Foreachoftheprograms,“netcountableincome”andassetscannotexceedadefinedlevel,whichisdifferentforindividuals,marriedpeople,andpeoplewithchildren.TheseprogramsdeterminenetcountableincomeinthesamemannerasforeligibilityforSSI(seechapter8,section8.2).Keepinmindthatthismeansyoucanearn(fromajob)slightlymorethantwicethelimitandstillbeeligible.

In calculating income for eligibility purposes, total SSD payments areincludedbeforedeductionfortheMedicarePartBpremium.Inlate1997,thenetcountablemonthlyincomeeligibilitylevelsforafamilyofoneareQMB,$658;SLIMB,$888;andQWDI,$1,315.

Under SLIMB,Medicare premiums are paid for the recipient (deductiblesand copayments are the recipient’s responsibility). As a bonus, the monthlydeduction forMedicare Part B, currently $43.80 permonth, is restored to therecipient’sSSDcheck.

Under QMB, if the Medicare beneficiary’s countable income is less than$658permonth,theMedicarepremiums,thehospitaladmissiondeductible,andthe copayment for doctor visits are paid for by the state. Eligible individualsreceivefullcoverageforjustaboutallmedicalcareexceptprescriptions,dental,and nursing home care. These excepted items are covered by stateMedicaid.

Moststatesdonot,however,coveradultdentalcareintheirMedicaidprograms,eventhoughNewYorkdoes.Ifyoudon’tqualifyforstateMedicaid,seechapter25,section6.8,foradviceonobtainingfreemedicines.

UnderQWDI,onlyMedicarePartApremiumsarepaid.If you are already receiving SSI, apply for these programs at your Social

Security office. Otherwise apply through your local welfare office. For moreinformationabouttheseprogramscontacttheMedicarehotlineat800-638-6833ortheSocialSecurityAdministrationat800-772-1213.

Additional information. If you have questions about Medicare, call theMedicarehotlineat800-638-6833,theHealthCareFinancingAdministrationat202-690-6726,theMedicareRightsCenterhotlineat800-333-4114or212-869-3850,oryourlocaldepartmentofaging.YoucanalsoobtainafreecopyofYourMedicare Handbook by writing the Health Care Financing Administration,Office of Beneficiary Relations N-1005, 7500 Security Boulevard, Baltimore,MD21244-1850.

Therearealsostateprograms topayMedicarepremiums,coinsurance,anddeductibles.

Section2.Medicaid

2.1Eligibility

Medicaid is a “means-based” benefit program that is paid for by the federalgovernment but administrated by the states. Medicaid, which is known inCaliforniaasMediCal,paysthemedicalbillsforpeoplewithalowincomeandfewassetsprovidedtheyfitwithinoneofsixcategories:

•disabled.•blind.•peopleundertheageoftwenty-one.•pregnantwomen.•membersof familiescontainingoneormorechildrenunderageeighteendeprivedof twofullyfunctioningparentsinthehomeduetoabsence,death,medicalincapacity,orrecentlossofajob

(Aid toFamilieswithDependentChildrenorAFDCfamilies).Thiscategorypresentsa secondopportunityforqualificationforMedicaidsincethedisabilitytestforan“incapacitatedparent”isfarmoreliberalthantheSSAstandardsfordisability.

•peopleoveragesixty-five.

Agedanddisabled legalaliens in theUnitedStatesasofAugust22,1996,areeligibleforMedicaid.Mostsuchlegalaliensenteringthecountryafter thatdateareno longereligible forMedicaidunlessanduntil theybecomecitizens.IllegalaliensarenoteligibleforMedicaid.

Most larger industrial stateshave theirownprograms,which theyalsocallMedicaid, forpoorpeoplewhodonot fit in the sixcategories.Since the rulesvarysomuchfromstatetostate,checkthespecificsofyourstate.ThefollowinggeneraldescriptionofMedicaidismeanttoprovideanoverviewonly.

Basically, tobeeligible forMedicaid,your incomeandassetsmustbe lessthantheSSIorAFDClevelsinyourstate.Theassettestsarethesameasthoseused for SSI and theMedicaremeans-based programs (see chapter 8, section8.2). The deductions are also the same—except thatwithMedicaid, in all butthirteenstates,youcanalsodeducta“spenddown.”

Tip. Ifyou leaveworkdue todisabilityandyouhavenohealthcoverage,youimmediately qualify for Medicaid if you qualify for SSI. This coverage cancontinue through the five-month waiting period for SSD. Since most SSDpayments will be above the SSI income level, you would lose MedicaidcoveragewhenSSDstartsunlessyourSSDlevelisbelowtheSSIleveloryouqualifythrough“spenddown”provisionsasdescribedbelow.

Spend down. When income is too high to meet Medicaid eligibilityrequirements,theprogramallowsincometobereducedbyaspenddownequalto theamountofmedicalbills thatare incurredduring thesubjectperiod. It isnot necessary that the bills be paid—just that they be incurred.This generallyincludespremiumsforMedicareandprivatehealthinsurance.Toillustrate,iftheeligibilityincomelevelis$500andyoumake$700,butyouincurmedicalbillsinthemonthfor$200,yourcountableincomebecomes$500($700less$200in

medicalbillsincurred)soyouareeligibleforMedicaidduringthatperiod.Spenddownprovisionsonlyapplytoexcessincome,nottoexcessassets.Generally,SSIandMedicaiddonotcareifanapplicantsellsassetsforless

thanfairmarketvalueorevengivesthemawayinordertoqualify,exceptwithrespecttolong-termcare(seesection2.3).

Living benefits. If you obtain an accelerated benefit from the life insurancecompanyorsellyourpolicyinaviaticalsettlement,onceyoureceivethemoney,youflunktheincometest.Youalsofailtheassettest—untilyounolongerhavethemoney.

Getting your Medicaid card. In most states (“1634 states”), SSI recipientsautomatically receiveMedicaid cards. In other states (“TitleXVI states”), SSIrecipientshavetoproveSSIeligibilitytothestatewelfareofficetoqualify.Inathird set of states (“209(b) states”), recipients must apply separately forMedicaidatthewelfareofficebecauseMedicaidrulesarestricterthanSSIrules—althoughasageneralmattermostSSIrecipientswillqualifyforMedicaidaswell.

Spouses.WhenonememberofamarriedcouplemovestoanursinghomeandappliesforMedicaid,thereareprotectionsfortheotherspouse’sassetsknownasthecommunityspouseresourceallowance(CSRA),whichvaryfromstatetostate. The spouse not in the home can usually also retain his or her income.There is also an allowance for the remaining spouse and a family incomeallowanceforminorchildren.

2.2Benefits

Inadditiontoprovidingwhatcouldbethoughtofastraditionalhealthcoverage,Medicaidtendstobecomethepayeroflastresortforlong-termcare.Eachstatehas its own program, which is subject to federal minimums. In just about allstates,Medicaidcovers

•physicianservices•prescriptiondrugs(subject,insomestates,tolimitspermonth).•laboratoryandX-rayservices.• medically necessary transportation to and from medical care (including ambulances andsometimeshandicappedvansandtaxis).

•carebyapsychiatrist.Somestatesalsocoverpsychologistsandpsychiatricsocialworkers.•cliniccare.• home care by professionals such as registered nurses and physical therapists. In some states,Medicaid also covers physician-ordered part-time skilled nursing, and homemaker servicesprovided by certified home-health agencies—particularly if it would keep the applicant fromhavingtoenteranursinghomeorahospital.Likewise,personalcareservicesmaybecoverediftheyare incidental tomedicalcare. Inall statesexcept theDistrictofColumbia,Medicaidwillcover a personal care aide if ordered by a hospital under a “waiver” program. Some waiverprograms even cover respite care. These waiver programs usually require the person be asimpairedassomeonewhowouldotherwisebeinanursinghome.

•assisted-livingcareifyouqualifyforahomeandacommunity-basedwaiverofservice(seehere)ifthefacilityislicensedbythestate.Thisprogrammayevencovercasemanagement,whichisnotordinarilycoveredbyMedicaid.

•hospitalcare,bothinpatientandoutpatient.•nursinghomes.•hospicecare(inabouthalfofthestates).•family-planningservicesandsupplies.•atleastbasicdentalcareforchildren.Afewstatesalsocoveradultdentalcare.

Medicaidpaymentsaremadeaccordingtoascheduleoffeesthatvariesstateby state. The amount of payments is low compared to market prices and isgenerallyevenlowcomparedtopaymentsmadebyMedicare.Thepaymentsaremadedirectlytotheprovider.Thefederallawallowsrequirementofanominalcopayment,which is not defined but is usually $.50 or $1 per office or clinicvisit,perlabtest,perprescription,andperothermedicalserviceoritem.FederallawalsoprovidesthatnoprovidercanwithholdanitemorserviceifaMedicaidrecipientcannotaffordthecopayment.

Participating physicians. In general, medical care providers do not have toparticipate inMedicaid.Many prefer not to because of the lowMedicaid feeschedulesandtherequirementthattheprovideraccepttheMedicaidratesasfullpayment.Asageneralmatter, the result is thatdoctors inpoorneighborhoodsaccept Medicaid while most of those in middle-class and upper-class

neighborhoodsdon’t.YourGuardianOrgoryoursocialworkermayhavea listofparticipatingproviders.

Tip. An exception to the general rule is that doctors who are involved in aclinicalpracticeassociatedwithateaching,research,orlargepublichospitalareeffectively required toparticipate inMedicaid.Theirpatients receive the latestmedical care. The doctors are paid the difference between what they receivefromMedicaidandtheirnormalfeesthroughsubsidizedendowments,charities,andthelike.

Managedcare.Witha lawpassedin1997, thestateshavetheright torequirethat Medicaid patients enroll in managed care organizations. See chapter 14,section 3.2, for factors to consider if you have a choice as towhichmanagedcareorganizationtouse.

PaymentofMedicareandprivatehealth carepremiums. Since states haverealizedthatitislessexpensivetopaypremiumsforhealthcoveragethantopaythe actual medical expenses for poverty-level residents, all states pay forMedicare premiums, coinsurance and deductibles for Medicare beneficiaries,andpremiumsforprivatehealthinsurancepoliciesforMedicareeligiblepeople.Allstatescan,andafewstatesdo,payCOBRAhealthinsurancepremiumsforthosewithlowincomesandassetseveniftheyarenoteligibleunderthestate’sregularMedicaidrulesforotherMedicaidbenefits.

Ifyouqualify forbothMedicareandMedicaid. It ispossible tobeonbothMedicare and Medicaid—for instance, when a person receives SSD but theamountofthemonthlypaymentisbelowtheSSIlevel.(WhenapersonaccessesbothprogramsitiscalledMedi-Medi.)Inthatcase,Medicarefirstpaysmedicalbillsuptowhateveritsrulesallow,thenMedicaidpaystherest.HealthcoveragebecomescompletesinceprescriptiondrugsarecoveredunderMedicaid,andyouwon’thavetopaythedeductiblesandcopaymentsthatyouwouldotherwisefacewithoutMedicaid.Yourhealthcareprovidersarealsohappybecause theyand

hospitals are coveredby thebetter ratespaidbyMedicare,whichmakes themmore likely to accept you as a patient and devote adequate time to your care.Also,whenyouareonMedi-Medi,MedicaidwillstartpayingtheMedicarePartBpremiumforyousoyourSSDcheckwillincreasebytheamountofthePartBpremium.

2.3ImpoverishingYourselftoQualifyforLong-TermCare

Long-termcare,which includesnursinghomes,hospicecare, andhomehealthcare,canbeexpensive.Toavoidhavingpeoplequalifyfor thisexpensivecareby giving away their assets to loved ones, there is a look-back period—theresponsibleagency“looksback”todetermine ifanytransfersfor less thanfairmarketvalueweremadebytheapplicantduringaspecifiedperiod.Thestatesdonothave to include this look-backperiod,but if theydo,aperiodof thirty-sixmonths ismandated. The look-back period is extended to sixtymonths if thetransferwastoatrust.

Transfers of assets to spouses do not count as transfers at all but areconsidered assets of the applicant. (Neither do transfers to blind or disabledchildren.) Transfers by the spouse of a person who receives or applies forMedicaidduringthelook-backperiodcandisqualifytheapplicant.

Althoughstateregulationsvary,transferswithoutfullvaluewithinthethree-yearperiodmaybepermitteddependingonthepurposeforwhichthetransfersaremade,andwhen.Mattersareoftendecidedcasebycase,andyouwillhavetoprovethetransferwasnotmadetoqualifyyouforMedicaid.Forexample,itis likely that if your father needs a $20,000 heart operation, you will not bepenalizedforgivinghimthemoney.

Anyassetstransferredinthelook-backperiodtriggerapenaltyperiod.Thispenalizes applicants to the extent that the transferredmoney could have beenusedforlong-termcare:

•Determinehowmuchmoneywastransferredwithoutfairvalueduringthelook-backperiod.•Determinehowmuchsupervisedcarecostspermonthintheapplicant’sarea.•Dividetheamountthatwastransferredbythemonthlycostofsupervisedcare.

•TheresultisthenumberofmonthsMedicaidwillnotpayfornursinghomecare,startingwiththefirstdayofthemonthsucceedingthemonthinwhichyougaveawayassets.

Forexample,intheSyracuse,NewYork,area,nursinghomecareisassumedtocost$5,000amonth.Iftheapplicanttransferred$50,000fornoconsiderationtoasonthreemonthsbeforeapplyingforlong-termcare,then$50,000dividedby$5,000equalstenmonths.Theapplicantwouldhavetoabsorbthecostofanursing home for tenmonths.Medicaid would start covering the costs of thenursinghomeintheeleventhmonth.

If the transfer ismadeduringthe look-backperiod, there isnolimitontheterm of the penalty period. In the above example, if the applicant transferred$300,000, the penalty would continue for sixty months. Thus, if the penaltywouldbemore than thirty-sixmonths, it ispreferable tomake the transferandwaitmorethanthirty-sixmonthsbeforeapplyingforMedicaid.

Note: There are no federal prohibitions against transferring assets beforeapplying for non-nursing-home Medicaid benefits. However, your state mayimposesuchrestrictions.

Inresponsetoabuses,Congressmadeitacriminaloffenseforprofessionalsto give advice about divesting assets to qualify forMedicaid during the look-backperiodorduringthepenaltyperiod.Advicegivenbeforethelook-backisnot a criminal offense, and neither is advice during the look-back or penaltyperiod if the applicant does not actually apply forMedicaid coverageof long-termcareuntilafterthepenaltyperiod.Thepracticaleffectofthisprovisionhasbeentomakeadvisersmorecautiousabouttheiradvice.Allofwhichleadsmetostate:

The following discussion is for information purposes only and is not to beconsideredadviceorassistancewithrespecttodisposingofassetstoqualifyforMedicaidlong-term-carenursinghomebenefits.

People facedwith the exorbitant costs associatedwith long-termcarehavebecome eligible for Medicaid by shielding assets to some extent or bytransferringassets.

Conversion. The simplest method to qualify for Medicaid has been to shiftassets intoexcludedcategories(e.g.,ahome).Forexample,SebastianL.couldnotobtainprivatehealthinsurancebutneededrecurringexpensivetreatmentforhiskidneydisease.Heusedhis$100,000nesteggforthepurchaseofahouse.Herentedaroomtoafriend,whopaysfortheexpensesofthehouseinsteadofpayingrent.

Divestiture. Another method used is divestiture (giving assets away). Thecommon method of divestiture is to follow the “rule of half”—the applicanttransfersone-halfofhisassetsandkeeps theotherhalf.Theruleofhalf isnotarbitrarily set at50percent.Since therewillbeapenalty for themoneygivenaway,enoughmoneyisretainedfortheapplicanttopayforthenecessarycareduringthepenaltyperiod,whilemaximizingtheamountthatisgivenaway.Forexample,apersonwith$100,000gives$50,000 toachildandkeeps theother$50,000,whichisthenusedtopayfornursinghomecare.Intheexamplewe’vebeenusinginwhichnursinghomecarecosts$5,000amonth,the$50,000thatisgivenawayequals tenmonths ina localnursinghome. In theeleventhmonth,thepersonapplies forMedicaid.Thesecond$50,000 isnoproblembecause itwastransferredforvalue—fortheservicesofthenursinghome.

Toexemplifytheproblemadvisersarehavingtoday:IftheapplicantappliesforMedicaidinmonthnine,thereisnoeffectontheapplicant.TherewillstillbenoMedicaid coverage untilmonth eleven.Nevertheless, if, during the penaltyperiod,anadviseradvisesanapplicanttodothis,theadvisercouldbedeemedtohavebrokenthelaw.

Supplemental needs trusts (also known as special needs trusts). Underfederal lawandundermany state laws it is possible for a friendor relative toestablisha“supplementalneedstrust”foradisabledpersonunderagesixty-fivetoprovide forneedssupplemental towhatMedicaidandSSIpayfor—suchasvacations, specialeducationaland recreationalprograms,specialequipment,ormodificationstothehometoaccommodateadisability.Theassetsremaininginthe trust upon the death of the beneficiary can be distributed according to the

desires of the creator of the trust. Your GuardianOrg or state or local barassociationcanprobablyprovideareferraltoanattorneyspecializinginthisareaoflaw.

Insomestates,thesetrustscanbeestablishedwithadisabledperson’sownfunds, which both reduces assets so as to become eligible for Medicaid andprovidesforadditionalneeds.Generally,anyassetsremaininginthissortoftrustafterthedeathofthebeneficiaryareavailabletothestatetorecoverthecostofcareprovidedtothedisabledbeneficiary.

Keepinmindthepracticaldifficultiesofdistinguishingbetweenluxuriesandnecessities. For example, rent, food, and medical bills are necessities. Foradditionalinformation,lookatThirdPartyandSelf-CreatedTrusts:ALawyer’sComprehensive Reference by Clifton B. Kruse Jr. (Chicago: American BarAssociation,1995).

Annuities. Another method that has been used to avoid the asset test is topurchase a single-premium annuity, which changes an asset into a stream ofincome.Forexample,ifyougointoanursinghome,youcanassigntheincometothehome,thenreclaimtheremainingincomewhenyouleavethehome.Thisusuallyworksbestforpeoplewithalongerlifeexpectancy.

Liens.Forpeopleoveragesixty-five,Medicaidcaneventuallyseektorecovermoney from the estate of deceased recipients, or even place a lien on realpropertyownedbytherecipientformoneyspentbyMedicaidonlong-termcare.Ifahome is inhabitedby legallymarriedspousesorminoror“disabled”adultchildren,Medicaiddoesnotplacealienonthepremisestotrytorecovermoneyspentonlong-termcareforadeceasedrecipientorrecipientsnolongerlivingonthepremisesunlessfraudwasinvolved.Generally,therecanalsobenorecoveryif title to the asset is transferred. For people under age sixty-five, liens andrecoveriesfromestatesaregenerallynotpermittedunlesstherehasbeenfraud.

Tip. If transferring or spending your assets to qualify for Medicaid seemsappealing,beawarethat

•Medicaiddoesnotcoveranumberoftestsandprocedures,and,sincepaymentsarelimited,maynotprovideaccesstothebestcare.

•whenyougiveawayassets,youactuallydoimpoverishyourselfandnolongerhaveanycontrolover theassets.Formoney,youmust relysolelyon thediscretionof theperson towhomyourassetshavebeentransferred.Yourassetswillalsobesubjecttothatperson’slegalandfinancialproblems.

•theUnifiedGift-Estatetaxmayapply(seechapter33,section4).• you should consult a qualified attorneywho is a specialist in this area.Whilebeing careful tocomplywiththenewlaw,attorneysstillgiveadvice.Tolocateanattorney,contactyourlocalbarassociation. The National Academy of Elder Law Attorneys, 1604 N. Country Club Road,Tucson,AZ85716-3102(520-881-4005)canprovidealistofitsmembersfor$25.

Waiverservices.Ifhomeattendantcareistheissue,anditisnotcoveredunderMedicaidinyourstate,itmaybecoveredaspartofhome-andcommunity-based“waiver services.” This vague term permits less expensive home care (notnormally covered) if it allows the person to stay at home rather than “riskinstitutionalization.” The word institutionalization was apparently meant asexpensive nursing home care, but it has generally been interpreted to alsoincludehospitalization.States can even set broader eligibility requirements forpeoplewho fit thiscategory.For instance, inwaiver situations,doctorscanbepaidmorethantheregularMedicaidpaymentstobesurethepersongetstreatedoutsidetheinstitutionalsetting.

Tip.Ifyouneedlong-termcareandcan’tarrangeit,getadmittedtoahospital.Youwon’tbedischargeduntilanarrangementforyourcareisinplace.Itmaynotbewhatyouwant,but it’s likely tobebetter thannotgetting thecareyouneed.Ifnot,youcanalwaysleave.

2.4Appeals

YouareentitledtoahearingifyourapplicationforMedicaidisdeniedorifyourMedicaidbenefitsareterminated,suspended,orreduced.Thewrittennoticeyouwillreceiveofcessationorreductionofyourbenefitswillnotonlyinformyouabouttheactiontotakeplace,thereasonandthedateitwillhappen,itwillalsoprovide information about an appeal. The notice will describe the action you

must take to continue your benefits pending a hearing. If you need to appeal,seektheassistanceofanattorneywithexperienceinMedicaidcases.

Moreinformation.IfyouhaveadditionalquestionsaboutMedicaid,calltheMedicaidhot line (800-541-2381)ordirectoryassistance inyour stateandaskforMedicaid’stelephonenumberorcallyourlocaldepartmentofaging.

Section3.Hill-Burton—FreeHospitalandHealthFacilityCare

In exchange for Hill-Burton program grants and loans to hospitals and otherhealth facilities for construction, renovation, and expansion, the facility mustgive freeor reduced-feemedicalcare topeoplewith lowincomeswhoarenotcompletely covered by private health insurance, Medicare, or Medicaid. Theamountofcareafacilitymustprovideisset(andaudited)eachyear.

Hill-Burtondoesnotconsiderassets.Itcoversinpatienthospitalbills,butnotdoctors’bills.ItispossibletoapplyafteryouleaveahospitalfortheHill-Burtonprogramtopayforyourstay,butitisbettertodoitbeforeentering.Tolocateafacilityinyourareathatparticipatesinthisprogram,calltheHill-Burtonhotlineat800-638-0742.

Tip.Whencallingafacilitytodeterminewhetheritwilladmityouforlittleornocost,askfor the“Hill-Burtoncoordinator”ora financialcounselor.Even ifthe facilityhasused itsHill-Burton requirements forayear, itmayhaveotherprogramstoprovidefreeorlessexpensivecare.

Section4.Veterans’Benefits

The Department of Veterans Affairs administers various health programs andneeds-basedincomeprogramsforveteransoftheAirForce,Army,CoastGuard,Marines, Navy, the Environmental Services Administration, the NationalOceanic andAtmosphericAdministration, theWorldWar IImerchantmarine,ArmyAirCorpsFlyingServices,Philippineguerrillaunits, andcommissionedofficersofthePublicHealthService.Ifyouservedinanyoftheseorganizations,

contacttheVeteransAdministrationat800-827-1000tofindoutabouteligibilityforhealth,income,andburialbenefits.Generally,allveteranswithhonorableorgeneraldischargeswhohaveatleast180daysofactivedutycanreceivecareatVAmedicalcenters—eveniftheyarenotdisabledunderVAorSocialSecurityrules and whether or not they served in a war zone or during “wartime.” Ifincomeexceedsaprescribedlevel,acopaymentischarged.

Tip.Be aware that if your illness is not service based,when you go for care,peoplewithservice-basedproblemsaretakencareofaheadofyou.

Tip. VA care can provide prescription coverage for many severely ill anddisabled veterans for whom such coverage is not generally available (even ifthey have SSD and Medicare). VA clinics and hospitals charge only $2 perprescription,andsmallcopayments—evenforhigh-incomeveterans.

Section5.StateandLocalPrograms

Manyotherbenefitprogramsadministratedby statesand localitiesprovide forhousing,medications,andothermedicalcosts.Tofindoutabouttheseprogramsand whether you are eligible, you should speak with a social worker at thewelfareoffice,countyorcityagingagency(evenifyou’renotelderly),countyor city housing department, and legal aid agencies. Also speak with yourGuardianOrgaswellasotherpeoplewithyourcondition.

Tip.Ifyouaretoldthatnoprogramsapplytoyou,seekasecondopinionfromanotherexpert.AlanE.wastoldbyacasemanagerthatnolocalprogramswouldbenefithim,althoughhecould(andeventuallydid)qualifyfora localhousingprogram.

PartV

NewUsesofAssets

Chapter19

LifeInsurance,aLiquidAsset

ThesuccessofKenW.’ssmallcompanydependedonhispersonaleffort.WhenKensufferedaseriesofhealth-relatedsetbacks,hisbusinesswentunder.Inadditiontoowing$25,000inmedicalbills,hehadamortgageandaheftylifeinsurancepremiumtopay.Hewasconsideringsellinghishousewithallitsmemories.Hewasn’tawarethathislifeinsurancepolicyprovidedananswer.

Traditionally,lifeinsurancehasbeenviewedasanincome-replacementvehiclefordependentsof adeceased insuredor as a fund to cover estate taxes and/orburial expenses. In some instances, it has also been used as a savings and/orinvestmentvehicle.This chapter is abouthowyoucanobtaincash froma lifeinsurancepolicyduetoyourcondition—andhowinspiteofyourconditionyoucanstillpurchaselifeinsurance!

Loans against your life insurance policy, accelerated benefits from the lifeinsurance company, and viatical settlements are methods of turning lifeinsuranceintoaliquidasset.Beforeyouuseanyofthesealternatives

• keep in mind that any of these actions will decrease the amount of life insurance proceedsavailable for your beneficiaries. Balance your current and future needs against those of yourbeneficiaries.

• consider the new uses of other assets described in chapters 20–23 to determine which of thevariouscoursesofactionisbestforyou.

Section1.LoansAgainstYourLifeInsurancePolicy

Even ifyourcredit isnotgood,oryoudon’thavesufficient incometoqualifyforacommercialloan,youmaybeabletoobtainaloanusingyourlifeinsurancecoverageascollateral(securityforrepaymentoftheloan).

1.1LoansfromtheLifeInsuranceCompany—CashValue

1.1LoansfromtheLifeInsuranceCompany—CashValue

The two basic types of life insurance policies are term andpermanent. In aterm policy, each penny of premium purchases only life insurance. With apermanent policy, part of the premium purchases pure life insurance, and theotherpartgoesintoasavingsorinvestmentplan.Toillustrate,if$100purchasesa $10,000 term policy, all that the insured has is a death benefit of $10,000.However, if the insuredpurchases abasicpermanentpolicy, the same$100 isdivided between pure insurance and a savings feature that grows each year.Whilethedeathbenefitstaysat$10,000,theinsuredcanborrowmoneyagainstthesavingsaccountfeature,whichiscalledcashvalue.

Cash value provisions allow you to borrowmoney from the life insurancecompany without having to qualify as a borrower and without delays. Thecontractstates theamount thatcanbeborrowedeachyearandthe termsunderwhich themoneymay be borrowed. The interest rates are usually reasonable,especiallyifitisanolderpolicy.Cashvalueprovisionsaremorelikelytobeinindividual rather thangrouppolicies—policies issued throughagroupsuchasanemployer,union,orassociation.

Tip. If it is not immediately clearwhether your life insurance coverage has acashvalueprovision,callyourlifeinsurancecompanyoragent.Whileyou’reatit, find out howmuch you can borrow, aswell as the interest rates and otherterms.Thiskindofquestioniscommonandwillnotraiseanyflagsaboutyourhealthunlessyoudecidetoinformthecompanyaboutyourphysicalcondition.

1.2LoansfromPrivateIndividualsSecuredbyYourLifeInsurance

If a loan from your life insurance company isn’t available, or if the interestcharge is too steep, consider askinga friendor familymember tomakeyoualoanusingthepolicyascollateraltosecurerepayment.

Consider every person or company you know as a potential loan source.Don’t forget your current or former employer. Since your beneficiary has themosttolosebyasale,perhapsheorshewouldmaketheloan.Peopledon’tliketomakemoneyofftheirfriends,particularlywheninneed,butaloanwithafair

rateofinterestmaybedifferent.If thisapproach isappealing toyou,consulta localattorneyabout thebest

waytosetuptheloan.Ideally,theloandocumentsshouldcontainthefollowingprovisions:

•No repayment or interest on the loan during your lifetime (so youwill not be burdenedwithmakingpaymentsatatimewhenyourincomehasprobablydecreased).

•Theloanshouldbenonrecourse,whichmeansthatthelendercanonlylooktothelifeinsurancepolicyforrepaymentandnottoyourestate.

Tip.Ifwillingfriendsorrelativesdonothavethecashavailabletomakealoan,butdohaveequity inahouse, theymight raise the fundsusing theirequityascollateralforaloan.Ultimately,theproceedsfromyourlifeinsurancepolicycanbeusedtopayofftheloanplusinterest.Thedifferencebetweenthedebtandthedeathbenefitcantheneithergotothepersonwholentyouthemoneyortoanyotherbeneficiaryyoudesire.

1.3LoansfromCommercialLendersSecuredbyYourLifeInsurance

If a “friendly” loan is not available, consider obtaining a “commercial” loanfromabankorotherinstitution.Asofthiswriting,nobanksofferloanssecuredbylifeinsurancepolicies,butsincethisislikelytochange,itisworthcheckingincasetherearesuchbanksbythetimeyouneedthemoney.

Several nonbanking companies make loans against life insurance policies.Thesecompaniesarenotcurrentlyregulatedorsupervisedbyanygovernmentalauthority. If you are thinking about a loan from one of these companies,consider:

• Even though repayment of the loan is secured by the life insurance policy, these companiesusuallychargeinterestatleastequaltowhatmostpeoplepayonunsecuredloanssuchascreditcards.

•Thecostsofinitiatingtheloanareoftenhighcomparedtoaloanfromabank.•Whiletheintent is torepaythemoneyondeathandnotwhiletheinsuredisalive, thecontractmayprovidethelenderwiththerighttocalltheloanatanytime,whichmeansthatyoumayhavetorepaytheloanwhileyou’realive,eventhoughyouspentthemoney.

•Generally,loancontractsrequiretransferofownershipofthepolicytothelender.Thismeansyou

willhavefewerrightsthanifyoukeepownershipyourself.•Whathappensifthelendergoesoutofbusinessorassignsyourcontract?Iftheloanissetupinamannerthatpermitsyoutoborrowmoremoneyfromthelenderovertime,asmostdo,youhaveno guarantee that the lenderwill be in businesswhen you are ready to draw down additionalfundsundertheloan.

•Canyourbeneficiary’sinterestinthepolicybewipedoutbythelender’sactions?•Doesyourbeneficiaryhavetherighttorequestanaccountingofmoneydue?

1.4AdvantagesandDisadvantagesofaLoan

Advantagesofaloan.•Loanproceedsaregenerallyconsideredtobefreeoffederalandstateincometax.•A loancanbestructuredso itdoesnothave tobepaidbackduringyour lifetime,yetyoucanretaintheoptiontopayofftheloanifyousodesire.

•Thedeathbenefitofthelifeinsurancepolicypaysoffanypartoftheloanthathadnotpreviouslybeenrepaid,togetherwithanyaccumulatedinterest.Thedifferencebetweenthatamountandthedeathbenefitispayabletoyourbeneficiary.Toillustrate:JeanC.borrowed$50,000againsther$100,000 policy. No payments were made during her lifetime. When she died, an additional$12,000wasowedtothelenderforinterest.Atherdemise,thepolicypaid$62,000tothelenderandtheother$38,000toherbeneficiary.

Disadvantagesofaloan.•Youhavetocontinuetopaypremiumsontheentireinsurancepolicyforlife.•Ifyoulivelongerthananticipated,thedebtplusinterestcouldexceedthedeathbenefitandyourestate could be liable to pay the lender the difference. This problem can be eliminated byspecifyingintheloandocumentthattheloanisnonrecourse,asdescribedinSection1.2.

Effectongovernmentbenefits.Money received froma loanaffects the assetrequirements of means-based entitlement programs such as SupplementalSecurityIncome(SSI).ThereceiptofthismoneydoesnotaffectSocialSecurityDisabilityincome(SSD).

Tip.Itiscriticaltoberepresentedbyanattorneybeforeenteringintoanyloanagreementsecuredbyyourlifeinsurance.

Section2.AcceleratedDeathBenefits

Even if your policy doesn’t contain a cash value provision, it may contain aliving or accelerated benefit. This feature permits an advance from theinsurance company of part of the death benefit while the insured is alive,providedaspecifiedtriggeringeventoccurs.Triggeringeventsdifferdependingonthepolicyandtheinsurancecompany,buttheycaninclude

•diagnosisofspecifiedillnesses.•alifeexpectancyofaspecifiedperiod,suchastwelvemonthsorless.•aneedforlong-termcarebasedonaninabilitytoperformthenormalactivitiesofdailyliving.•adebilitatingillnessorpermanentconfinementtoanursinghome.

Somecompanieshaveautomaticallyaddedtheseprovisionstotheirpoliciesfor free—even for policies already in existence. For others, the provision isoptionalandthecompanyspecifieswhatmustbedonebytheinsuredtoaddtheprovision.

Whether the coverage is automatic or optional, no medical questions areaskedbeforeacompanyaddsanaccelerateddeathbenefit. Infact,at leastonelargelifeinsurancecompanyallowsinsuredstoaddtheprovisionandacceleratethedeathbenefitatthesametime.

Tip.Unless you can prove you did not know about your condition until afteryour firstdiagnosis,becertain thatyourpolicy (andeveryother life insurancepolicy you have with the same insurance company) is past the contestableperiod (if any) before checking with your life insurance carrier or broker todeterminewhetheryourpolicymaycontainanacceleratedbenefitprovision.Acontestableperiodpermitsthelifeinsurancecompanytocontesttheexistenceofthepolicyforalimitedtimeaftertheeffectivedateofcoverage.Whenapolicylapsesand is reinstated, the reinstatementdatebecomes theneweffectivedateforpurposesofcontestability.Thecontestableperiodisusuallytwoyears.

Terms.Thetermsofanacceleratedbenefitvaryfromcompanytocompany.• Eligibility is usually limited to insureds with a life expectancy of twelve months or less(sometimesevennineorsixmonths).FederalemployeeswithFEGLIcoveragearepermittedtoacceleratethedeathbenefitoftheirbasiccoverageiftheyhavealifeexpectancyofninemonths

orless.•Theadvanceamounts, andcharges,vary fromcompany to company.Advances range from25percentto95percentofthedeathbenefit,andmanyinsurancecompaniesplaceadollarlimitontheamount theywilladvance. If less than theentiredeathbenefit isaccelerated, the remainder(perhapsminusasmallfee)ispaidtothenamedbeneficiaryuponthedeathoftheinsured.

•Someinsurancecompaniesplaceaminimumonthedeathbenefittowhichtheprovisionappliesandsomeplaceamaximum.

•Somecompanieslimit themannerinwhichdistributedmoneymaybespent(e.g., toreimbursemedicalexpenses).

Effectongovernmentbenefits.Themerepotentialtoaccelerateadeathbenefitdoes not affect SSD, SSI, or Medicaid in any way, including eligibility.However,once these fundsare received, theyaffectboth the incomeandassetrequirementsofmeans-basedentitlementprogramssuchasSSI.The receiptofthismoneydoesnotaffectSSD.

Tax. Accelerated benefits for people with a life expectancy of twenty-fourmonthsor lessarefreeof federal incometaxandarespecificallyexemptfromstateincometaxinseveralstatessuchasCaliforniaandNewYork.Thereisalsonostateincometaxdueforresidentsofthosestatesthathavenostateincometaxatallorforthosethatfollowthefederalleadindeterminingtaxableincome.

Tip.Ifthereisataxdue,whenfeasible,accelerateinayearinwhichincomeisreducedorinwhichexpensesareparticularlyhigh.

Acceleration plus a sale of the remainder. If your policy contains anaccelerated benefit provision, youmay be able to accelerate and then sell theremainder(asdescribedinthefollowingsection),realizingagreateramountofmoneythroughacombinationofthetwothanthrougheitheranaccelerationorstraight sale alone. However, some insurance companies do not permit asubsequentsaleafteracceleration.

Section3.ViaticalSettlements

A viatical settlement is a sale of a life insurance policy in which you, the

owner,transferallrightsandobligationsunderthepolicy,includingtherighttochoose the beneficiary and the obligation to pay premiums. In return, youreceive an amount of money equal to a percentage of the full death benefit.Generally, the transaction carries no restrictions on how you (the seller orviator)canspendtheproceedsofthesale.

3.1Salability

Necessarymedicalcondition.Anyonewhohasbeenmedicallydiagnosedwithashortenedlifeexpectancymayqualifyforaviaticalsettlement.Acombinationof unrelated conditions may combine to create a shortened life expectancy.Whilesomecompanieswillpurchasepoliciesfrompeoplewithalifeexpectancyof five years or more, the bulk of the viatical settlement companies onlypurchasepolicies frompeoplewitha lifeexpectancyof twenty-fourmonthsorless.

Types of policies that are salable. In general, while there are alwaysexceptions,suchascredit life insurance,any life insurancepolicy issalable. Itdoes notmatter if it is group or individual. It also doesn’tmatterwhether thepolicy is termor permanent. SavingsBankLife Insurance (SBLI) policies aregenerally salable, as are Federal Employees’ Group Life Insurance policies(FEGLI). Servicemembers’Group Life Insurance (SGLI) andVeteransGroupLife Insurance (VGLI) coverages are salable by converting to an individualpolicywithaninsurancecompany.

Tip. Ifyouconvertgroupcoverage to individualcoveragewith the thoughtofsellingit,selectthemethodofpremiumpaymentthatrequirestheleastoutlayofyour dollars. Premium payments between the time of conversion and salegenerallywon’tbereimbursed.

Individualpolicies.Unlessyourpolicyisanindividualpolicyresultingfromaconversion of group coverage, it is difficult to sell while it is subject to a

contestable period or while a suicide exclusion is in effect. The suicideexclusion is the period during which the life insurance company will returnpremiumspaidinsteadofthedeathbenefitintheeventofdeathbysuicide.Thecontestable and suicide exclusion periods usually run simultaneously from theeffectivedateofthecoverageoritsreinstatementintheeventofalapse.Aswithan accelerated benefit, by attempting to sell a policy during the contestableperiodyouruntheriskthat,oncealertedtoyourhealthsituation,theinsurancecompanymaycontesttheveryexistenceofthecoverage.

Otherfactorsmaypreventthesaleofapolicy:•Anissuinglife insurancecompanythatdoesnothaveat leastanAratingbytheratingservicessuchasA.M.BestCompany(908-439-2200).

•Abindingagreementconcerningownershipofthepolicyorpaymentoftheproceeds,suchasapolicythatwasissuedaspartofanarrangementbetweenbusinesspartners.

•Aprohibitioninapolicyagainstachangeinownershipand/ordesignationofanewbeneficiary.Whileyouwould think that a policywith abeneficiary that hasbeendesignated “irrevocably”cannot be sold because the beneficiary cannot be changed, there can still be a change if theirrevocablebeneficiarysignsaconsenttothechange.

•Limitationsonhowapolicymaybeassigned(e.g.,asagiftonly)or limitationsontowhomitmaybeassigned(e.g.,apolicymaylimittheclassofpeopletowhomthepolicymaybeassignedorwhomaybelistedasbeneficiary).

Tip. It is sometimes possible to have restricting provisions removed from aparticular policy or for the insurance company to make exceptions. In somestates,bystatute,ifapolicypermitsanytypeofassignment,itisalsodeemedtopermitassignmentforvalue.

Group policies. Group policies have the same limiting factors as individualpolicies. They cannot be sold if the insurance company does not have a goodenough rating, if change of ownership or designation of a new beneficiary isprohibited,orifhowapolicymaybeassignedislimited.

In addition, a group policy is probably not salablewhile you are activelyworking because the coverage could be terminated by the group (usually anemployer)orbytheinsurancecompany,andthepurchaser’sinterestwouldalsobe terminated. The exception to this generalization is for those group policiesthat permit conversion to an individual policy if the coverage is voluntarily

terminated by the insurance company, the employer, or the insured (such aswhen the insured quits). The amount of conversion coverage permitted is themaximumamountthatwouldbesalable.Forexample,iftheinsurancecoverageis $100,000, and the employee is permitted to convert up to $10,000 upontermination, then the employee could sell $10,000 in coverage while stillworking.

Many group policies contain a provision known as disability waiver ofpremium. Under this provision, when the insured employee leaves work ondisability,thepremiumpaymentsarewaivedandtheinsurancecontinuesforthefullamountevenifthegrouppolicyisterminated.Thefullamountofthegroupcoverageisthensalable.

Conversion from group to individual coverage. When group coverage isconvertedtoindividualcoverage,suchaswhenanemployeegoesondisabilityor otherwise leaves the employer, life insurance companies often impose newcontestableclausesandsuicideexclusionsforthetraditionaltwo-yearperiodontheindividual life insurancepolicy.Althoughafewpurchaserswillpurchaseaconverted policy subject to these provisions, there would be more purchasers(and thus, the likelihood of a higher price to you) if these provisions wereremoved.Ifthisisyoursituation,besuretochecktheinsurancelawofthestateinwhich you reside.Certain states limit the additional period forwhich theseclauses may be imposed, no matter what the converted individual policyprovides.Evenifstate lawdoesnotprohibit reimpositionof theclauses,manyinsurance carriers agree to waive them on request. You should negotiate thisbefore you convert or, if your employer knows about your diagnosis, ask theemployertouseitsclouttohavetheseprovisionswaived.

Tip.UnderNewYork law, upon conversion, the life insurance companymayonlyimposeapremiumforaterm-typepolicyduringthefirstyear,ratherthanamoreexpensivepermanent-typepremium.Ifyouconvert,checkthelawofyourstatetoseeifthisprotectionhasbeenextendedtoyourconversionaswell.

Tip. If your group coverage is not salable, itmay beworthwhile to ask youremployertochangethefeatures.Mostofthefeaturesthatpreventapolicyfrombeingsalablecanbechangedwithoutcostingtheemployeranymoney.Itisjustaquestionofnegotiatingwiththeinsurancecompany.

3.2ConsequencesofaSale

A number of consequences of selling a policy should be evaluated beforecompletingasale.

Incometax.TheTaxCodepermitstax-freetreatmentofviaticalsettlementsincertain circumstances. In general, the law provides that money received by“terminally ill” or “chronically ill” individuals from a “viatical settlementprovider” for the sale or assignment of a death benefit under a life insurancecontract is considered “an amount paid under the life insurance contract byreasonofthedeathofsuchinsured”andthus,tax-freeincome.

Thelawonlyappliestoa“terminallyill”or“chronicallyill”individual.Aterminallyillindividualis“anindividualwhohasbeencertifiedbyaphysicianashavinganillnessorphysicalconditionwhichcanreasonablybeexpectedtoresult indeath in twenty-fourmonthsor less after thedateof certification.”Achronically ill individual is one who has been certified within the previoustwelve months by a licensed health care practitioner as basically requiringnursinghomecare.Thelawrequiresthattheindividualeither

•beunabletoperform,withoutsubstantialassistance,at least twoactivitiesofdailylivingforatleastninetydaysdue toa lossof function(activitiesofdaily livingfor thispurposeareeating,toileting,transferring,bathing,dressing,andcontinence);

• have a similar level of disability as determinedby the secretaryof the treasury in conjunctionwiththesecretaryofhealthandhumanservices;or

•needssubstantialsupervisiontoprotectagainstthreatstohealthandsafetyduetoseverecognitiveimpairment.

There is no restriction on the use of money by a terminally ill taxpayer.Moneyspaid toachronically illperson,however, areonly tax free if theyareused for “costs incurred by the payee (not compensated for by insurance orotherwise)forqualifiedlong-termcareservicesprovidedfortheinsuredforeach

period.” This is generally thought tomean nursing home care, but other caremaybeincluded.TherearealsoprovisionsintheTaxCodeconcerningproceedspaidperiodically.

A viatical settlement provider is a company “regularly engaged” inpurchasingpoliciesandmusteitherbelicensedundertheviaticalsettlementlawinyour state, if there isone,or if there isno such law,must complywith thestandardsintheModelActandRegulationsadoptedbytheNationalAssociationofInsuranceCommissioners(NAIC).Sincetheburdenwillbeonyoutoprovethe tax-freestatusofa transaction, it isnotsafe to relyonwhatanypurchasermay tell you. You will have to do your own homework. Your insurancecommissioncantellyouifviaticalsettlementsareregulatedinyourstateand,ifso,whether a particular company is authorized to purchase policies under thelaw. If there is no such law, you have more work to do. To qualify as a“provider”thepurchasermustsatisfysections8and9oftheNAIC’sModelAct,aswellasthestandardscontainedinsection4oftheNAIC’sregulations.

Ifyourstatehasalawgoverningviaticalsettlements,skiptohere.Ifnot,andyouwanttomakeasale,youwillneedtounderstandtheprovisionsoftheNAICModelActandRegulationsthatfollow.Alsoaskthepurchaserforcertificationin writing that the offer, the disclosures, and the agreement satisfy therequirements of sections 8 and 9 of the Model Act and section 4 of theRegulationsoftheNAICconcerningviaticalsettlements.

The NAIC Model Act and Regulations. Section 8 of the act relates todisclosure.Thepurchasingcompanymustdisclosetoyounolaterthanthedateyousignthecontracttheinformationdiscussedinthistextaboutthealternativesto,andtheconsequencesof,asale.Thepurchasingcompanymustalsogiveyoutherighttocancelthedealwithinthirtydaysaftersigningthecontractorfifteendays after you receive themoney,whichever is less, and tell you the date onwhichyouwillreceiveyourmoneyandfromwhom.

Section9addsmorerulestoprotectyou.Beforeenteringintoacontractwithyou,thecompanymustobtain(1)awrittenstatementfromyourdoctorthatyouare of soundmind and not under any constraint or undue influence, and (2) a

document inwhich you consent to the contract, acknowledge that you have a“catastrophic or life-threateningdisease,” that youunderstand the contract andthebenefitsavailableunderyourpolicy,thatyoureleaseyourmedicalrecords,and that you are entering the transaction freely and voluntarily. The companymustkeepyourmedicalrecordsconfidentialinaccordancewiththelawofyourstate.Uponreceiptofyourcontract,thepurchasermustplacetheproceedsdueyouintoanindependentescrowaccount.(Anescrowiswhenanitemisheldbya third party and is not to be released until defined conditions are satisfied.)Whenconfirmationofthetransferoftitleisreceived,thefundsmustbereleasedtoyouimmediately.Ifyoudon’tgetyourmoneywhendue,youcandeclarethecontractnullandvoid.

Section4oftheRegulationssetsminimumpricingstandardsaccordingtotheinsured’slifeexpectancy,asfollows:

LifeExpectancy %ofDeathBenefit

Lessthan6months 80

Atleast6butlessthan12months 70

Atleast12butlessthan18months 65

Atleast18butlessthan24months 60

24monthsormore 50

Ifyoursaleissubjecttoanincometax.Thetaxiscalculatedonthedifferencebetween the net proceeds and an amount equal to premiums you paid lessamounts you previously received under the contract, such as dividends andpolicy loans, less thecostof insuranceprotectionprovided through thedateofsale.Thecurrentpositionof theInternalRevenueServiceis that theincomeistreatedasordinaryincome,notcapitalgains.Thistaxlawhasnotyetbeentestedincourt,andnoregulationshavebeenissuedunderit.

Trytolimitthetaxbyconsideringthefollowing:•Transferownershipofthepolicypriortoasaletosomeoneinalowertaxbracket.Keepinmindthepotentialofagiftand/orestatetax.Ifyouexpecttouseanyofthismoney,youhavetototallytrustthepersonwhowillreceiveit.

•Splitthecoverageintosmallerpoliciesandselloneofthesmallerpolicieseachyear,possiblyinayearwhenyouhavematchingdeductiblemedical expenses.Eachpolicy shouldbegiven theeffective date of the original policy so there is no effect on salability. If the life insurancecompanywon’tsplitthepolicyforyou,considersellingapartialinterestinyourpolicyeachyear.Seesection3.6below.

•Ifthereiscashvalueinapolicy,butnotenoughtomeetyourneedswithoutasale,takealoanagainst thecashvaluetothemaximumavailable.Sell thedifference.Theamountreceivedasaloanisclearlynottaxable.Theloanwon’taffectthesalesincethepurchaserwillmerelydeducttheamountoftheloanwhendeterminingthepurchaseprice.

State incometax.Thestate taxstatusforasale is thesameasforacceleratedbenefits,describedinsection2.

Estatetax.Deathproceedsofalifeinsurancepolicyareincludedinyourestateifyouownthepolicyatdeathorifyoutransferownershipofthepolicybygiftwithinthreeyearspriortodeath.Ifthepolicyissoldforvalue,onlytheproceeds

from the sale that remain at death will be taxed in your estate, not the deathproceeds.

Effectondisabilityandhealthinsurance.Thesaleoflifeinsurancecoveragewillnotaffectyourdisabilityandhealthinsurancecoverages.

Federal or state assistance programs. Benefits you have paid for (such asSocial Security Disability Income Retirement, or Veterans’ benefits) remainunaffectedbyasale.However,iftheprogramisbasedonincomelevelorassets,the benefits will probably be affected and may even be terminated until themoneyfromasaleisspentordivested.Youwillfailtheincometestduringthemonthofreceiptandwillfailtheassettestforanymonthinwhichyoustillhavethe proceeds. Benefit experts indicate that this can generally be avoided bytransferringthepolicybeforesaletoatrustedfriendorrelativeorcontributingitto a special needs trust (see chapter 15, section 2.3).Another alternative is to“spenddown”proceedsonceyouhavethemthroughabonafidetransferofthemoneytothirdparties,includingtrusts,relatives,orfriends.

Tip.Toavoidaffectingbenefits,getassistancewithstructuring the transactionbeforeyouviaticate.

Youremployer.Ifyousellagrouppolicyyouhavethroughwork,beawarethatapurchasingcompany’sverificationoftheexistenceandtermsofyourcoveragemay alert your employer to your health situation. Even if there is no officialcontact,itisalsopossiblethatsomeoneatthelifeinsurancecompanywillgossipwithsomeoneatyourcompany.

Outliving estimated life expectancy. The risk of your outliving estimatedlongevityissolelythepurchaser’s.

Creditors.Proceedsofasalemaybesubjecttotheclaimsofyourcreditors.Ifyouareconsidering,havecommenced,orevenifyouwererecentlydischargedfrombankruptcy,seektheadviceofyourattorneybeforesellingyourpolicy.

Premiumpayments.Generally, after a sale your rights and responsibilities inthepolicyceaseandthepurchaserwillpaythepremiums.FEGLIandalimitednumber of group policies are exceptions to the general rule because thepremiums are only payable by the employee and only as a deduction frompayroll(orfromcontinuingbenefitsifnolongeremployed).

Ifpremiumsarewaivedunderadisabilitywaiverofpremiumprovision,noonewillhavetopaycontinuingpremiums,althoughevenafterasaleyoumaystillberequiredtoperiodicallysupplyinformationtoshowthatyoucontinuetobedisabled.

Accidental death benefit or double indemnity provision. In general, anaccidental death benefit, also known as a double indemnity provision,increases the death benefit by 100 percent if death is caused by an accident.Sinceasaleisatransferofallyourrightstothepolicy,unlessthesalecontractspecificallypermitsyoutoretaintherighttothesebenefits,anymoneypayableby reasonof these clauseswouldbelong to thepurchaser.Be sure theviaticalcontract specifies thatyou retain the right toname thebeneficiary for thisandanyotherportionofcoverageyoudon’tsell.

Future increases inthedeathbenefit.Somelife insurancepoliciesguaranteeyou the right topurchase additional insurance in fixedamounts at fixeddates.Whenyousellyourpolicy,youselltherighttotheseincreasesaswellunlessthecontract specifies to the contrary. You should either retain the right to theincreases,aswellastherighttodesignatethebeneficiaryforthoseamounts,ornegotiatehowafairpricewillbedeterminedandpaidtoyouwhenincreasesareavailable.

Beforeyousellapolicy.Beforeyoucompletethesaleofapolicy,Isuggestyouconsultwithyourtaxadviserandyourattorney.Youshouldalsoconsultwithanexpert concerning minimizing the effect of a sale on any means-basedentitlementsyouarereceivingorexpect toreceive. Ifyouhaveagrouppolicy

andaresellingitasagrouppolicyorconvertingtoindividualcoveragetopermita sale, check to determine whether your other employer benefits would beaffectedbythesaleorconversionofyourlifeinsurancecoverage.

3.3FederalandStateRegulation

Federalregulation.Thereisnofederalregulationofviaticalsettlementsexceptthe tax law and regulations concerning insurance coverage for federalemployees. A federal district court ruling has held that a normal sale by aninsuredisnotsubjecttothefederalsecuritieslaws.

State regulation. A number of states have adopted laws concerning viaticalsettlements. To find out if your state has a viatical settlement law, call yourstate’sdepartmentofinsurance(seeresourcessection).

3.4Timing

Whentobeginasaleisamatterofbalancingyourneedformoneyagainst thelikelihood that you could obtain more money if you waited and became lesshealthy.Ontheotherhand,ifnewdrugsortreatmentsinthepipelinelookasifthey will extend your life, it may be worthwhile selling now rather thanobtaininglessmoney,ifany,later.Thereisnorightorwrongtime.

Tip.Ifyourpolicyispastthecontestableperiod,considertestingtoseewhetheryourpolicyissalableandwhatpriceyoucanobtain.Youneverhavetosayyestoanoffer,butknowingthesefactscanhelpinyourfinancialplanning.Theonlypossibledisadvantageisthatifyouhaveagrouppolicyandyouremployerdoesnot know about your condition, the information may unintentionally beconveyed.

3.5FactorsThatDeterminePrice

Factorsgenerallyusedindeterminingpriceare

•yourstatisticallifeexpectancy.Purchaserswillpaylesstosomeonewhohasalifeexpectancyofthirty-sixmonthsthantoapersonwithsixmonths.

•theratingofthelifeinsurancecompany.•theamountofpremiums(ifnotwaived).•thepurchaser’scosts,includingoverheadandthecostofavailablefunds.

Tip. While the primary consideration in determining price is statistical lifeexpectancy, I’m not recommending that you ask your doctor for an estimate.Instead, let your lawyer or a viatical settlement broker assess longevity andargue to the viatical settlement purchasing company that you aremuch sickerthanyouappear.Ifyouchoosetonegotiate,askyourdoctoraboutfactorsrelatedtoyourhealthconditionthatyoucanarguemightdecreaseyourlifeexpectancy,butdonotfocusonanyparticularlongevity.

3.6SaleofPartofaPolicy

Oneway tomaximize your return on your life insurance is sell the policy inparts.Forexample,TomW.hasa$200,000lifeinsurancepolicy,atwo-yearlifeexpectancy,andneedsmoneytocoveraprojectedshortfallinincomeeachyear.He could sell half the policy now for approximately 60 percent of the deathbenefit.Sixtypercentofone-halfofthepolicyis$60,000.Intheory,inanotheryearTomwillhaveaone-yearlifeexpectancy,whichwouldwarrantapurchaseprice more like 70 percent of the remaining death benefit or $70,000. Tomwouldmake17percentonhismoneybyholdingoffonsellingthesecondpartof his policy. If the sale is subject to tax, hewould alsominimize his tax byspreadingtheincomeovertwoyears.

Howtosellpartofyourpolicy.•Ifyouhaveanindividualpolicy,askthelifeinsurancecompanytodividethepolicyforyou,andsell one of the substitute policies. There is no need to disclose to the company your healthconditionorthereasonwhyyouwantthepolicydivided.Besuretoconfirmthattheissuedatesofthenewpoliciesarethesameastheissuedateofyourexistingpolicy.

• If the insurance company won’t divide your policy, or if you have group coverage, considersellingpartofanundividedpolicy.Itispossibletosellremainingpiecesofthepolicytothesamecompany(or,theoretically,toanotherpurchaserorpurchasers)astimegoesby.Ifyourmedical

conditionworsens,thepercentageyoureceiveforeachadditionalportionshouldbehigherthanthepercentageyoureceivedfortheoriginalportion.

•Ifyoueventuallywanttosellallorpartoftheundividedremainderofthepolicy,youwillhavetodeal with the viatical settlement purchasing company to which you sold the first part of thepolicy. Deal only with a reputable company that has sufficient assets to make it likely thecompanywill stay in business.Many companies today contract with you, but intend for yourpolicytobepurchasedbyanindividualpurchaser.Ifyouareonlysellingpartofyourpolicy,Istronglyrecommendagainstsellingtoanindividualinvestoryoudon’tknow.

•Caution: Ifyousellpartofapolicy,youcan’tgodirectlytothelifeinsurancecompanywhenyouwanttochangeyourbeneficiaryonthepartyouretainsinceonlyownerscanmakechanges,and the purchasing company becomes the owner. You will have to rely on the purchasingcompanytorequestthechange.Besuretogetconfirmationfromthelifeinsurancecompanythatanychangeinbeneficiaryismadeaccordingtoyourwishes.

3.7Beneficiaries,Payment,andMonitoring

The role of the beneficiary. You can expect that every purchasing companywill require thateachprimarybeneficiarysigna releasewaivinganyclaims tothe policy. If you do not want your beneficiary contacted about your policy,consider changingyourbeneficiary to someoneyouwouldnotmindasking tosignarelease.Beforeyouchoose thatperson, remember that ifyoudiebeforethe sale is completed, that person will actually receive the proceeds of yourpolicy.Analternativeistonameyourownestateasthebeneficiary.Youcouldthen sign the release on behalf of your estate. If you die in the interim, themoneywillpassthroughyourwill.

Tip.Donotdesignateabeneficiary“irrevocably,”unlessthereisagoodreason.Itmakesitmoredifficulttosellapolicybecauseyoucannotmakeasubstitutionfor an irrevocable beneficiary without the irrevocable beneficiary’s writtenconsent.

Paymentoftheproceedsofasale.Generally,purchasingcompanieswillpaytheproceedstowhomeverandhoweverthesellerdesignates.Insistthatpaymentbe by certified check, bank check, or by wire transfer directly into a bankaccountofyourchoice.

Tip. Be sure to insist on a lump-sum payment. Do not accept any type ofinstallment payment unless it is legal in your state and the purchaser legallysegregates the funds to pay the future installments or fully funds an annuitypolicy.Thelast thingyouneedis to loselaterpaymentsbecausethepurchasergoesoutofbusiness.

Monitoring.Sincepurchasersarenotpaiduntil theinsureddies, thepurchasermust have a system of keeping track of each insured. There is no standardmonitoring method in the industry. Some companies actually call insuredsmonthlyto“seehowyouare.”Attheotherextremearecompaniesthatattempttohaveaslittlecontactwiththeinsuredaspossible,checkingcreditcardreportsto monitor use (on the assumption that if the card is used, the person is stillhere),orcheckingwiththeattendingphysician’soffice.

Tip. If you don’t want a telephone call from the purchaser, follow themonitoringprocedureestablishedbyitprecisely.Attheslightestnoncompliancethepurchaserwillusuallyattempttocontactyoutoconfirmyourstatus.

3.8TheBestWaytoSellaPolicy

In theory, the sale of a life insurance policy is simple. However, since theprimaryfactorthatdeterminesprice,lifeexpectancyofaparticularindividual,ismore of a guesstimate than a science, offers between different purchasingcompanies can vary greatly. Even if a company offers higher prices than anyotherforascheduleoflifeexpectancies,determinationoflifeexpectancyissosubjectivethatnocompanycanguaranteethebestprice.Further,ifyoustarttheprocess, you don’t want to find a month or two later that the purchasingcompanywon’tpurchasethepolicybecauseofaglitchtheyseethateithercouldhavebeencorrectedorisnotaglitchtoanothercompany.

Youhavetwoalternatives tosuccess.Oneis togodirectly toat least threepurchasing companies, apply to each of them with the awareness that yourdoctor and insurance companywill be contacted by each, negotiate any price

they offer (including arguing that you are going to die sooner than theyanticipate),andthenoverseetheclosingwiththecompanyofyourchoice.

If you choose this route, be sure to determine the net amount of the offer(somecompaniesdeductmoneytopayfuturepremiums;somedeductmoneytobeheldbackfornotificationpurposes,etc.)andtoverifythatsufficientfundingis available to be placed in an escrow account for payment.Don’t let anyoneintimidateyouintoacceptinganofferbysayingitwillbewithdrawnunlessyouactimmediately.

Thealternativeistoengageabrokerwhowilldoalltheworkforyou.SinceI founded and am still head of a national brokerage firm, I am prejudiced infavorofbrokers.Here’swhy.Abroker

•helpsapplythegeneralprinciplestoyourparticularsituationandgivesyouadvice.(Iamaslikelytosuggestpeoplenotsellastoassistinasale.)

•providescriticalexpertise,particularlywithrespecttotargetinghigh-payingpurchasers.•gatherstheinformationonetimefromyourphysicianandinsurancecompanyandthencopiesitforasmanypurchasersasarewarranted.

•hasstrongnegotiatingskillsandincreasedbargainingpower.•advisesyouandoverseestheclosingifthereistobeone.•workstoreduceyourimmune-reducingstress.• canassist inobtaining the factsnecessary foryour taxadviser todetermine the tax statusof aparticulartransaction.

•shouldworkforyouatnocost,beingpaidfromthepurchaser’sshareofthemoney,ratherthanfromyourshare.

•doesallthenegotiation,soyoudon’thavetoarguewithapurchaser,orevenworse,agroupofpurchasers,abouthowsickyouareandhowshortatimeyouhave.

Thedisadvantagetoworkingwithabrokeristhatthepurchasermayreducetheofferforyourpolicytotakeintoaccountthecommissionthepurchaserwillhave to pay the broker. Inmy experience this is rare. A good broker earns acommissionbydoingmuchoftheworkapurchaserwouldotherwisehavetodoat its own expense. Furthermore, a broker’s reputation rests on its ability toobtain the highest price for the sellers he represents, thereby increasing thebusinessheisabletobringtoapurchaser.Allofthesefactorsworktokeepthepricesofferedashighasthemarketwillbear,whichistoyouradvantage.

Ifyoudecidetosellapolicyonyourown,considerusingabrokerasoneoftheentitiestowhichyouapply.

Caution if you are selling more than one policy. Just because a viaticalsettlementpurchasingcompanyoffersthebestdealinaparticularsituationdoesnotmean itwilloffer thebestdeal all the time.Checkaroundbeforeyou sellanotherpolicy,eveniftherehasbeennochangeinyourhealth.

Choosingtherightpurchasingcompanyforyou.Therearedifferenttypesofpurchasingcompanies,butgenerallytheyfallundertheheadingof“self-funded”or“nonfunded.”

Self-funded companies have their ownmoney or available lines of creditwith which to purchase policies. Self-funded companies purchase policies intheirownname,althoughagroupofpoliciesmayeventuallyberesoldbyaself-fundedcompanytoanothercompanyoreventoindividuals.Thismeansthattheultimateownerofyourpolicymaybeanentityorpersonotherthanthecompanytowhichyouoriginallysoldit.Ifyouareconcernedaboutthispossibility,haveyourlawyerlookovertheclosingpapersforthetransactiontobesurethereisasatisfactoryprovisioninthecontractonthisissue.

Nonfunded companies purchase policies for ultimate ownership by anindividual investor in the“secondarymarket.”Thesecompaniesaresometimescalledbrokers,butthisisdifferentfromabrokerthatworkssolelyonbehalfoftheseller.Thedescriptionofthepolicyandtheinsured’smedicalconditionmaybebroadcastwidelytopotentialindividualpurchasers,althoughtheoreticallytheinsured’sidentityiskeptconfidential.

Considerationsinselectingapurchasingcompany.•Onlydealwithacompanythatislookingforanindividualwithyourmedicalstatusandapolicylikeyours.Workingwithanyothercompanyisawasteofyourtime.

• Only deal with a company that places an amount equal to the purchase price into anindependentlycontrolledescrowaccountimmediatelyuponreceiptofasignedcontract.

• If confidentiality is important to you, learn about the company’s procedures with respect toconfidentiality.Ifthecompanyinsistsonpermittingaresaleofthepolicy,besureconfidentialityrequirements extend to any and all purchasers—and that the purchaser doesn’t broadcast your

identifyinginformationtoalargenumberofpotentialpurchasers.• If tax isof concern toyouandyour state requiresviatical settlementpurchasingcompanies toregister,findoutwhetherthecompanyisregisteredandingoodstanding.Ifthereisnosuchlaw,has the company complied with the minimum requirements in the National Association ofInsuranceCommissioners’statutesandregulations?

•Whatarethecompany’smonitoringprocedures?• Some sellers only want to sell to a company that pays a good price and cares about peoplesimilarlysituated.Todetermine thesoulof thepurchasingcompany,askwhether thecompanygives to anyGuardianOrg; if so, howmuchand towhichones?Do its employeeshelppeoplewithseriousillnesses?Besuretoverifytheinformation.

Tip. Insteadofacceptinga lowerpricefromacompanythatgives toacharityyoucareabout,goforthehighestpriceandmakethedonationyourself.

•Manypurchasingcompaniesadd“bonuses”totheirofferssuchasprogramsofferingdiscounteddrugsor other items,medical or financial advice, and the like. I haveyet to see any “benefit”offeredbyapurchaser thatyoucannotgetonyourownorpossibly throughmembership inanorganizationthatyouarealreadylikelytobelongtoorthatyoucouldjoinforaminimalpayment.Still,ifthepriceisright,the“bonuses”maybeofinteresttoyou.

•Thecompany’shonesty.Youdon’twanttoworkyourwaythroughtheprocessonlytofindthe“initial” offer is suddenly greatly reduced after six weeks of waiting for the money. YourGuardianOrgmayhaveinformationonthis.

Tip.Donotspendmoneyfromaviaticalsettlementuntil it is inyouraccount.Until then any number of unforeseeable problems may prevent or delay thetransaction.Anddonotdealwithanycompanyjustbecausetheysound“nice.”Likewise,donotbelulledintothinkingthecompanyisnottryingtomaximizeitsreturn.

Section4.TerminatingCoverage

4.1IndividualPolicies—CashSurrender

Ifallothermeansofaccessingcashfromyourpolicyfail,andifyoureallydon’twant to maintain coverage under any circumstances, as a last resort you canexercise the cash surrender option and terminate your policy. Under thisprovision, included in most individual life insurance polices, you receive a

designated amount of money when the policy is terminated (in insuranceparlance, thepolicy is “surrendered”).When this happens, neither younor thebeneficiaryhaveanyfurtherrightstothepolicy.Thisalternativeusuallyyieldsyoutheleastamountofmoneyofallthealternatives.

Tip.Talkwiththelifeinsurancecompanyaboutdecreasingthepremiumtoanamount that works for you. The company can tell you how much the deathbenefit will be reduced to reflect the lowered premium. Also talk with yourbeneficiaryorotherfamilymemberorfriendandseeifheorshewillpayallorpartofthepremiums.

4.2GroupInsurance—LeavingYourJob

Wehave already covered leaving your job to go on disability. Sometimes theemployercontinuestopaytheinsurancepremiums,sometimestheemployeehastopaythepremiums,andsometimesthepremiumsarewaivedandnoonehastopay themso longas thedisabilitycontinues. If therearenorights tocontinue,youshouldatleasthavetherighttoconverttoanindividualpolicy.Inanyevent,sincethelifeinsurancecompanywantsrelieffromanysituationthatmayleadtoaclaim,followthecontractualprovisionspreciselysothecompanydoesn’thaveanexcusetoterminateorevenreinstatethecoverage.

If you leave your job for any reason other than disability, many grouppoliciesletyouconvertyourcoveragetoindividualinsurancewithoutevidenceof insurability. Even if you obtain additional coverage through anotheremployer,itisgenerallyworthwhileforyoutoconvertasmuchinsuranceasyoucanafford.

Ifyoucan’t afford tokeep the coverage, considerborrowing themoney topaytheinitialpremiumswithaviewtosellingitimmediately.Ifafriendwon’tlendyouthemoney,aviaticalsettlementbrokerorcompanyprobablywill.

Tip.Donotrelyonyouremployeroranyoneelsetoinformyouofyourrightstocontinueyourlifeinsurancecoverage.Attimeswhenaclientwasn’tinformedof

aright toconvert, Ihaveargued thecasewith the insurancecompany. Ineachinstance the company luckily agreed to “do the right thing” and issue theindividualcoverageasofthedateofterminationofwork,butdon’trelyonthegoodwillofthecarrieroryouremployer’sbenefitsdepartment.

Section5.HowtoObtainLifeInsurance(EvenwithaDiagnosisofaLife-ChallengingCondition)

Itmay not sound possible, but even someonewho has been diagnosedwith alife-challenging condition may be able to purchase life insurance. Credit lifeinsuranceisdiscussedinchapter21,section1.Thenextsectionsprovideadviceabouthowtolocateindividualandgroupcoverages.

Tip.Checktheratingofthelifeinsurancecompany,particularlyifyouintendtosellthelifeinsurancecoverage.

5.1IndividualLifeInsurance

Ifyouarelookingtopurchaseindividuallifeinsurance,pleasereadthroughthisentiresectionbeforecontactingabrokeroralifeinsurancecompany.

Increasesincurrentindividualcoverage.Yourinsurancepolicymaygiveyoutherighttopurchaseadditionalinsuranceatdifferentperiodswithoutamedicalexaminationorevenanymedicalquestions. It isworthcheckingyourpolicies.This right must be exercised during the period specified in the policy or itexpires.Thereisusuallyanewsuicideperiodthatattachestotheincrease.Ifso,theincreasecannotbesoldduringthesuicideperiod,buttheunderlyingpolicystill can. (Think of it as a sale of a part of your coverage—see section 3.6above.)

Thetraditionalapproach.Dependingonthenatureoftheconditionwithwhichyouhavebeendiagnosed,andyourcurrenthealth,itmaybepossibletoobtainaregularlifeinsurancepolicythatcontainsaratedpremium(anextrapremium)

to take account of the extra risk the insurance company is assuming—just asairlinepilotsare“rated.”Theprobability isgood that the life insurancecarrierthatsellsyouanindividualpolicywillinsistthatyoupurchasepermanent,ratherthan term, life insurance. Permanent coverage of course carries a higherpremium.

Tip.Ifyouwanttofindoutifyoursituationpermitsyoutoobtaincoverage,forsafety,contactalifeinsurancebrokerwhomyoudonotknowunderanassumedname to findout the typeof policy thatwouldbe issued, themaximumdeathbenefit,andthepremiumthatwouldbechargedforsomeoneatyouragewithaconditionlikeyours.Besuretogiveanaccurateaccountofyourmedicalhistoryand current condition aswell as your desires.Understand the informationyoureceive isprobablyonlyan indicationandnotabindingpricesincebefore thepolicy will be issued the life insurance company will probably have to dounderwriting (a review of your health condition to determine whether thecompanywillissueapolicyand,ifso,atwhatpriceandwithwhatrestrictions).

Do not complete an application with your real name based solely on theinformationsuppliedbyonebroker:hemayjustbetryingtogetyoutocompleteanapplicationhopingtoearnacommissionifitworks.Toomanybrokersdon’tcarewhetheryou’llberejected.Youshould,sinceyournameandtherejectionwill probably be reported to the Medical Information Bureau (MIB), whichcouldjeopardizeyourchancesofevergettinganylifecoverage.

Tip. If you can’t find this kind of life insurance coverage in your state, callbrokersinnearbystatesorstatestowhichyoucaneasilytravel.Youonlyhavetobeinthestateinwhichthepolicyisissuedatthetimeyousigntheapplicationforit.Youdonothavetobearesidentofthatstate.Ifyoudotraveloutofstatetoobtainthiskindofcoverage,retainproofoftravel(suchasrestaurant,hotel,carrental,planeticket,and/orgasreceipts)withyourcopyofthepolicyincasethe insurancecompanyever tries tocontest thecoverageon thebasis thatyouwerenotinthestatewhenyousignedtheapplication.

Tip. If you can’t find a traditional policy with full death benefits, consider apolicy with limited benefits, known as a graded policy, in which the deathbenefit starts small and increases incrementally over two years until the fullamountisreachedattheendofthesecondyear.

Note. When applying for individual insurance, assume that the insurancecompanywill learneverythingaboutyourhealth that is inyourMIBfile,withtheexceptionofinformationlearnedduetoadisabilityinsuranceclaim.Priortoapplyingforanindividualpolicy,findoutwhat theMIBhasonfileaboutyou(seechapter3,section6).

Simplified issue. For policies with death benefit amounts under $50,000 orperhaps even $100,000, many insurance companies employ simplifiedunderwriting procedures, requiring only completion of questions on anapplication,withoutbloodtestsorphysicalexams.Youcanaskyourbrokerforthemaximumamountofcoveragehecanobtainwithoutabloodtestorphysicalexam.This is not a tip-off—many totally healthy people don’twant to take aphysical.

Review the applications to see if you can answer the questions truthfully.Somepeoplehavebeenknowntolieonanapplicationinthehopethattheywillsurvive the two-yearcontestableperiod.However,even thoughthepolicymayonlycontainastandardtwo-yearcontestableclause,inagreatnumberofstates,the life insurance company can deny coverage at any time, giving your heirsbackthepremiumstogetherwithinterestif“fraud”isproven.

The larger the policy, themore underwriting you can expect the insurancecompany to do.With certain small policies, the brokermay actually have theauthoritytoissuethepolicyonthespot.

Some clients have expressed the fear that life insurance companies shareinformation about peoplewho are diagnosedwith a life-challenging conditionjust as they often share information obtained through applications for lifeinsurance. The American Council of Life Insurance and the MIB have bothstatedthatsuchinformationisnotshared,andthattodosomaybeagainststate

law.

Tip.Ifyoucan’tfindsimplifiedcoverageinyourstate,reviewthetiphere.

Simplified issue—mortgage life insurance. In many states it is possible topurchase life insurance to cover amortgage debt (often up to $200,000)withonly a few simple health questions. It may even be possible to obtain thiscoveragewithout anyhealthquestions.While, as youwill see elsewhere, I donot generally recommend that you purchase a house, if you are consideringmakingsuchapurchase,obtaining thismuch life insurancemaybeadecidingconsiderationforyou.

Sincemortgagelifeinsuranceisaformofcredit lifeinsurance(theamountof the death benefit decreases as the balance of your outstanding mortgagedecreases), the coverage is generally not salable and does not have anyacceleratedbenefitfeature.Ifyoudie,thecoveragepaysoffthebalanceofyourmortgageorthecoveredportionofit.

Guaranteed issue. A guaranteed issue policy is guaranteed to be issued nomatterwhatyourmedical conditionmaybewhenyouapply for the coverage.Nomedicalquestionsareaskedontheapplication.Thepoliciesaregenerallyforsmalleramounts,thepremiumsarecomparativelyhigh.

Guaranteedissuepoliciesgenerallyprovideasafetyvalvefortheinsurancecompanyiftheinsureddieswithinthefirsttwoyearsofthepolicy’sexistence.Generally, during that time the beneficiary only receives a return of thepremiumspaidplusinterest(whichcanbeasmuchas8–12percentayear).Avariation isagradedpolicywithcoveragestarting lowandbuilding to the fullamount at the end of the two years. Some policies decrease the death benefitafteragivenage,suchassixty-five.

Manycompanieslimitguaranteedissuecoveragetopeopleoveragivenage,suchasforty-fiveorfifty,oraclasssuchasveterans.

Creditlifeinsuranceisaformofguaranteedissuecoverageinthesensethatnomedicalquestionsareasked.However,aswithmortgagelifeinsurance,credit

life insurance cannot generally be sold, and there is no accelerated benefitfeature. The main value of this coverage is that it pays the balance on yourrelevantcreditcardsupondeath.

Tip. If you do research and stay alert to the situation, youmay findmultiplesourcesofguaranteed issue life insurance.Multiplesof$5,000or$10,000addupquickly.

Tip. If you can’t find guaranteed issue coverage in your state, review the tiphere.

5.2GroupLifeInsurance

Aninsurerreliesforitsunderwritingofgrouppoliciesmainlyonthefactthatapersonjoinsorisamemberofaparticulargroupforreasonsotherthantoobtainlifeinsurance.Consequently,itmaybepossibletopurchasesometypesofgrouplife insurance without providing anymedical information or taking amedicalexam.Opportunityforenrollmentinsuchcoverageisusuallylimitedtospecifictimeperiods(openenrollments)and/orevents(uponcommencinganewjoborjoiningaprofessionalassociation).

Note: Since there are nomedical questionswith such group life insurancepolicies, the information that the MIB may have about your health is notrelevant.

Variousalternativesforobtaininggroupcoverageareasfollows:

Anewemployer.Many employers offer life insurancebenefits to employees.As a general rule, the larger the employer, the more likely it will offer lifeinsurancecoverage.

Thefederalgovernmentofferslifeinsurancetoallnewemployeesequaltoamultipleofyourannualsalary.Thesalarymaynotbeimpressiveworkingforthegovernment,butthebenefitsare.

Ifyouhaveachoice,andifyoupayanypartof thepremiums, lookforan

employerwithayoungerpopulation—itwillprobablyhavelowerpremiums.

Tip.Itispossibletomovefromcompanytocompany,obtaininglifeinsurancewith each new job and converting it on leaving to an individual policy thatcannotbe terminated so longas thepremiumsarepaid.ArnieK. accumulated$350,000inlifeinsurancethisway.Donotjoinagrouporanemployerjusttoobtain life insurance coverage until you verify that the coverage offered issalable.Also, do not lose sight of yourmedical coverage,which is critical toyourfinancialhealthunlessyouarewealthy.

Yourcurrentemployer.Takeadvantageofanyopenenrollmentperiods.If your employer does not have group life insurance, but does have health

insurance,itmaybepossibletoconvinceyouremployertomovethecoveragetoa company that offers guaranteed issue life insurance along with healthinsurancecoverage.

Tip. Check your group health plan. It may include the right to purchasenonmedicallyunderwrittenlifeinsurance.

Spouse. If you are legally married, or if your significant other works for anemployer that recognizes nontraditional relationships, review its coverage todetermineifyouqualifyforlifeinsuranceunderhisorhergrouppolicy.

Yourownbusiness.Ifyouownyourownbusiness,considerbuyinginsurancefortheentirefirm.Dependingonapplicablestatelaw,youmaybeabletolimitthe availability and/or amount of coverage to certain classes of employees.Crunch thenumbers.Toobtaincoverageforyourself, itmaybeworthwhile topay100percentofthepremiumsfortheemployeesthelawwouldrequireyoutocover.

Tip. Be sure any business policy you purchase permits an unlimited right ofassignment. Ideally it should also have a disabilitywaiver of premiumand anaccelerateddeathbenefitprovision.

Employee leasing company. If you are an employee andyour employerdoesnotoffergroup life insurancecoverage forwhichyouqualify, consideraskingyouremployertoleaseyoufromanemployeeleasingcompanythathasgrouplifeinsuranceandhealthinsurancebenefits.Anemployeeleasingcompanyisacompanythat“leases”itsemployeestoworkforanothercompany.

Ifyourcurrentemployerwon’t“rent”you,perhapsanotheremployerwill.

Association.Ingeneral,thehighertheduesandrequirementsformembershipinan association or other group, the easier it is for a life insurance company tooffernonmedicallyunderwrittencoverage.Theassumptionisthatapersondoesnot become an attorney, for instance, just to join a bar association to obtaingrouplifeinsurance.

Contact any association for which you may qualify (including readinggroups,chessclubs,fraternalorganizations,andpoliticalgroups)todetermineifthey offer life insurance coverage and how to qualify. It may even be worthgoing to school to learn about a given area if that allows you to join anassociation with substantial life insurance. Remember, for you, life insurancemaybecomealiquidasset.

School insurance. Given the average age, health, and life expectancy ofstudents, it is understandable that these inexpensive group policies are issuedwithoutmedicalunderwriting.Ifyou’reastudentorwillingtobecomeone,thisisworthcheckingout,butdonotbesurprisediffull-timeattendanceisrequired.

Deferredvariableannuities.Ifyouareconsideringpurchasinganannuity,lookatdeferredvariableannuities.Thisproductprovideslifeinsuranceaspartofanannuitypolicy.Theamountof thedeathbenefitunder thepolicy is tied to thesecurities purchased. The death benefit varies according to the predeterminedmarket value of the purchased securities at the time of death. The coverageprovidesaguaranteethatifatthetimeoftheinsured’sdeaththemarketvalueofthesecuritiesisbelowtheamountofthedeathbenefit,thedifferenceismadeup

throughlifeinsurancecoverage.

Tip.Keepinmindthatthebeneficiarynamedinyourlifeinsurancepolicywillreceivethedeathbenefits,notthepeoplenamedinyourwill.Ifyoudon’twantpeople involved with your life insurance to know the identity of yourbeneficiary,nameyourestateasthebeneficiaryandprovideforthepeopleyoucareaboutinyourwill.

Chapter20

OptionsforConvertingRetirementAssetsintoIncome

Cessationofworkisnotaccompaniedbycessationofexpenses.

—CatotheElder

Retirement assets are typically considered “long-term, low-liquidity”investments—since mandatory distributions do not begin until age 70½, andvoluntary distributions generally cannot be made before age 59½. Even then,voluntary distributions are subject to income tax, penalty, and excise tax.However, several options exist for converting your retirement assets intoimmediatecash.

Caution:Tappingintoretirementfundsisnotsomethingthatshouldbedonewithout careful consideration.Using these funds nowmeans that asset growthwillnotbetaxdeferred.Italsomeansthefundsmaynotbeavailabletoyouatretirement,andthemoneywillnolongerbeprotectedfromcreditors,includingtheIRS.Considertheothernewusesofassetsdiscussedinchapters19,21,22,and23,andspeakwithanaccountantorattorneybeforeaccessingthesefunds.

Section1.Loans

Manyretirementplanspermitloans

•foranypurpose;•uptotheamountsyouhavecontributed(butnotmorethan$50,000);•subjecttointerestpaymentstotheretirementplan,whichincertaincasesmaybetaxdeductible(e.g.,ifyouusetheloantopurchaseahome);

• thatmustbe repaidquarterlywithin fiveyears (unless the loan isused topurchaseahome, inwhichcasethereisnolegallimitontherepaymentperiod);

•thatarenotsubjecttocurrenttaxunlessyoustopmakingrepayments.

Loansversuswithdrawals.Loansaremoreflexible thanwithdrawalsbecausegenerally you do not have to demonstrate a purpose for a loan, whereaswithdrawalsaretypicallymadeforspecialpurposes,suchashardship.Loansarealsocheaperthanwithdrawals,sinceloansaresubjecttointerestbutnottax(ifrepaidontime),whereaswithdrawalsaresubjecttotaxandtaxpenalties.

Loanoptionsunderemployer-sponsoredplans.Loanprovisionsvaryamongemployer retirement plans, so check the specific terms of your plan regardingloanqualification,purpose,amount,andrepayment.Youremployerdetermineswhetheryouqualifyforaloan,typicallybyrequiringyoutodemonstrateeitherthat you have exhausted your personal financial resources or that alternateresourcesarenotavailabletoyou.Ifyouqualifyforaloanfromyourretirementplan,youwillbeabletoborrowanamountuptoone-halfofyourvestedaccountbalance(typicallyupto$50,000).

If you have an outstanding loan balance against your employer retirementplanandareabout tochange jobs,youmust repay thebalanceoryoumaybeable torollover thebalance toyournewemployer’splan. Ifyoudonot repaythebalance,itwillbetreatedasawithdrawalsubjecttoincometaxandthe10percenttaxpenaltyforearlywithdrawals.

LoansfromESOPplansarenotpermitted.

Loanoptionsunderindividual-sponsoredplans.• Loans from qualified retirement plans such as pension, profit-sharing, and 401(k) plans arepermittedunlessyouareasoleproprietor,partner,orshareholderofanScorporation.

•LoansfromIRAsandSEP-IRAsarepermitted,butwithheavypenaltiesiftheloanisoutstandingformorethansixtydays.

•Loansfromannuitiesarenotpermitted.

Tip.Ifyouareconsideringaloanformorethansixtydaysandhavemorethanone retirement plan, borrow fromyour IRA last because of the possible taxesandpenalties.

Section2.Withdrawals

Withdrawals, also known as distributions, can be made from your pretax orafter-taxcontributions.Withdrawalsfromafter-taxcontributionscanbemadeatany time, for any purpose, and only the tax-deferred earnings on thesecontributionsaresubjecttotax.Withdrawalsfrompre-taxcontributionscanonlybemadeincertaincircumstancesandareotherwisesubjecttoincometaxplusa10percenttaxpenaltyforearlywithdrawalsbeforeage59½.However,youmaybeeligibleforspecialprovisionsthatpermitearlydistributions,sometimesonatax-reducedbasis.

Depending on thewording in the plan, anyonewho is disabledwithin theSocialSecuritydefinitioncanusuallywithdrawfundswithoutpenalty.Disabilitydoesnotchangethetaxstatusofthemoneywithdrawn.

Throughout the rest of this section, withdrawals refers to withdrawals ofpretaxcontributions.

2.1InGeneral

Qualifiedplans.Withdrawalsmadefromallqualifiedplansintheeventofyourdisability, although subject to income tax, are exempt from the 10percent taxpenaltyforearlywithdrawals.DisabledisdefinedunderTaxCodesection72(m)as “unable to engage in any substantial gainful activity by reason of anymedicallydeterminablephysicalormentalimpairmentwhichcanbeexpectedtoresultindeathortobeoflong,continuedandindefiniteduration.”

EmployerretirementplanandyourIRA.Withdrawalsmadebeforeage59½from your employer retirement plan or IRA, in “substantially equal paymentsover your life expectancy, or the joint life expectancy of you and yourspouse/namedbeneficiary,”areexemptfromthe10percenttaxpenaltyforearlywithdrawals.

Pension and profit-sharing plans. Withdrawals from a pension or profit-sharingplanmayalsobeavailablewithouta10percent taxpenalty if theplanhasanearly-retirementprovisionofagefifty-five.

Tax-favored retirement accounts. Withdrawals from tax-favored retirementaccounts are exempt from the 15 percent excise tax on annual withdrawalsexceeding$155,000,forathree-yeartrialperiodbeginningin1997.Peoplewithserious health problems or critical financial needs should consider takingadvantage of this three-year tax break, despite the prevailing 10 percent taxpenaltyforprematurewithdrawals.

Forward averaging.Withdrawalsmade at any age in the event of “total andpermanent disability” are eligible for reduced income tax treatment underforward averaging rules. Using forward averaging rules, a lump-sumwithdrawalwillbe treated for taxpurposesas if itweremadeover five to tenyears, resulting in a reduced rate of taxation.Note, you can only use forwardaveragingrulesonce.YoucannotuseforwardaveragingrulesforIRAorSEP-IRAwithdrawals.Five-yearaveragingwillbephasedoutin1999.

2.2OptionsUnderEmployer-SponsoredPlans

Withdrawals from employer retirement plans can only be made for specialpurposes: to fundmedical expenses, tuition costs, or a home purchase. These“hardship withdrawals” are generally subject to income tax and often a 10percenttaxpenaltyforearlywithdrawals.Youremployer(usingIRSguidelines)determinesifyouqualifyforhardshipwithdrawals,whichmayinclude:

•Withdrawalstofundmedicalexpensesexceeding7.5percentofyouradjustedgrossincomearesubject to incometaxbutexemptfromthe10percent taxpenaltyforearlywithdrawals(unlikeotherhardshipwithdrawals).

Tip. Your medical expenses must exceed 7.5 percent of your adjusted grossincome for you to qualify for income tax deductions as well as penalty-freewithdrawalsfromyourretirementplan.Thecatchisthatwithdrawalsfromyourretirementplanraiseyouradjustedgrossincome,inturnraisingthethresholdforallowable deductions. Therefore, try to consolidate your deductible medicalexpensesbyacceleratingordeferringexpensestoyearswhenyoucanexceedthe

7.5percentthreshold.

•Withdrawalstofundcollegeexpensesforyou,yourspouse,oryourchildren.• Withdrawals to fund the downpayment for a home or to prevent a threatened mortgageforeclosure.

•WithdrawalsofdividendsearnedinanESOPareexemptfromthe10percenttaxpenaltyforearlywithdrawals.

•Ifyouareagefifty-fiveorolderandabouttoleaveyourjob,youcanmakeawithdrawalfromyouremployerretirementplanjustbeforeyourolloveryourretirementaccounttoanIRA,andthewithdrawalwillbeexemptfromthe10percentpenaltyforearlywithdrawals.

• Withdrawal of employer stock from your employer retirement plan: There are certain taxadvantages associated with the employer stock in your plan, which you can apply when youwithdraw the stock from your plan as you change jobs or retire. The three options forwithdrawingtheemployerstockinyourplanaretocashout,totakestockcertificates,ortorollovertoanIRA.Eachoptionhasdifferenttaxconsequences.Ifyourplancontainsaconsiderableportionofemployerstockthatissignificantlyappreciable,takingstockcertificateswillmaximizetaxadvantages,bothforyouandyourheirs.

Information.Youcanobtaininformationaboutyourplanfromyouremployeroryourunion.Youarelegallyentitledtothisinformation.

2.3OptionsUnderIndividual-SponsoredPlans

WithdrawalsfromIRAscanbemadeforanypurpose(unlikewithdrawalsfromemployerretirementplans).

ThreetypesofIRAwithdrawalsareeligiblefortaxexemptions:

•Withdrawalstofundmedicalexpensesexceeding7.5percentofyouradjustedgrossincomeareexemptfromthe10percenttaxpenaltyforearlywithdrawals.

•Temporarywithdrawalsmadeforsixtydaysarenotsubjecttoincometaxorthe10percenttaxpenaltyforearlywithdrawals(unlessthewithdrawalisnotreinvestedwithinsixtydays).

• Periodic withdrawals using the life expectancy method are exempt from the 10 percent taxpenalty for earlywithdrawals. Allowable annual withdrawals are determined by dividing yourIRA account balance by your life expectancy or the joint life expectancy of you and yourspouse/beneficiary(asprovidedinIRSlifeexpectancyschedules).Youcanbeginthiswithdrawalmethodatanyage,butmustthenmakewithdrawalsannuallythereafter.

Tip.BycombiningahomeequityloanwiththeIRAlifeexpectancywithdrawalmethod, you may be able to create a “tax-free” income stream to meet your

contingencyneeds.Forexample,youcouldtakeoutahomeequityloananduseyour IRAwithdrawals tomake themortgage interest payments on your loan.Although your IRA withdrawals are subject to income tax, your mortgageinterestpaymentsaretaxdeductible,therebycreatingataxoffset.Dependingonyourtaxbracketandprevailinginterestrates,thenetresultcouldbea“tax-free”sourceofemergencyfundingthatmightnototherwisebeavailabletoyou.

Withdrawalsfromannuitiesaresubjecttoincometax,plusthe10percenttaxpenalty for early withdrawals, plus surrender charges (up to a 7 percentwithdrawal penalty imposed by the plan sponsor). Generally, it is moreexpensive and difficult to make withdrawals from annuities than from othertypes of retirement plans—so if you think you might need to access yourretirementfundsearly,don’tinvestinanannuity.

Section3.Transfers

The funds in your retirement plan are “portable” investments, meaning thattypically you have the flexibility (within IRS and plan guidelines) wither totransfer these fundsamongdifferent investmentoptionsunderyourplan,or toroll them over to different plans. Transfers and rollovers are generally notsubject to tax,but theymaybesubject tocertainfees,suchascommissionsorpenalties,dependingonthetypeofplanyouhave.

3.1OptionsUnderEmployer-SponsoredPlans

Ifyouchangejobsorretireearly,youcanrolloveryourvestedretirementfundseither to your new employer’s plan or to an IRA. When rolling over yourretirement funds,makesurenot to takepossessionof the funds,oryouwillbesubject to income tax. There is also a refundable 20 percent employerwithholding tax and a potential 10 percent tax penalty for early withdrawals.Thereisoneexception:ifyouremployerretirementplancontainsaconsiderableportion of employer stock that is significantly appreciable, you will forfeit

certaintaxadvantagesforyourselfandyourheirsifyourolloveremployerstocktoanIRA.

Note thatonlypretaxcontributionsare eligible for rollover,while after-taxcontributionsmustbedistributedsubjecttoincometaxontax-deferredearnings.

3.2OptionsUnderIndividual-SponsoredPlans

IRAs permit transfers among different investment options offered under thesameplan,and rolloversamongdifferentplans.Transfersunder thesameplanmaybemadeperiodically(asperplanrules)andarenotsubjecttotaxorfees.Rollovers among different plans typically are permitted once per year and arenotsubjecttotaxes,butmaybesubjecttocertainfees.

Tip.Whenyouopenan IRA,makesure that theagreementyousigndoesnotpermitthetrusteetoautomaticallyrenewyourIRAuponmaturitywithoutyourpriorapproval.

PartVI

HealthMatters

PartVII

EstatePlanning

Chapter32

ProvidingforthePossibilityofIncapacitation

IthasbeenreportedthatJacquelineKennedyOnassisrefusedlife-prolongingmedicalinterventionbefore her death from non-Hodgkin’s lymphoma, and that former president Richard Nixoninsistedonreceivingcomfort-easingcareonly—notanyheroicmeasures.Theybothmadesuretheirwishesweresatisfiedthroughuseofadvancedirectives.

Section1.AnOverviewofAdvanceDirectives

Advance directives ensure that your wishes with respect to physical andfinancial matters will be carried out if you lose the capacity to make suchdecisionsforyourself.

Physical matters. If you become incapacitated and don’t have advancedirectives:

•Medicalauthoritiescan,andmayevenberequiredbylawto,extendyourlifeforyears,nomatterhowmeagertheexistenceandatyourexpense.

• In an emergency, your consent to a procedurewill be assumed.At other times, someone else,generallyyourlegalnextofkin,willhavetomakestressfuldecisionswithoutyourguidance.Acourtmayappointapersontomakethedecisions.Theappointeemaybearelativeorastranger.

•Peopleyoumaywanttomakethesedecisionswillnotbeconsidered,particularlyiftheyarenotyourlegalnextofkin.

•Youcanexpectextraordinarymedicalcharges.Accordingtoonestudy(amongmanythatreachthe same conclusion), hospital charges for last hospitalizations forMedicare patients averagedmorethan$95,000perpatient.Yet,theaveragecostforpatientswithatypeofadvancedirectiveknownasalivingwillwasonly$30,000.

Financialmatters. If you become incapacitated and someone doesn’t tend toyour financial health, it can become disastrous. Aside from the possibility oflosing your residence because no one has the authority to pay the rent ormortgage,youcouldloseallyourmedicalcoverageandlife insurancebecauseno one is paying the premiums.Also, no one could act quickly in a financial

emergencywithout costly and time-consuming court guardianship proceedingsforauthorization.

Ifincapacityoccursandappropriatestepshavenotbeentaken,aninterestedpartywouldhavetogotocourtwithwhateverdocumentationthecourtrequires.Time-consumingnoticewouldhavetobegiventoallinterestedparties.Ifthereismoneyinvolved,youcanexpectthatrelativesandcreditorswillcomepouringout of the woodwork. Obviously, having a court sort out your finances caninvolvemuchtimeandexpense.

Complementary. The different advance directives may seem duplicative buttheyactuallycomplementeachother.

State law and forms. Check the laws of your state to determine the legalrequirementsforadvancedirectives;e.g.,somestatesthatrecognizelivingwillsdo not allow any restrictions on food and water.Be sure the wording of thedocumentandyourexecutionofitconformpreciselytothestatelaw.

Thespecificformsandtheexecutionrequirementsforeachstatecaneasilybeobtained.For instance, theCancerInformationServiceat800-422-6237hasinformationonhowtoobtaintheformsforyourstate.Forafeeof$3.50perset($3.79 for New York State residents and $3.70 for residents of Washington,D.C.),appropriatestatedocumentscanalsobeobtainedfromChoiceinDying,anonprofitorganizationlocatedat200VarickStreet,NewYork,NY10014(800-989-9455or212-366-5540),ortheycanbeobtainedfreefromChoiceinDyingvia the Internet at www.choices.org. Any hospital or medical care facility inyourareashouldalsobeabletosupplyyouwiththisinformation,orconsultthesourceslistedintheresourcessection.

Ifyouliveinastatethatdoesnotlegallyrecognizeadvancedirectives,orifanadvancedirectiveisimproperlyexecuted.Itisstillimportanttostateyourwishesinwriting.Evenifthedirectivedoesnothavetheforceoflawbehindit,therightphysicianorcourtwillbelikelytoabidebyyourwishes.

The advice of an attorney may be helpful to ensure that your documents

accuratelyreflectyourwishesandarelegallyeffective.

Travel between states. If you split your time between states, be sure thedocumentsmeet therequirementsofeachstate.Alternatively,createaseparatedocument for each state in the form preferred by that state. Even though amajorityofstateshavereciprocityagreementsthathonorout-of-statedocuments,the advantage to using multiple directives is that familiarity with the state-approvedformmaypreventdelaysinvalidation.Acostlydelaymayoccurwhilelawyers,nurses,doctors,ortechniciansstudyanunfamiliarform.

Choosingyouragent.Ingeneral,anydesignatedagentshouldbe•atleasteighteenyearsold.•someoneyouareconfidentwillfightforyourwishes,ifnecessary.•someonewhoisagreeabletoactingasyouradvocate.•ideally,someonewhoknowsyouwellenoughtohaveaclearideaofyourpreferences,includingany religious considerations that need to be taken into account, so he or she can make aninformeddecision.

•availablebytelephone,butheorshedoesnothavetoberelatedtoyou,livingwithyou,oreveninthesamearea.

Evenifitislegalinyourstate,donotconsidernamingyourtreatingdoctororanemployeeoroperatorofthetreatinghealthfacilityasyouragent.Thereistoogreataconflictofinterest.

Tip.•Name the sameagent in eachofyourmedical advancedirectives, so there isnoconflict.Thisadvicedoesnotextendtoagentsforbusinessaffairsorguardiansofyourchildren.

•Namemorethanoneagentincasethefirstagentisunavailablewhenneededorrefusestoserve.Be clear in the document about your order of preference and that each agent namedmay actseparately(thewordinlegalterminologyisseverally).

• In any documents dealing with health matters, insert all of your agent’s telephone numbersincludingwork,home,summer,andasmanyaddressesasyouhavesotheycanbecontactedasquicklyaspossible.

A discussion to have. Despite the emotional difficulties, discuss your wisheswithyour agents aheadof time.Howcan someone respectyourwishes ifyoudon’t make them known? It’s not necessary to drive yourself crazy thinking

abouteverypossibility,butbeclearaboutyourcorebeliefs,andaboutasmanymattersasareimportanttoyou.

Tip.Writealettercontainingyourwishesasamemoryaidforyouragent.

Oraldirectives.Sincesomestatespermitoraladvancedirectives, itmayseemthat written documents are unnecessary. However, proving oral discussions isdifficult (particularly if testimony is contested) and costs timeandmoneyat atimewhenyoucan’taffordtowasteeither.

Periodicupdate.Reaffirmdirectivesby re-initialing and redating themyearlyand when your circumstances change (such as when a woman becomespregnant).Dr. Juliewas reluctant to follow thewishes expressed inGraham’slivingwillbecauseitwassevenyearsold.Luckily,Graham’ssonhadacopyofanewlivingwill thatGrahamhadexecutedayearbeforebuthadneglectedtogivehisdoctor.

Torevokeanyadvancedirective.Anydirectivecanberevokedatanytimebydestroyingitand/orexecutingadocumentrevokingitandnotifyinganypersonswhohavecopies,includingyourphysician.

Changing agents. You can change agents at any time by notifying them andanyoneelsewhomayhaveacopyof thedocument (custodians),preferably inwriting. Give custodians a new, properly executed document naming the newagent(s).

Access to the documents. Be sure to inform your spouse, significant other,and/orclosefriendsoftheexistenceandwhereaboutsofalladvancedirectives.Donotkeepthemlockedaway,especiallynotinyoursafe-depositbox.

Tip.Advancedirectivesconcerningyourhealthcanbephotocopiedtoareducedsizesoyoucancarrythemwhentraveling.

Enforcement.Forassistance inensuring thatyourwishes,or thoseofa lovedone,arehonoredby thehealthcaresystem,contacta localattorney;Choice inDying;orGentleClosure,60SantaSusanaLane,Sedona,AZ86336(520-282-0170).

Section2.HealthCarePowerofAttorney↑↑↑

Ingeneral, apowerof attorney is a document inwhichyou, themaker (alsoknown as theprincipal), give another person (the agent or attorney-in-fact)authoritytoactonyourbehalf,asiftheagentwereyou.Thedocumentspecifiesthematterstobecovered,whichcanbespecific,suchassellingyourhouse,orbroad,todojustaboutanythingyoucan.Youdeterminethetimeduringwhichthepowerof attorney is in effect. It canbe effective immediatelyor start at aspecifiedtimeorupontheoccurrenceofanamedevent.

Thehealthcarepowerofattorney, alsoknownas themedicalpowerofattorney,healthcareproxy,anddurablehealthcarepowerofattorney,isaspecialkindofpowerofattorneytriggeredonlyintheeventofyourincapacityor incompetence. As implied in its name, this document requires hospitals,nursing homes, doctors, and other health care providers to obey the agent’sdecisionsas if theywereyours. Inmost statesnoadult,notevenspouses, canmake medical decisions for another person without this proxy. While as apracticalmatteryourphysicianmaylistentoyourspouse,whytakethechance?

Thedocumentmustincludetheworddurable.Powersterminateintheeventtheprincipalbecomesincompetentunlesstheyincludetheworddurable.

Thehealthcarepowercanbetailoredtogiveyouragentaslittleorasmuchauthority as you choose, but generally it authorizes your agent to make alldecisionsregardingyourhealthcare,including

•theuseorwithholdingoflifesupportandothermedicalcare.•whethertoplaceyouinorcheckyououtofahealthfacilitysuchasahospital.•decisionsnotspecificallycoveredbyalivingwill.

Thepowerofattorneycanalsogivetheagenttheright

•todealwithMedicare,publicbenefits,andprivateinsurancecompanies.•toreviewyourmedicalrecords.

Thehealthcarepowerofattorneydoesnot

•giveanyauthoritywithrespecttofinancialmatters,administeringinvoluntarypsychiatriccare,orsterilization.

•generallycovermedicaltreatmentthatwouldprovidecomfortorrelievepain,whichmeansthatahealthcareproxycannotrefusepainreliefonyourbehalf.

Tip.Anunmarriedpartnerisnotconsideredarelativeunderthelawandcouldbebarredfromvisitingyou.Thehealthcarepowerofattorneygivesthatpersonvisitationrights.Ifyouhavechosensomeoneelseasyourproxy,makesurethatyoualsocreateadocumentthatprovidesyourunmarriedpartneraccesstoyou.

Duration.Thedurablehealthcarepowerofattorneygenerallyonlytakeseffectwhentwophysicians,includingthephysicianofrecord,certifythatyouarenotcapableofunderstandingorcommunicatingdecisionsaboutyourhealth.Itwillapplyaslongasthisconditioncontinues.

Copies.At least fouroriginal copiesof adurablehealth careproxy shouldbeexecuted:oneeachfortheagent,yourphysician,yourpharmacist(topermitanexchangeofinformationwithoutworryaboutinvasionofyourprivacy),andonetotaketothehospitalwithyoushouldtheneedarise.(Considerkeepingthislastcopyinyouremergency-roombag;seechapter29,section3.2.)Makesureyouragentknowstohavethedocumentplacedinyourrecordsatthehospitalintheeventthatyoucannotpresenttheproxydocumentuponadmission.

Section3.LivingWills↑↑↑

Permitted in one form or another in all states, a living will is an advancedirective that describes your “end-of-life” wishes concerning life-sustainingmedical treatment and procedures in the event you become incompetent orunconscious. The living will describes the physical condition(s) the maker

determines to trigger the document’s provisions, as well as the types oftreatmentsand/orprocedurestobeavoided.Itonlybecomeseffectiveasthefinalstatementofintentwhenthepersonwhoexecuteditisunabletomakeorexpresshisorherowndecisionsconcerningmedicalcare.Anyinstructiontowithdrawlifesupportmayhavenoeffectduringafemalepatient’spregnancy.

A living will can be drafted in general terms such as to “withhold orwithdraw any and all procedures that delay death,” or it can be drafted to bespecific about authorized and unauthorized procedures. As a general matter,nutritionorwaterarenotwithheldifdeathwouldresultsolelyfromdehydrationorstarvationratherthananexistingillness.

Tip.Checkwithyourdoctortoensureshewillabidebyyourdirective.Ifyourdoctorwon’tagree,findoutwhy.Ifyoucan’tcometoanagreementwithyourdoctor and yet don’twant to change to another physician, perhaps shewouldagree to be superseded by a predesignated physician in the event of yourincapacity.Insomestates,anydoctorwhoisfurnishedacopyofthedeclarationisrequiredtomakeitapartofthepatient’smedicalrecordand,ifthedoctorisunwillingtocomplywiththedirective,musttransferthepatienttoanewdoctor.

Your values and beliefs. Decisions about end-of-life medical treatments aredeeplypersonal and shouldbebasedonyourvalues andbeliefs.Because it isimpossibletoforeseeeverytypeofcircumstance,thinkaboutthequalityoflifethatisimportanttoyou.Youshouldconsider

•youroverallattitudetowardlife,includingtheactivitiesyouenjoyandsituationsyoufear.•yourattitudeaboutindependenceandcontrol,andhowyoufeelaboutlosingthem.• your religious beliefs andmoral convictions, and how they affect your attitude toward seriousillness.

•yourattitudetowardhealth,illness,dying,anddeath.•yourfeelingstowarddoctorsandothercaregivers.•theimpactofyourdecisionsonfamilyandfriends.•talkingaboutend-of-lifedecisionswithyourfamily,friends,doctor,and/oraclergyperson.

Homework.Talkwithyourdoctortofindoutwhatmayhappentopeoplewithyour condition, and what treatments might be used, including life support

treatments. Life support temporarily replaces or supports a failing bodilyfunctionuntilthebodycanresumenormalfunctioning.Attimes,thebodydoesnot regain the ability to function without life support. Thinking about thesematterswillnotmakethemhappen.

Beasspecificaspossible.Trytoidentifyproceduresasspecificallyaspossiblesothatlittle,ifany,decisionneedstobemadebythepeopletryingtocarryoutyour wishes. For instance, instead of using a general phrase like heroicmeasures,whichcouldmeananyofanumberofmedicalprocedures, listyourwishesabout:

•Cardiopulmonary resuscitation: A group of procedures performed on a person whose heartstopsbeating (cardiacarrest)orwhostopsbreathing(respiratoryarrest) inanattempt to restarttheheartandbreathing. Itcan includemouth-to-mouthbreathing,chestcompressions tomimicthe heart’s function and cause the blood to circulate, or drugs, electric shocks, and artificialbreathingaimedatstimulatingtheheartandrevivingadyingperson.

•Major surgery: Yourwishes could be stated in terms of “major surgery” or specific surgerycouldbeindicated.

•Respiratororothermechanicalbreathing:Breathingbymachinethroughatubeinthethroattoreplacethefunctionofthelungs.

•Dialysis:Cleaningthebloodbymachine.•Bloodtransfusions.•Artificialnutritionand/orhydration:Nutritionand/orliquidisgiventhroughatubeinaveinorinthestomachtosupplementorreplaceordinaryeatinganddrinking.Ifyouwantyouragenttohave the right towithhold nutrition or hydration, Choice inDying suggests itmay be best toincludeageneralstatementsuchas“Myagentknowsmywishesconcerningartificialnutritionandhydration.”Addingmore to thegeneralstatementmayunintentionally restrictyouragent’sauthoritytoactinyourbestinterest.

•Painmedications.Thesemayindirectlyshortenlife.

You could also state a general procedural preference tied to a projectedoutcome.For example, in the eventof lung failure, you coulddecide that youwanttobeplacedonarespiratorifitislikelythatyouwillsurviveit,butnotifthelikelihoodforsurvivalandreturntoaqualityoflifethatisimportanttoyouis slim. You can also state your preference in terms of medications andprocedures that treat thesymptomsrather than thedisease (suchaspainkillers,bloodtransfusions,tubefeeding,orarespirator).

Relationship to health care power of attorney. It is good to have bothdocuments. The agent named in your durable medical power of attorneybecomesinvolvedifyoubecomeunable,eventemporarily,tomakeahealthcaredecision.Thepersonnamedinyourlivingwillonlybecomesinvolvedifyouareneardeathandadecisionneedstobemadeaboutwithholdingordiscontinuingfurthermedicaltreatmentorsustenance.Whileitissafesttodesignatethesamepersonasagentinbothdocuments,ifyoudon’t,besuretoincludeaprovisioninyourlivingwill totheeffect that“if thereisaconflictbetweenthehealthcareproxyandthis livingwill, thenthe(namethepersonin theselecteddocument)shallprevail.”

Section4.DoNotResuscitateOrder↑↑↑

A DNR (do not resuscitate order) prohibits your medical team from takingmeasurestoreviveyouintheeventyourheartorlungsstopfunctioningifyouareneardeath.Yourwishesconcerningresuscitationmaybecontainedinyourliving will. However, if you only want to cover this one situation, you canexecuteaseparateDNRorder.

ADNR order only applieswhen the heart stops beating or the lungs stopbreathing. A DNR order only applies to CPR. It does not mean that othertreatmentsarenotofferedorgiven.Thatiswherethelivingwillcomesin.

OnlyafewstateshavelawsgoverningDNRorders.Generally,DNRordersareregulatedbyahealthcarefacility’spolicies.

Note: Some states require DNR documents to be executed prior to eachhospital admission in order to remain effective. If you want to have a DNRorder,forsafetytellthehospitaladmittingpersonnelwhenyouareadmittedtoahospitalornursinghomethatyouwant toexecuteaDNR(andbesure itgoesintoyourrecord).

Section5.Guardianship

Intheeventofincapacitation,judgesgenerallyappointanevaluator(usuallyan

attorney who will be paid from your assets) to evaluate the situation for thecourt. If the allegedly incapacitated person is found to be unable to makefinancialand/orhealthdecisions,thecourtappointsaguardian(alsoknownasaconservator)tomakethenecessarydecisionsforaspecifiedtime.

Usually the guardian is an attorneywhohas no clue howyouwouldwantyourlifemanaged.Theguardianmostoftenendsupjustpayingbillsratherthanmaking appropriate decisions that could incur liability. In addition, the court-appointed guardianwill require payment for services fromyour estate, addinganotherdrainonyourfinances.

Youcanimaginehowexpensivetheprocedure,andtheresultingdecisions,canbetoyouandyourestate.Evenworse,theguardianmaybeintrusiveinyourlifeanddecidetotallyoppositetowhatyouwouldwant.ItalsodependsonthestateandthecourtastowhethertheguardiancanorwouldtransferyourassetstosatisfyMedicaideligibilityrequirements.

Tip.Not only is a guardianship likely to bemore expensive than creating thedurable power of attorney described below, appointment of a guardian alsoentailspublicdisclosureofpersonalmattersandfinancialinformation.However,if youprefer tohave court supervisionof theguardianshipwith the additionalprotectionthatbrings,andfulldisclosuretoallinterestedparties,thenrelyonaguardianshipanddonotexecuteadurablepowerofattorney.

Preneeddesignationofguardian. Insomestates,youcanexecuteapreneeddesignationofguardian,whichdesignatesyourdesiredguardianintheeventofneed. Only judges can determine who the guardian will be, but they willgenerallyfollowyourdesignation.

Section6.TheDurablePowerofAttorney↑↑↑

One method of avoiding a court-appointed guardian is by use of a durablepowerofattorney.Adurablepowerofattorneyisatypeofpowerofattorneythat isused forbusinessandotheraffairs.Because it contains themagicword

durable, it does not terminate if the principal (the person who executes thepower of attorney) becomes unable to communicate or is otherwiseincapacitated.Itdoesterminateondeathoftheprincipal.

Powerscanbeeffectiveimmediatelyor,ifthelawofyourstateallowsit,canbespringing: thepower“springs”tolifewhenaneventoreventsdescribedinthepoweroccur.Forexample, it couldbe stated that thepoweronlybecomeseffectiveifandwhenyou,theprincipal,becomeincapacitated.

Thedocumentcangivetheagentorsomethirdpartythepowertodeterminewhentheprincipalhasbecomeincapacitated.Thisdoesn’tmeanyouragentcanjustdeclareyouincapacitated.Theagentmuststart theprocessbyaskingyourdoctortocertifyincapacity.Aneffectiveprovisionthatbalancestheneedsofthepartiesandtimelinesswouldbetopermittheagenttodetermineincapacitywiththe confirming advice (or agreement) of twophysicians, oneofwhom is yourattendingphysician.Ifyoudonotprovideanyinstructions,acourtmayhavetomakethedetermination.

Tip. Provide in the power of attorney for a periodic reexamination of yourcapacity.

Powers can be general, or limited to matters specifically stated such asdealingwithMedicaidorMedicare, signingchecksorpayingbills.Powersdonot generally (and in some states may not) cover health, marital status, ortestamentarydispositions. In a fewstates, aprincipal is allowed todelegate totheagentinthedurablepowerofattorneyvarioushealthcarepowersinadditiontocontroloverfinancialmatters.Insomestates,suchasNewYork,ahealthcarepowerofattorneymustbeaseparatedocumentfromapowerofattorneyusedtomanagethepropertyandfinancialaffairsoftheprincipal.

Tobesuretheagenthasallthenecessarypowerstotakecareofunforeseenmatters,itispreferabletoincludeagenerallistofimportantspecificpowersinaddition to the ones specified in the state statute. Unless these powers arespecificallymentioned, the agent’s actionsmay be limited to only themattersdescribedinthestatute.Considergivingyouragentthepowerto

•changeyourdomiciletoastatewhereMedicaidrulesaremorefavorable.•accesssafe-depositboxes.•renounceordisclaimaninheritanceand/orinsuranceproceeds.ThiscouldbeusefulforestateandMedicaidplanningunlessprohibitedbystatelaw.

•signtaxreturns,signIRSpowersofattorney,andsettletaxdisputesincaseofanIRSaudit.•dealwithandcollectproceedsfromhealthand/orlong-termcareinsurance.Withrespecttoyourlifeinsurancepolicy(s):totakealoanagainstthecoverage,toaccelerateanydeathbenefit,andeventosellthecoverage.

•makegiftsorcontinueagiftingplanthatcanbeusedtosystematicallyreducethesizeofanestateandthustheestatetaxortoqualifyforMedicaid.

•yourrighttorevokeoramendthepowerofattorneyitself.

Tip. To preclude any questions about your competency, when you execute apower, attach a letter from your attending physician stating that you arecompetent.

Apowerofattorney,likealloftheotherdocumentsdiscussedinthischapter,can be revoked at any time. It is revoked automatically when the principalreturnstomentalcompetenceordies.

Tip. In some states the appointment of a guardian or other representativeterminates thepowerofattorney. In thosestates,name theagent toalsoactasyourconservator,committee,orguardian.

Consultwithalocalattorneybeforesigninganypowerofattorneytobesureofthecorrectwordingandeffectivenessinthestateinwhichyoureside.

Whomtochooseasanagent.Unlike inmatters involvingyourhealth,wheretimelinessisusuallyimportant,youmayconsiderappointingtwoormorepeopletoacttogetherasyouragentforyournonhealthaffairs.Thedecisionsinvolvedinbusiness affairs arequitedifferent from those involvedwithhealth, and thechecksandbalancesthattwopeopleprovidemaybeofvalue.

Copies.Ifyouexecuteadurablepowerofattorney,executeuptosixduplicateoriginalssincemanycompaniesororganizationsinsistonhavinganoriginalfortheir files. Also, go to your bank, your stockbroker, and any other financial

institutions you deal with and get a copy of their power of attorney form.Althougheachof thesecompanieswouldeventuallyaccede toyourform, theyarelikelytogiveyouragentaneedlesshassleifyourpowerisnotontheirform.They can also be expected to hassle over a power executedmore than a fewyearsago,soitisbesttore-executethisdocumenteveryfewyears.

Tip.Whetherrequiredbystatuteornot,includethenotarizedsignatureofyouragentoragentsonyourpower.Itistheauthenticityofthatsignatureuponwhichthepersontowhomthepowerofattorneyispresentedwillberelying.

Section7.RevocableLivingTrust

Forpurposesofthischapter,itisonlyimportanttoknowthatanotheralternativeto guardianship is the creation of a revocable living trust. A revocable livingtrustallowsyoutobeincontrol,whileappointingasuccessortotakeoverifyoubecomedisabled.Theseentitiesarediscussedinchapter33,section3.6.

Idonot recommendcreationofa living trust solely toavoidguardianship.However,it isanancillarybenefittobeconsideredwhenexploringtheusesofsuchadevice.

Section8.PreneedDecisionsConcerningMinorChildren

Bybeingprepared,youcancontrolthesituationintheeventofyourincapacityordeathandassurethatyourchildrenaretakencareofinaccordancewithyourwishesratherthanthoseofacourt-appointedguardian.

Tip. If youuse anyof the alternativesmentioned in this chapter, discusswithyourpotential choice forguardianyourviewsoneducation,moralupbringing,religion,possiblynutritionandexercise,andanyothermattersofimportancetoyou.Confirmyourthoughtsinwritingsoyoudonothavetorelyontheperson’smemory.Includerelevantpersonalinformationabouteachminor—suchaslikesordislikes,medicalhistory,andschoolhistory.

8.1GuardianforChildren

One method of protecting your children is to petition the court to appoint aguardian now. This gives you the opportunity to present your version ofwhyyour candidate should be appointed. On the other hand, appointment of aguardiannowmeansthatyouhavetogiveupyourlegalrightstoyourchildren.While the children could live with you, and you can always ask the court torevoke theguardianship,nodecisionscouldbemadeabout thechildrenunlessyouobtaintheagreementoftheguardian.

Standby guardian. In some states you can go to court now to have a personnamed standby guardian—whichmeans the person doesn’t become guardianuntil a specific event happens, such as your incapacitation. In addition to theadvantages of a guardian just discussed, there is the added advantage that thepersonisinplacetostartactingimmediatelyifsomethinghappenstoyou.

Preneeddesignationofguardian.Anotheralternativeinsomestatesistouseavariantofthepreneeddesignationofguardiandescribedinsection5,designatingapersonasaguardianforyourchildren.Itprovidesforthecareofyourchildrenwithoutyourgivingupcustodynow,sinceitdoesnottakeeffectuntil(andonlyforaslongas)thereisa“need.”

Identifyingtheguardian. Ifyourchildren’sotherparentisaliveandinvolvedin their lives, that person would normally become the guardian. But if thatpersonisabusive,estrangedfromthechildren,orisunfit,youwillwanttopickanothercaretaker.

Whenchoosingapersontoserveasguardianorsubstituteguardian:•Manytherapistssuggestthatthechildrenbeinvolvedinidentifyingaguardian.Inanyevent,thismaybeagoodtimeforthechildrentospendmoretimewiththeirpotentialguardian.

•Doyouandthepersonsharethesamethoughtsonraisingchildren?Willthatpersonfollowyourwishes?

•Doesthepersonwanttoraiseyourchildren,anddotheyallgetalong?•Doesthepersonhavetheenergyandresourcestoraiseachild?Doesheorshehaveafriendorfamilythatcanhelpoutifnecessary?

• If you are considering naming a couple as guardian, be sure to statewhat happens if they no

longerlivetogether.Youdon’twantyourchildrentobethesadobjectofamessydivorce.•Keep inmind thecourtwillprobablycheck tosee if thepersonhasanypriorcomplaints filedagainsthimorher,particularlyconcerningchildabuse.

Tip.Theotherparentofyourchildrenhastherighttorequestcustodyofthem.To avoid a hassle, try to obtain the other parent’s written agreement to yourchosen guardian. If that doesn’t work, or if even the request would beproblematic,speakwithanattorneyabouthowtohandlethesituation.

8.2AnAdoptiveFamilyforYourChildren

Iftherearenoappropriatefamilymembersorfriendstocareforyourchildrenifyoudie,considerchoosinga“second family” for thechildren.Takingsuchanaction now relieves stress for both you and the children. Children will bereassuredthattheywillnotbeleftaloneorabandonedifyoudie.Therearelocalprogramstohelpparentsfindadoptivefamilies.

Anadoptionhasthefollowingadvantages:

•Thechildren,onceadopted,havethesamerighttosupportandbenefitsfromtheadoptiveparentsasiftheywereborntothem.

•Theadoptiveparentsdonotrisklosingcustody.

Disadvantages:

•Youloseallofyourrightstocustodyofthechildrenandtomakedecisionsforthem.•Theadoptionmayalsoaddmorestress to thechildrenbecause itcouldbeaconstant reminderthataparentisillandwillprobablybegoneoneday.

Adoptiongenerallyrequirestheconsentofbothparentsiftheyarealiveandhavenot abandoned the children.Acourtmust approve the adoptiveparent(s)andwillprobablyconductaninvestigationtomakesurethepersonorpeoplearefittobeparents.Adoptionispermanent,whileguardianshiporcustodymaybetemporary.

8.3FosterCare

Fostercare,placingyourchildrenwithadultswhowillberesponsibleforthem,without adopting them, is a fail-safe alternative if you arenot able to care foryourchildrenandnoothercareisavailable.Ifyouneedfinancialassistancetokeepyourchildrenoutoffostercare,orifyouwanttoexploresettingupfostercare now, contact your GuardianOrg, a social worker, or your local welfareagencyforadvice.

Section9.WheretoStoreAdvanceDirectives

Donotkeepanyadvancedirectivesinyoursafe-depositbox.Theywouldnotbeaccessible when needed. Preferably the documents should be kept as notedbelow.

Tip. Choice in Dying has an electronic living will registry. As part of theregistrationservice,theorganizationwillreviewyouradvancedirectivetoverifyvalidity.Incaseofamedicalcrisis,theregistrywillimmediatelyfaxacopyofyourdocumenttwenty-fourhoursaday.Theonetimeregistrationfeeis$45formembers,$55fornon-members.

Chapter33

ProvidingforthePassageofAssetstoYourHeirs

I’mnotreallysuperstitious,butIamafraidifIwriteawill,I’mgoingtodie.

—EllenN.

Regardless of health or age, every adult should plan for the transfer of assetswhenheorshedies.

Section1.InGeneral

Whyplan?Ifyoudon’tdecidewhogetswhatandthentakestepstoimplementthosedecisions, state lawwillmake thedecisions foryou inways that seldomhave anything to do with your desires. Their choice of heirs is generic, notspecifictoanyindividual.Likewise,ifyouareinvolvedinarelationshipthatisnotlegallyrecognized,yourassetswillpasstoyourbloodrelatives,leavingtheperson you care about in the cold—particularly if one of your assets is yourmutualhome.

Whatassets?Before focusingonhowyouwilldisposeofyourassets, reviewthefinancialpictureyoucreated inchapter4.Toviewyourfinancesforestateplanningpurposes:

•Allpermanent, term,andgroup life insuranceshouldbevaluedat thedeathbenefitminusanyoutstandingloansoracceleratedbenefitsreceived.Inadditiontocoverageyoumayhavethroughyouremployer,besuretoincludecoveragesthroughanygroup,union,association,andpoliticalorfraternalorganizationtowhichyoumaybelong.

•Deletefromyourcalculationsanydebtthatiscoveredbycreditlifeinsurancesincetheinsurancewillpaythedebt.

• Reduce the value of jointly held propertywith a right of survivorship by the amount that thesurvivingjointownercanproveheorshepaid.Thepresumptionfortaxpurposesisthatthefirst-to-dieownerofa jointlyownedpropertypaidfor itall,except for theamount thesurvivorcan

provehe/shepaid.Ifyouresideinacommunitypropertystate,yourspousemayownone-halfofyourassetseveniftheyarenotlistedinhisorhername,soonlyincludeyourhalfinterest.

•Even thoughyoudonotown them, include inyour calculations assetsoverwhichyouhaveapowerofappointmenttopaytoyourself,yourcreditors,yourestate,orcreditorsofyourestate,sincetheywillbeincludedinyourestateforestatetaxpurposes.

Tip. This is a good time to review beneficiary designations in life and/oraccidentaldeathinsurancepolicy(ies),retirementplan(s),bankaccounts, trusts,andcontractualarrangementsthathaveaprovisionthattakeseffectatdeath.Nomatter what you state in your will, these designations will prevail. If anydesignation doesn’t reflect yourwishes, change it. Connie T.was horrified tofind that the ex-husband she had jailed for not making his child supportpaymentswasstilllistedasthebeneficiaryonherlargestlifeinsurancepolicy.

Funeralarrangements.Yourwillisnotadmittedtoprobateuntilaperiodafteryourdemise.Therefore,itisimportanttomakeyourfuneralwishesknownnowtothosewhowillcarrythemout(seechapter34).Itisalsoagoodideatostateyourdesiresinyourwilltoconfirmyourintent.

Title.Ifanyofyourassetsareregisteredwithanotherperson,checkthetitletodeterminewhathappenswhenyoudie.Forexample,ifyouownyourhousewithanotherpersonwitha“rightofsurvivorship,”thehousepassesautomaticallytothatpersononyourdeath.

Achartonthenextpageshowsthelegalconsequencesofvariousformsofownership.Theconsequencesnotedwillbecomeclearasyouread through theremainderofthechapter.

Goals. Regardless of the state of your health, ask yourself what you want tohappentoyourassetsifyoudietomorrow.Decidehowtobalanceyourdesireswiththoseofyourlovedonesandthentaketaxesintoconsideration.

Thinkaboutwhomyouwanttoreceiveyourassetsandwhen.Forexample,ifyouwanttoleaveasubstantialamountofmoneytoaten-year-old,youmaywant thechild to receiveonly the income from theprincipaluntil age twenty-

one, at twenty-one to receive a portion of the principal, and at age thirty toreceivethebalance—atatimewhenheislikelytobeabletohandlemoney.

Also,thinkaboutalternateheirsintheeventthatapersonnamedinyourwilldiesbeforeyouorbeforethetimestatedtoreceiveanasset.

Periodic review. Review your total estate plan annually, updating it asnecessary,andperhapslettingthoseinvolvedknowaboutanychangesthatyoufeelarepertinenttothem.Agoodtimetodothisiswhenyou’recompilingtaxinformationeachyear.

Section2.YourWill

Nowthatyouhaveafixonyourassetsandwhatyouwanttodowiththem,youneeda challenge-resistant, legally valid, up-to-datewill (also knownasa lastwill and testament). This is necessary regardlessof health,wealth, ormaritalstatus.

Costshouldnotbeafactorindeterminingwhetheryouhaveawill.Willsaregenerallynotexpensive,rangingfromafewhundreddollarstoafewthousandforacomplexwill.ManyGuardianOrgshavelistsoflawyerswhowillprepareoneforfree.

Yourdesires.Awilldisposesofyourpropertyinvirtuallyanywayyouchoose.Therearecertainlimitationshowever.Awillcannot

•changethedispositionofpropertysubjecttotitleorcontractrestrictions(suchaspropertyownedinjointnamewithrightofsurvivorship,orcontractuallydeterminedbusinessinterests).

•disinheritaspouse.Attheveryleast,yourspousemaybeentitledtotheamountthatwouldhavebeenreceivedifyouhaddiedwithoutawill.Insomestates,suchasNewYork,whilethespousecanmakeanelection to receiveapercentageofyour assets in spiteof the termsof thewill, aspousecannotelectagainstlifeinsuranceorevenagainstassetsinarevocabletrust.

•bequeathassetstoanillegalorganization.• impose on a bequest conditions that are socially undesirable and therefore generallyunenforceable(suchasleavingmoneytoadaughterprovidedsheagreestodivorceherhusband).

What yourwillmust include.Yourwillmust includewhowill receive yourassets, what they will receive, when they will receive them, and how the

distribution will be administered. Each of these subjects are covered in orderbelow.

2.1WhoWillReceiveYourAssets

If you are married, in a relationship, or have children, your answer to thequestionofwhowillreceiveyourassetsmaybeclear.Ifyou’resingle,youmayneedtotakesometimetoconsiderwhoandwhatisimportanttoyou.

Tip. Whether as a payback for helping you or to assist others in a similarsituation, consider leaving at least a part of your estate to aGuardianOrg thatdoesresearchon,advocatesfor,orprovidessupporttopeoplewiththeconditionwithwhich you have been diagnosed. If you are considering donating a largepercentageofyourestate,askalocalattorneyorresearchforyourselfwhetherinyour state of residence there is a maximum you can leave to charity without

challengebyyourlegalheirs.

Tip. If any of your beneficiaries are havingmarital problems, check the locallawregardingwhether inheritancesare treatedas separateproperty fordivorcepurposes.

Minors who are beneficiaries. If any of the people you want to leave yourassetstoareminors,asdefinedbythelawsofyourstate(usuallyapersonunderage eighteen, although twenty-one is not uncommon), the courtwill appoint aguardiantoholdormanageanymoneyorpropertylefttothem.Asdescribedinchapter 32, section 5, you can influence who the guardian is by a preneeddeclaration of guardian. As an alternative, in your will you can nominate thepersonorpersonsyouwould like thecourt toappointasyourchild’sguardianand an alternate.While only the court can appoint a guardian, thewill canbeusedincourtasproofofyourwishes.

Analternativethatcanprovideflexibilityis tocreateatrust inyourwill toholdyour child’sproperty.The trustwould start onyourdemise andcontinueuntilyourchildreacheswhateverageyouspecify.Italsoallowsyoutogivethetrustee(s)instructionsabouthowyouwouldlikethemoneyinvestedandspent.This idea also works for anyone to whom you want to leave assets but isn’t“goodwithmoney.”

Tip.Ifafriendorfamilymemberisaskedtobethetrustee,heorsheislikelytoagree to serve without compensation. Trustee’s fees can deplete the value ofyourbequests,particularlyifthetrustislongterm.

Tip.Whetheryouuseaguardianand/oratrustee,inasidedocument,notinthewill, you shouldwrite the guidelines that are important to you for the personwhowillhavelegalresponsibilityforyourchild.

Asanalternative toaguardianship,manystateshaveadopted theUniformTransfers toMinorsAct,whichpermitsyouto leaveyourpropertytoanamed

custodianforthebenefitofyourchildren.PropertylefttothecustodianwillbemanagedanddistributedinaccordancewiththedetailedrulessetoutintheTaxCode. A custodian does not have any legal responsibility for the child. Thepropertywillbedistributedatagetwenty-one.Ifyouretainanycontrolovertheaccountatyourdeath,andthechildhasnotreachedagetwenty-one,theaccountwillbeincludedinyourestateforestatetaxpurposes.

Note:WhileIamnotsuggestingit,ifyouwanttodisinheritachild,yourwillshouldspecificallystatethatfact.Ifyourstatepermitsdisinheritingachildandyoudon’tmentionit inyourwill, thechildmaystillhaveaclaimagainstyourassets.

2.2WhatTheyWillReceive

When setting the amounts to be given to various beneficiaries, anticipatechanges in your financial affairs. For example, it is acceptable to list specificdollaramounts thataresmall relative to thecurrentsizeofyournetestate,butdon’t specify dollar amounts that are large relative to your net worth. WhenGeorge S. wrote his will, he was worth $250,000. He left $10,000 each toseveralfriendsandrelatives,andtheremainderwent toSusan.Sincehisestatehad shrunk by the time he died, Susan got little after the $10,000 gifts weredistributed.ThiswasnotGeorge’sintent.

Tip.Leavingpersonalassetstoatrustedpersonmakesiteasiertochangeyourdesignatedbeneficiaries fromtime to time.Give thatpersona letterspecifyingwhichitemsgotowhom.Sincetheletterdoesnothavethefullimportofawill,itcanbechangedatyourwhim.Ifthewillmakesreferencetothesideletter,andthe letter is found in a place where it is expected, this type of disposition islegallybindinginmoststates.Inthosestateswhereitisnotlegallybinding,youwill have to rely on the integrity of the person you choose. If any items thatpersonistogiveawayexceed$10,000invalue,or$20,000ifmarriedandhisorherspouseagreestothegift,agifttaxwillhavetobepaid,soleavethemmoneytocoverthetax.

Tip. If you own property jointly with a right of survivorship with someonefamilymembersdon’tlike,itispossiblethefamilywillcontestthedisposition.Youcanprotectagainstacontestby leaving theproperty to the jointowner inyourwill.

Debts. Debts at the time of your demise that are not paid off by specificinsurancemustbepaidbeforeanyassetscanbedistributedtoyourbeneficiaries.

Ifanassetissubjecttoadebt,specifywhetheryouwantthebequestofthatasset to be subject to the debt, orwhether the debt is to be paid off first. Forexample, if there is amortgageonyourhouse, andyouhaveassets that couldpayoffthedebt,specifywhetheryouareleavingthedesignatedbeneficiarythehousesubjecttothemortgageorwhetheryouwantotherassetsusedtopayoffthemortgage.

2.3WhenTheyWillReceive

Generally,awillpassesassets toyourbeneficiariesuponyourdemise.But,asnoted in section5below,yourheirswillnot receive theassetsuntil sometimeduringorat theendof theprobateperiod.Insomestates this isnotaproblembecauseproceduresare sosimple that the transfer to thebeneficiarycanoccurratherquickly.Inothers,thenatureoftherequiredproceedingscantakeagooddealoftimeevenifeverythingmovesasquicklyaspossible.

2.4HowtheDispositionWillBeAdministered

Youwillneed tonameaperson to“execute” thewishesdescribed in thewill.This person, the personal representative, also known in some states as theexecutor,shouldbesomeonewho

•hasthementalcapacitytounderstandyourwishes;•thesenseofresponsibilitytoactuallycarrythemout;and•isfriendlyto,oratleastnothostiletoward,yourheirs.

Responsibilities of the personal representative. The personal representativewillgatherallyourassetsanddothenecessaryadministration,whichincludes

•informingtheappropriatepeople.•gatheringyourpropertyandhavingitappraised.•payingdebts.•preparingandfilingrequisiteestateandincometaxreturns.•preparinganaccounting.•distributingtheassetstoyourheirs.

Identityof thepersonalrepresentative.Thepersonal representativedoesnotneedtoknowthelaw.Anattorneycanbehiredbytheestateasaguide.

Ifthepersonalrepresentativeisnotanattorney,youcanexpecttheestatetobe charged a fee for the personal representative (usually the statutory fee,althoughtherepresentativecould take lessorwaive thefeealtogether),andanadditional fee for the attorney. If the personal representative gathers all theinformation and drafts the necessary forms, the attorney’s billed hours can berelatively small. The money the personal representative receives is a taxdeduction to the estate, so if there is an estate tax, themoney ispassed to therepresentativeatthelowerincometaxrate.

If you want to choose an attorney as a personal representative, discusswhether the attorney will charge one fee or two. Although the functions ofpersonalrepresentativeandattorneyaredifferent,insomestatesonlyonechargeisallowedifanattorneyfillsbothfunctions.

Beforeyouappoint someone inanyofficial capacity inyourwill, get theirconsent.Don’tallowtheappointmenttobeasurprise.

Successors. Be sure to provide in your will for a successor personalrepresentative in case the first named person dies or is unable or unwilling toperformtherole.

2.5ProtectAgainstChallenges

Nomatterhowcompetentyouare,andhowcloselyyoufollowtherequirementsforthecreationofavalidwill,awillcanalwaysbechallenged.Inmanystates,

whenawillisadmittedtoprobate,thepeoplewhowouldinheritunderthelawifyoudiedintestateareentitledtonoticeandtochallengeitsvalidity.Theremaybeotherpeopleorentitieswhowouldconsiderchallengingawill.Whetheritistrue or not, it may be claimed that just because of your diagnosis, you werelegally incompetent to make a will, or that one of the beneficiaries undulyinfluencedyou.

Ingeneral,youmusthavetestamentarycapacityinordertoexecuteawill,whichmeansyoumustbeabletoshowthatyouunderstand

•youaremakingawill;•thenatureandextentofyourestate;•thenatureandextentofyourdispositions;and•thenaturalobjectsofyourbounty—yourlegalheirs(evenifyouarenotgoingtoincludetheminthewill).

Toprotectagainstpossiblechallenges,followprecisely therequirementsofyour state with respect to the execution of a will. Also make sure that thewitnesses

•arenotrelativesofyours;•arenotnamedinthewillasprimaryorcontingentbeneficiaries;and•donototherwisestandtobenefitfromyourdeath.

Alsoconsideranyorallofthefollowingalternatives:

•Sotherecanbenoquestionabout thesubstitutionofpages,besureall thepagesareboundbysomethinglikeastapleandthatithasnotbeenunstapledbeforeyousign.Initialeachpageinaninnocuous place such as the bottom right-hand corner.Whenyou have thewitnesses sign, askeachofthemtoaddtheirinitialsinthesameareaasyourinitialsoneachpage.Thepagescanbeheldinsuchamannerthatthewitnessescannotreadthesubstanceofthewillevenwhiletheyareaddingtheirinitials,andthentheirsignaturesattheendofthedocument.

•Videotape,withoutinterruptioninthefilming,theexecutionofthewill.Ideally,thetapeshouldstartwithadiscussionprovingtotheviewerthatyouhavenecessarytestamentarycapacity.Youshouldalsostateoncamerathatyoueitherwrotethewillyourselfor,ifsomeoneelsepreparedit,thatyoureaditoverwordforwordandthatbysigningthedocumentyouknowyouareexecutingyour will as your own free act. If your survivors would consider the provisions in your willunusual, explain why you are making such dispositions. Name your witnesses and get theirconsenttoactasyourwitnessesontape.Thecamerashouldthenrecordyourinitialingthepages

andsigningthewillinsightofallthewitnessesandtheirinitialingeachpageandsigningattheend.Itshouldbeobviousthroughoutthetapethatallwitnessesarepresentwithyouduringtheentireproceeding.Givethetapetoyourattorneytohold,orstoreitinyoursafe-depositbox.Caution:Thetapecouldworkagainstyouifyoudonotlookcompetent,ifyoulookill,orifaperson who could be accused of undue influence over you is present. Some people associatelookingpoorlywiththinkingpoorlyorbeingincompetent.Don’tvideotapetheproceedingsifyouspeakhaltinglyevenifthatisyournormalspeechpattern.Thepersonorpeoplewhowilldecidefrom the videotape about your competence do not knowyou andwill only have the tape as ameasure.

•Ifavideotapedoesn’tworkforyou,consideraskingacourtreportertoattendtheexecutionofthewilltorecordyourexactwords.

•Lookforwitnesseswhoarepresentableandarticulate.Theyshouldalreadyknowyousotheycanstate,ifnecessary,thatyouappearednodifferentfromusual.

•Askthewitnessestosignanaffidavitimmediatelyafterexecutionofthewillstatingthat•youaskedthemtoactaswitnessestoyourexecutionofyourwill.•theywitnessedyouexecuteyourwillintheirpresenceandinthepresenceofeachother.•theysignedyourwillinyourpresenceandinthepresenceofeachother.•intheiropinionyouwereofsoundmind,memory,andunderstanding.•youcouldread,write,andconverseintheEnglishlanguage.•youunderstood thenatureofyourassetsand the identitiesof thepeoplewhowould receiveyourassetsiftherewerenowill.

•youwerenotsufferingfromanydefectofsight,hearing,orspeechorfromanyotherphysicalormentalimpairmentthatcouldaffectyourcapacitytomakeawill.

•youwerenotunderanyundueinfluence. Theirsignaturesshouldthenbenotarized.Itwouldalsohelp ifeachwitnessmadenotes(tobekeptwiththewill)abouttheconversationsthattookplacethatindicatedyourcompetence.

•Considerhavingyourpsychotherapistorphysicianasoneofthewitnesses,oratleastaskoneofthem to sign an affidavit or other document attesting to your capacity on the same day youexecuteyourwill.Theyshouldstoretheoriginalofthedocumentintheirfiles,andplaceacopywiththeoriginalofthewill.Ifallelsefails,atleastaskyourdoctortomakeanotationaboutyourlegalcompetenceinyourfileatadateascloseaspossibletothedateofthewill’sexecution.

•Aclergymanwouldalsomakeagoodwitness.• State in your will that if any beneficiary challenges its validity, whatever would have beenpayabletothechallengingbeneficiaryispayabletoanothernamedbeneficiary.Thisonlyworksif you are leaving the challenging beneficiary something substantial, so that the challengingbeneficiaryhassomethingtoloseifheconteststhewill.Italsoworksifthechallengecausespaintosomeonethechallengercaresabout.For instance,whenGrahamC.wasconcernedabouthisbrotherDanielchallenginghiswill—whichleftnothingtoDaniel,butasubstantialsumofmoneytoDaniel’schildren—GrahamwroteinhiswillthatifDanielchallengedthewill,allthebequeststoDaniel’schildrenwouldgotoGraham’sfriendCheryl.

•While,asageneralmatter,youshouldonlyhaveonewill,onewaytoprotectagainstchallengesistointentionallywrite“serial”willswithasignificanttime(suchasafewweeks)betweenthe

executionofeachwill.Underthismethod,ifalaterwillischallenged,theearlierwillstands(andpresumablydoesn’tgivethechallengingpartyanymorethanunderthelaterwill).

Inthehospital.Ifyouorthepersonyoucareaboutisinthehospitalasyouarereadingthis,andthereisnowill,it’snottoolatetowriteone.Ifnecessary,findout ifyour state isoneof the few thatpermitsoralwillsorholographicwills(handwritten wills) and, if so, what the requirements are. Generally, a validholographicwillmust expressly state that it is a will, must be entirely in thehandwritingof thepersonwhomakes thewill, andmust bedated and signed.Thewill could be placed in the hospital’s safe-deposit box until the patient’sdischargefromthehospital.

Even if holographicwills are permitted in your state, consider executing atraditional will. The hospital can probably provide witnesses and/or a notary,evenifsomewhatreluctantly.Thereluctancecomesfromfearofliability,butitcanusuallybeovercomebya request to theappropriatesupervisoryperson. Ifnecessary thehospitalombudsmanorpatients’ rightsadvocatecanhelpcollectthenecessarypeople.

IoversawexecutionofGordonM.’swillashewas literallybeingwheeledintosurgery.Hisestrangedwifemighthavechallengedthewillonthebasisofapreoperative injection, so I had a doctor and a nurse interview him before hesigned. Luckily, he survived the surgery. We executed the will again in theformalsettingofmylawofficeafewweekslatertopreventanychallenge.

2.6WritingYourWillYourself

Ifyourwillisgoingtobe“simple,”youcanwriteityourself,providedyouactcautiouslyandwithknowledge.Examplesofa“simple”situation:

•Ifyouronlyassetsofvalueare$10,000inabankaccountandafewantiquesfromyourparents,andyouwant to leaveeverything toyourwife,who is also to act as the administratorofyourestate. Your son is to succeed her as beneficiary and administrator if she dies before you, orwithinsixtydaysafteryourdemise.

•Yourestateiswellbelow$625,000invalue,youhavenosurvivingspouse,andyouwanttoleaveeverythingequallytoyouradultchildrenwhoarealiveat thetimeofyourdeath,oreverything

goestothesurvivorifoneofthempredeceasesyou.•Everythingofrealvalueistitledtoautomaticallypasstothepeopleyoucareabout.

Consultanattorneyratherthanwritingyourownwillifyou

•wanttodisinheritaspouseorchildren.•haveinfirmorincompetentheirs.•ownasmallbusiness.•wanttoleaveagiftthatisconditionalonsomeeventorisinatrust.•havemutualwillswithyourspousebutwanttochangeyourdispositions.•anticipateachallenge toyourwill (especially if itcouldbeargued thatyouwerenotof soundmindorwereunderundueinfluence).

•havecomplexownershiporbusinessarrangements.•haveminorchildren.•haveaspousewhoisnotacitizenoftheUnitedStates.•haverealpropertylocatedinanotherstate.•haveasubstantialamountofassets.• have any complication at all in either your assets or how or to whom you want your assetsdistributed.

Even if the situation is “simple,” you should be cautious.Youwill not behere tocorrectmistakes.Precisely followthe requirements in thestateofyourresidence.Call yourGuardianOrg for the rules if you can’t find themonyourown. It isdefinitelybetter toerron thesideofsafety.Forexample,when twowitnessesarerequired,usethree.Whenidentifyingyourbeneficiaries,beprecisebyaddingtotheirnamestheirrelationshiptoyou(e.g.,mywife,CarolBrown,ormynieceKathyWoodside)andacurrentaddress,whichshouldbestatedas“currentlyresidingat…”Listalternatesintheeventthepersonpredeceasesyou,ortheentitygoesoutofbusiness.

If you need to research your state’s law, most law libraries in countycourthousesareopentothepublic,andthelibrarianstherearegenerallyhelpfultononlawyerswhowishtolearnhowtodotheirownlegalresearch.Askthemhowyoucanlocatethestate’sstatutesconcerningwills.

Do-it-yourself will kits are available from stationery stores, on numeroussoftwareprograms,and inbooks thatareeasilyavailable,severalofwhicharelisted in the resources section. However, an invalid will is the same as not

havingawillatall.Awillissusceptibletochallengesforanumberofreasons,andwhenmoney is involved, you can expect people to act unexpectedly.TherisksinvolvedinwritingandexecutingyourwillyourselfarenotworththefewLifeUnitsyouwillsave.

Tip.Ifyouprepareyourwillyourself,haveanattorneyfamiliarwiththelawsofyourstatereviewitbeforeexecution.Ifyou’vealreadydoneit,it’snottoolatetogetitreviewednow.Awillcanalwaysbeamendedorrewrittenentirely.Evenifyoucannotobtainawillforfree,mostattorneyschargelittleforpreparationofawill.

2.7WheretoKeepYourWill

A“safeplace”istheeasyanswer,butitshouldnotbeso“safe”thatnoonecanfind it.Awill that is lost or destroyed by an unhappy survivor can leave youintestate.Inaddition,youmustbesureitisaccessibletothosewhoeitherhavealegalobligationtofileitwiththecourtorwouldpersonallywanttoseeitfiledbecausetheystandtobenefit.

Whileasafe-depositboxistheplacethatusuallyspringstomind,itcanbeamistakeinthosestateswheretheboxissealedimmediatelyuponthedeathoftherenter, delaying probate and incurring additional costs. Inmy experience, it isbest to leave the original of your will with your attorney, if he is willing toaccept it,andtokeepacopyinasafeplace thatcaneasilybe locatedbyyourbeneficiary.Thecopyshouldindicatethelocationoftheoriginal.

Listof informationandinstructions.Tomake thingseasier,keep theListofInstructionsdescribed inchapter5, section3,with thewillor theduplicate. Ifyoudidn’tcreatethelistwhenyouwereassessingyoursituation,nowisagoodtime todo it. Itwill assure thatyourdesires are carriedout, in the fastest andleastexpensivemanner.Includeanyinstructionsyouwantpeople tohavewithrespecttomaintainingyourassets,suchasinstructionsforacontinuingbusiness.Since circumstances can change rapidly, it is best not to include these

instructionsinyourwill.

2.8MovingfromStatetoState

Generally,movingfromonestatetoanotherwillhavenoeffectonthevalidityofyourwill.However,thewillmusthavebeenvalidatthetimeitwasmade.Ifyoumovepermanently, even thoughyourwill should remainvalid, state lawscan have an impact. For example, if you move to California or Texas, thecommunityproperty lawsof those stateswill override thedispositions inyourwill forproperty acquired after themove,or forproperty that you specificallyconvertfromcommonlawpropertytocommunityproperty.Ifyoumove,haveyourwillreviewedbyalocalattorney.

2.9ChangingorRevokingYourWill

Anout-of-datewillcansometimesbeworsethannowill.Ifyouwanttochangeyourwill, you can eitherwrite a new one or change the existing onewith anamendment called acodicil.The requirements for execution of a valid codicilarethesameastherequirementsforavalidwill.Generally,thecodicilcontainsadescriptionof thechangesyouwant tomake,aswellasacatchall statementthat what is not changed in the will is intended to remain in effect. Have anattorney help you write your codicil since you may inadvertently affect thevalidityofallorpartoftherestofyourwill.Ifyourwillisasimpleone,itmaybejustaseasytoexecuteanewwill.

Revokeyourwill.Youcanrevokeawilloracodicilbydestroyingtheoriginaldocument. If the document is to be superseded by another document, it isimportant to state in the later document that it revokes and supersedes allpreviousdocuments,sothereisnoquestionaboutyourintent.

Section3.WillSubstitutes

Awill substitute is anything thatmoves property fromone person to another

withoutgoingthroughawill,andthusprobate.Someofthemethodsare

•registrationoftitle.•listingabeneficiaryonaretirementplan.•trusts.

Eachofthesevariousmethodshasitsadvantagesanddisadvantages.

Tip. As a general matter, a decedent’s creditors (other than the IRS) cannotattack assets that pass through a will substitute unless the beneficiary is theestateorunlessthestatelegislaturegrantsthatright(whichsomedo,particularlywithrespecttorevocabletrusts).

3.1RegistrationofTitle

Ifyou refer to thechart in section1above,youwill see theeffectsofvariousmeansoftitleregistration.Forexample,throughajointtenancywiththerightofsurvivorship, an asset automatically passes to the other named person. Thedownsideofsuchanarrangementisthattheotherpersonhasastakeintheassetimmediatelyupontheregistrationoftitle,andyoucan’tchangeyourmindabouthisownershipwithouthisconsent.

3.2RegistrationofBankAccountsinGeneral

Youcanpass title immediatelyby registeringyourbankaccount as a “payondeathaccount.”This typeof registration letsyoucontrol themoneywhileyouarealive,butitautomaticallypassestoyourbeneficiaryonyourdemise.

3.3TottenTrusts

Tottentrustsareaformofregisteringsavingsbankaccountsandcertificatesofdeposit.Theownerretainsfullcontrolduringhislifetimeandpaystaxesontheinterest. On the owner’s demise, the ownership of the account passes to thenamed beneficiary without the need for probate. Unlike the other trusts

mentionedabove,therecanbenoconditionsoragerestrictionsonthebequest.Sinceusuallyonlyonebeneficiarycanbenamedperaccount,ifmorethanonebeneficiary is to benamed, there has to bemore thanone account.All that isnecessarytoestablishaTottentrustisasignaturecardatthebank,atnocosttotheowner.

3.4CustodialAccounts

TheUniformGifts toMinorsActor theUniformTransfers toMinorsActhasbeenadoptedbyeverystate.Theselawsareusedwhenassetsaretobesetasideforminorstobeusedwhentheybecomeadults.Ifmoneyissetasideinaregularaccount,theincomeistaxabletothepersonwhoopenedtheaccountathishightax rates. If it isprovided for in a custodial accountunderoneof thesemodellaws,thefirst$1,000oftheaccount’searningsaretaxedatthechild’srateandthe balance at the account holder’s rates until the child is fourteen years old.Afterfourteen,theentireamountearnedistaxedatthechild’srates,whicharepresumablylowerthantheadult’s.

Themoney cannot beused for the account holder’s needs.Funds spent onbehalfofthechildmustbefor“extras,”notthebasicneedsparentsareexpectedtosatisfysuchasfoodandshelter.

On reaching twenty-one, the child receives themoneyandhasunrestricteduse of it, nomatter the purpose forwhich the account holder set it up. If thepersonwhosetuptheaccountdieswhileservingascustodianbefore thechildreachesmajority,themoneyintheaccountwillbecountedaspartoftheaccountholder’sestateforestatetaxpurposes.

3.5TrustsinGeneral

Anothermechanismthatbypassesprobateistheuseofatrust,particularlytheuse of an increasingly common instrument known as a revocable living trust,whichwillbediscussedinthenextsection.Atrustcanbeausefultoolforalotofpeople—notjusttherich.Atrustisalegalentitylikeapaperbagintowhich

youputwhateverassetsyouwant.Onthebag,youputinstructionsforuseofthecontents.Youcanholdontothebagorgiveittosomeoneelse.Whoeverholdsthebagmustfollowtheinstructions.

There are living trusts and testamentary trusts. A living trust is createdwhilethegrantor,thepersonwhosetsupthetrust,isstillalive.Atestamentarytrustiscreatedunderthetermsofawill.Alivingtrustcaneitherberevocable,whichmeansitcanberevokedorchangedbythegrantor,orirrevocable,whichmeansthatitcan’tbechangedafteritiscreated.Ifthetrustisrevocable,thingscanbe takenout or put into the trust. Instructions can also be changed. If thegrantor becomes disabled or dies, the trust is managed by someone else thegrantordesignated(i.e., thebagishandedofftosomeoneelsewhowillfollowtheinstructions).

Trusts can generally do everything awill can, and sometimes they can dothingsawillcannot.Forexample,atrustcanbesetuptoholdassetsforaminorbeneficiary,payingexpensesthataredefinedbythegrantor(suchaseducationormedicalexpenses)untilacertainage,wheneithertheincomeorprincipalorbotharepassedtothebeneficiary.

Tip. Although there are many self-help books on the subject, trusts aresophisticated and complex.Please do not consider creating any type of trustarrangementwithoutconsultinganattorney.Thisshouldnotinvolvemorethanfiveortenhoursofanattorney’stime.

3.6RevocableLivingTrusts

A revocable living trust is a trust that can be revised at any time during theowner’s lifetime. A revocable living trust is much more flexible for passinginterestsinpropertythanjointownershipandshoulddefinitelybeconsideredbyanyone

•withasubstantialnetworth.•withcomplexassets.•withanongoingsmallbusiness.

• with out-of-state property since it prevents the need for creating an expensive and time-consumingancillaryprobateinthatotherstate.

•whoanticipatesawillcontest.

Advantagesofarevocablelivingtrust.•Atrustismoredifficulttochallengethanawill.Tochallengeatrust,thechallengermuststartalawsuit.Tochallengeawill,thechallengerjustenterstheprobateproceedingswithlittle,ifany,expense.

•Sincetheassetslegallytransferredtothetrustareownedbythetrustandnotbyyou,theyarenotsubjecttoprobate—withnopublicdisclosureoftheterms.Duringyourlifetime,theassetscanbegivenawayorsold,ornewonesadded,andyoucanhavefulluseofanyincomethattheassetsproduce.

•Youcanserveastrusteeorascotrusteewithanyoneyouchoose.Ifyouprefer,arevocablelivingtrust allows you to givemanagement duties to someone else as trustee while you receive theincome,minusthetrustee’sfee,ifany.

• You have the chance to see how the arrangement works and continually make necessaryadjustments.

•Ifyoubecomeincapacitatedforanyreason,thetrustalreadynamesasuccessortrusteewhowillimmediatelytakeoverandtherebyeliminatetheneedforaguardianandanyrelateddisputes—atleastwithrespecttotheassetsinthetrust.

•Itallowsforcertaincontrolsandmanagementofyourpropertyafterdeaththatarenotavailablewithawill(e.g.,bequeststominorstotakeeffectatacertainage).

•Atrustcanprovideforquickerdistributionofassetstobeneficiaries,butitdoesnotcompletelyeliminatedelays.Thetrusteestillhastocollectanydebtsowedtoyourtrustafteryoudie,preparetaxreturns,paybills,anddistributeassets,justastheexecutorofawillwould.

•Provisioncanevenbemadeinyourwillthatanyassetsnotinthetrustbe“pouredover”intothetrust on your death. Likewise, the trust can be named beneficiary of a life insurance policy,retirementplan,andcontractualbenefits.Asnotedabove,checkstatelawtodeterminewhetherarevocabletrustissubjecttocreditors’claims.

• Ifyouwantyourestate administeredby someonewhodoesn’t live inyour state, a living trustmight be better than a will because the trustee probably won’t have to meet the residencyrequirementssomestatelawsimposeuponpersonalrepresentatives.

•Ifyouownrealestateinanotherstateandarevocablelivingtrustholdsthetitletothatproperty,there is no need for complicated, time-consuming “ancillary probate” procedures in that otherstate.

•Itsavesprobateexpense,whichinsomestatescanbesubstantial.

Disadvantagesofarevocablelivingtrust.•Alivingtrust isgenerallymoreexpensivetoestablishthanawill,bothin legalfeesandinthecostsoftransferringtitletopropertytothetrust.

•Sinceitisaseparateentity,trustassetshavetobekeptseparatefromyourotherassetsandare

subject to ongoing legal and accounting expenses. However, these expensesmay be offset bysavingstoyourestateafterdeath.

•Therearenoongoingmanagementfeesifthegrantor(thepersonwhocreatesthetrust)isalsothe trusteeor if the trusteeagrees toservewithoutcompensation.There isalsonoseparate taxidentificationnumberifthegrantoristhetrusteeandthetrustisrevocable.Thisdoesn’tchangeifthere is a cotrustee because it is still the grantor’s revocable trust and his tax number is used.When the grantor becomes disabled or dies, a new tax ID will be needed with the attendantongoingexpenses.Withanirrevocabletrust,aseparatetaxIDnumberisrequiredfromtheoutset.

•Dependingonthestateinwhichthepropertyislocated,puttingyourhomeinarevocabletrustmight jeopardizeahomesteadexemption (a legalconcept that letsapersonwhogoes throughbankruptcykeephisresidenceinspiteofthebankruptcy),resultinatransferfee,orcauseyourpropertytobereassessedforpropertytaxpurposes.

• Conflicts can arise between the beneficiaries and the trustee or between different classes ofbeneficiaries.

Tip.Don’ttransferownershipofanytax-deferredretirementaccounts,suchasa401(k)or an IRA, into these trustsunlessyouaredisabled forSocialSecuritypurposes.TheIRSwillconsiderita taxabledistributionandmaychargeyoua10percentpenaltytax.

Creditors and taxes. Although the revocable living trust creates a separateentitythatdoesavoidprobate,itdoesnotgenerallyprotectagainstyourcreditorsor income and federal estate taxes.You are responsible for taxes onwhateverincome the trustassetsproduce.Ondeath, theirentirevaluemaybesubject tofederalestateincometax.

Ifyourtrustisthelegalownerofaninsurancepolicyonyourlifeandyourestateisworthmorethan$625,000uponyourdemise,thetrustwillhavetopayestatetaxesontheproceedsofthepolicy.Theonlytypeoftrustthatcanownapolicy on your life and yet remove the death benefit from your estate is anirrevocabletrust.(Note:thelimitof$625,000graduallyincreasesto$1millionin2006.Seesection4below.)

Youstillneedawill.Arevocablelivingtrustdoesnotmakeawillunnecessary.Youstillneedawilltotakecareofassetsnotincludedinthetrust.Ifyouhaveminorchildren,youprobablyneedawilltosuggestornominateaguardianforthem.Atrustalsowon’taffectnonprobateassets(e.g.,jointlyownedproperty).

If youwantmore informationon revocable living trusts, several books arelistedintheresourcessection.Seealsothetiphere.

3.7CreditShelterTrust/BypassTrust

Arevocablelivingtrustcanbeusedtocreateacreditsheltertrust,alsoknownas abypass trust.This tactic is oftenused formarried coupleswith an estateover the$625,000 exemption. If an estate isworth$1.25million, thehusbandplaces the first $625,000 in a revocable living trust. The trust can provide anincometohiswifeandcanallowthetrusteetogivepartsoftheprincipaltohiswife or children. The rest of his estate is left to his wife tax free becausewhateveryouleaveasurvivingspouseistaxfree.Whenthewifedies,thefirst$625,000 of her estate passes tax free. When she leaves that amount to thechildren, the effect is that all $1,250,000passes to the childrenwith no estatetax.Note:acreditsheltertrustcanalsobeestablishedinawill.

Tip.Lifeinsurancecanbeusedasasurrogatetrust.Youcangenerallypickanalternatepayoutsuchasonethatpaysinterestonlyforatime,thenthecorpus(therestofthemoney)ispaidtothebeneficiaryatadateyouset.

3.8IrrevocableLivingTrust

Thisinstrumentgenerallyonlyworksforpeopleofsubstantialmeansandisnotusedoftenasanestateplanning toolbecause,as theword irrevocable implies,youforeverrelinquishownershipandcontrolofthetrustassetsandincome.Inadditiontoavoidingprobate,thisinstrumentalsohelpsreducebothcurrentandfuturetaxes.Contributionstothistrustareconsideredtobeagiftsubjecttothegifttax.Aswitharevocablelivingtrust,consultanattorneybeforeestablishingthistrust.

3.9CharitableRemainderTrusts

Most charitable gifts given at any time during the owner’s lifetime are tax

deductible.Ifagiftisnottobegivenoutright,itcanbegiventhroughuseofacharitable remainder trust, inwhich a beneficiary or beneficiaries are takencareofasyouspecify,andtheremainderofthetrustgoestothecharity.Somecharitiesofferdonorsa lifetimeincomeinreturnfora largegift.Consulta taxadviserbeforemakinganyofthesegifts.

3.10Incorporation

Whenapersondiesowningabusinessinterestintheformofaproprietorshiporpartnership,thepersonalrepresentativeisfacedwiththedecisionofwhethertoliquidate the business, sell it as a going concern, or pass it on intact to thebeneficiaries.Ifthebusinessisincorporated,thepersonalrepresentativecanpasson the shares to the beneficiaries, and the decision of what to do with thebusiness is theirs alone. It is also easier to settle the probate estate. Do notincorporatewithoutseekingappropriatelegaladvice.

3.11RetirementPlans

The designation of a beneficiary to a retirement plan automatically passes theassetsintheplantothebeneficiaryuponyourdemise,nomatterwhatawillmayprovide.

IRA. The distribution of an IRA at the time of death is not subject to anywithdrawalpenalty.Thedistributionistaxableincometothebeneficiaryunlessitistoasurvivingspouse,whocanelecttotreattheentireinheritedinterestashisorherown,rollingitovertoanothernewIRA,andavoidingtaxableincomefortheyearreceived.Thisalsoappliesifthespousereceivesaneligiblerolloverdistribution from the deceased’s employer’s qualified plan or tax-shelteredannuity.Thereceivingspousecanthenrolloveralloranypartofit(oralloranypartofadistributionofdeductibleemployeecontributions)intoanewIRA.Heor she cannot roll over a distribution into another qualified employer plan orannuity.

AspousemayreceivefromtheIRAupto$5,000withouttaxconsequence,asadeathbenefitexclusion.AspousecannotrolloverintoanotherIRAanypartofthedistributionthatqualifiesforthe$5,000deathbenefitexclusion.

Anybeneficiaryotherthanthespousecannotclaimadeathbenefitexclusionforanypartofadistributionfromadeceased’sIRA.Abeneficiaryotherthanaspouse also cannot treat an inherited IRAas thoughhe/she established it.TheIRAmaynot be rolledover into, or receive a rollover from, another IRA.Nodeduction will be allowed for amounts paid into that inherited IRA, nor candeductiblecontributionsbemadetoaninheritedIRA.

ThebeneficiaryofaRothIRAreceivesthefundswithnoincometax.

Section4.MinimizingTaxes

The process of transferring wealth can literally be a taxing one. The federalgovernmentimposesataxwhensubstantialamountsofpropertyaretransferredeitherbygiftorinheritance.Amarriedpersoncangiveaspouse,whilealiveorupondeath, anunlimitedamountofproperty,money,andotherassetswithouteither party being taxed. This is called the unlimitedmarital deduction forspouses.

Foranyotherbeneficiary,includingchildren,thelawisnotsomagnanimous.The federal system isunified,whichmeans the tax isonacombinationof allassets that are transferred during lifetime and at death. The total amount ofpropertythatcanpasswithoutanytax(theUnifiedGift-EstateTaxAmount)isasfollows:

Year

EstateTaxStartsAt

1998 $625,000

1999 650,000

2000 675,000

2001 675,000

2002 700,000

2003 700,000

2004 850,000

2005 950,000

2006 1,000,000

Taxes over the limit are steep, beginning at a rate of approximately 37percentandincreasingto55percentforamountsover$3million.Statetaxescanalsobesubstantial.

Helpwiththetaxcode.Seechapter18,section8.1.

4.1Gifts

Giftscanbemadetaxfreeduringaperson’slifetimeupto$10,000peryearperrecipient,or$20,000perrecipientwhenmadejointlybyamarriedcouple.After1998,theamountwillbeindexedannuallytoreflectinflation.Thereisnolimitonthenumberofpeoplewhocanreceivethesegifts.Giftswithintheselimitsarenotcountedaspartof theUnifiedGift-EstateTaxAmount.Valuationofagiftcanget tricky.Giftsover the limitbecomepartof theUnifiedGift-EstateTaxcredit.

Forestateplanning, if theobjective is to reduce taxes,makinggiftsduringone’slifetimeisgenerallybetterthanatdeath.Giftshavetheancillaryadvantageofreducingyourtaxliabilityforincomegeneratedbythedonatedassets.

If there isa tax topay,only thedonorpays the tax.Thebeneficiaryof thegift is never responsible for a tax, and the gift is not taxable income. The

recipientcanpaythetax,ifthatisaconditionofthegift,butthetaxpaidbytherecipientisconsideredincometothedonor.

Gifts:educationalandmedicalpurposes.Oneexceptiontothe$10,000limitis that you may give tax free an unlimited amount to a beneficiary foreducational or medical reasons. The gift must be to a third party such as ahospitalorauniversityandcannotbetothebeneficiarydirectly.Thus,adonormay pay a second party’s health expenses, or educational expenses, withoutlimitandwithoutbeingtaxedforit.

Gifts made in contemplation of death. In general, gifts that are made withstrings attached so that you still have control during your lifetime are notconsidered tobe completedgiftsuntil yourdeath and thusdonot avoid estatetaxes.

4.2IfYourNetWorthIsClosetoorMoreThantheUnifiedGift-EstateTaxAmount

IfyournetworthisclosetoormorethantheUnifiedGift-EstateTaxAmount,includingpensionsandotherretirementarrangementsandthedeathbenefitsofalllifeinsurancepoliciesyouown,youshouldconsultwithyourtaxadviserforthe best method of minimizing taxes. This is particularly true if you own asubstantialinterestinafamilybusinessoroneownedbyjustafewpeopleorifyour spouse is not a U.S. citizen. The following discussion about the variousmeansofminimizingtaxesistoprovideyouwithanideaoftheissues.

Tip.IfyouareveryillandnotmarriedtothepersontowhomyouwanttoleaveyourestateandyournetestateisclosetotheUnifiedGift-EstateTaxAmount,considergettingmarriedifthepersonisaU.S.citizensothattheestatecanpassestate-taxfreeduetotheunlimitedmaritaldeduction.

4.3Trusts

Taxes can be minimized through use of an irrevocable trust as described insection3.8above.

4.4RetirementPlans

Retirementassetsdistributedtoyourheirsaresubjecttoestatetax,incometax,andinsomecases,excisetax.

4.5RealEstate

Realestatewithalargegaininit.Fortaxpurposes,thevalueofrealpropertyat the date of your death becomes your heirs’ basis. Consequently, no capitalgainstaxiseverpayableonthedifferencebetweenyourbasisandthevalueatyourdateofdeath.Becauseofthis“step-up,”itmaybeworthwhiletoholdontorealestatewithalargeamountofappreciationinittoavoidthecapitalgainstaxontheappreciation.

Real estatewith a loss in it.Whatever the size of your estate, if you have avaluable property with a loss in it, you should consult a tax adviser. Undercurrent laws, the taxbasis for theproperty is “steppeddown” (reduced) to thevalueatthedateofdeath,andanypotentiallossdeductionwouldbeforfeited.Ifyou have substantial income, itmight pay to sell the property and deduct thelosses.Isay“might”becauseitdoesn’tpaytogeneratelossesthataremorethan$3,000 in excess of your capital gains. Excess losses can’t be deducted eachyear.While theycanbeoffsetagainst futurecapitalgains, if therearenosuchgains in future yearswhile you are still alive, the deductionswill be lost.Analternativewould be to sell the property at its current value to a close familymember.Althoughyourlosswouldnotbedeductiblebecausethepurchaserisafamilymember,anyfuturegainsthefamilymemberrealizeswillnotbetaxabletotheextentofthepreviouslydisallowedloss.

4.6Bonds

Some treasury bonds issued by theU.S. government can be purchased on theopenmarketforsubstantiallylessthantheirfullfacevaluebecausetheinterestrate isbelowcurrent interest rates.Thesebondscan thenbeused topayestatetaxesatthefullfacevalueofthebond.Usedthisway,thesebondsareknownasflowerbonds.

Tip.Flowerbondsshouldonlybepurchasedwhendeathisimminent.Theymaynotbeagoodinvestmentbeforethenbecausetheyyieldsolittleincome.

4.7Debts

Anydebtsowedtoyouthatarecanceledonyourdeathareconsideredanassetoftheestatesubjecttotaxeventhoughtheestatenevercollectsthemoney.

4.8Liquidity

Whileconsidering taxes,youmustalsoconsiderwhether therewillbeenoughcashorcashequivalentassets(assetseasilyconvertedtocash)topaytheestatetaxesandadministrativecostswithoutdisturbingassetsyouwanttopasstoyourheirs.Ifthereisnot,thenyoushouldmakeplansnowtoprovidethatliquidity,possibly through purchase of life insurance with your estate named asbeneficiary. (See chapter 19, section 5, about how to purchase life insurance.)Lifeinsurancepoliciespayabletoabeneficiaryotherthantheestatearenohelpwith respect to taxes andmay evenhurt.Although the personal representativecan argue that the beneficiary should pay the estate tax on money payabledirectly to the beneficiary, it may be difficult to obtain any money from thebeneficiaryonceheorshehasthemoneyfromthelifeinsurancecompany.

Tip.Ifyoucan’tprovidethenecessaryliquidity, letyourheirsknowwhatyousuggest they do to raise the funds, includingwhich assets to sell and inwhatorder.How-toadvicewillbecriticalforyourheirs.Itshouldnotbeinyourwillsince circumstances can change and you don’t want to execute a new willunnecessarily.

Section5.WhatYourHeirsCanExpect

Realistically,unlessyouleaveallyourassetsinatrust,therewillbeadelayinpassingthemontoyourheirs.Itmaytakeuptothirtydaysjusttostartprobate,and itmay take up to two years, or even longer if there are complications, tocomplete the transfer.Theamountof timeit takesdoesn’tnecessarilyrelate tothesizeofyourestate.

Automatic transfer of title. Even assets that automatically transfer to thebeneficiary, such as the proceeds of life insurance or a title registered in jointnamewiththerightofsurvivorship,maybehelduppendingcourtappointmentof the personal representative, and the personal representative’s obtainingappropriatetaxwaiversfromthestate.

Banksafe-depositboxandaccounts.Assoonas thebankhasnoticeofyourdeath, it generally seals your safe-deposit box and prevents entry by anyone,evenajointowner,untilanappropriaterepresentativeofthetaxingauthoritiesispresenttounsealandinventorythecontentsofthebox.

Yourbankaccountsarealsofrozenunless,asdescribedabove,theyaretitledinsuchawaythattitleautomaticallypassesonyourdemisetoanotherperson.

Taxes.The federalestate tax returnmustbe filed,and the tax, if any,paidnolater than nine months after the date of death. State tax due dates vary, butgenerallydonotexceedninemonthsafter thedateofdeath. Ifanestate tax isdue, your heirs can generally expect that the personal representative will notmakeanypayments to themuntil the IRSand thestatehavesignedoffon thereturn.

Ifyourheirsneedmoneywhiletheestateisbeingprobated.Ifnoprovisionhasbeenmadeforpartialpayments,theycanrequestadvancesfromthepersonalrepresentative.Ifhewon’tagree,theycanpetitionthecourt.

Saleofassets.Unlessyouhave specified to thecontrary,bequestsareusuallypaidincash,whichmeansthatyourassetswillgenerallybesoldtopaythem.

Trusts.Ifyouhaveplacedyourassetsinatrust,asdescribedabove,yourheirswill not be subjected to delays because title does not change on your demise.Titlewas,andwillcontinuetobe,ownedbythetrust.

Accounting.Asageneralmatter,neithertheestatenoranytrustwillbesettledwithout the court and/or the beneficiaries reviewing a detailed accounting andapprovingit.

Disclaiming an interest. A beneficiary can refuse to accept (disclaim) anyinheritance, provided the disclaimer iswithin the appropriate time set by statelaw.

Adiscussionwithyourheirs.Letyourheirsknowhowyouthinkassetsshouldbehandledormaintained,particularlyifoneoftheassetsisabusiness.Unlessthevalueofaspecificassetisvolatile,itmayalsohelptoletthemknownottomakeanydecisionswhileemotionsarestrong,andtodotheminimumnecessaryuntil they have a chance tomake a decisionwith clarity. If you have specificpeople who can give them advice, let your beneficiaries know. At all costs,quick,emotionaldecisionsshouldbeavoided.

PartVIII

YourTeamandOtherMatters

Chapter38

And…

Manypeopleallowillnesstodisfiguretheirlivesmorethanitshould.…Thereisalwaysamarginwithinwhichlifecanbelivedwithmeaningandevenwithacertainmeasureofjoy.

—NormanCousins,AnatomyofanIllnessThis chapter addresses important matters that do not readily fit into otherchapters.

Section1.MedicalIdentificationIfyouhaveanallergythatmaybelifethreateningorifyoujustwanttoconveyinformationaboutyourconditionintheeventofanemergencythatrendersyouunableto

communicate,thereareseveralalternativestoconsider:•MedicAlertFoundation,2323ColoradoAvenue,Turlock,CA95380(800-432-5378),provideswearablenecklacesandbraceletswithtagsthatareengravedwithyourmostcriticalmedicalconditionsandpersonalIDnumber,alongwithaphonenumberfortheiremergencyresponsecenter.Thetagalertsanemergencyteamtocalltoaccessyour

medicalrecord.MedicAlertcanevenprovidethecallerwiththenameandphonenumberofafamilymembertocontact.Costis$35plus

$15ayear.•Save-a-Life,382BostonTurnpike,Suite202,Shrewsbury,MA(800-755-6648or508-845-1396),provides business-size medical cards that include a microfilmed medical history. The card isviewedbythephysicianthroughamachineorlow-poweredmicroscope.Incasefacilitiestoreadtheinformationaren’tavailable,Save-a-Lifewillfaxtheattendingphysician’sreport.Thecostis$21fortwoyears.

Section2.Lying

Somepeoplewhohavebeendiagnosedwitha life-challengingconditionadopttheattitude“IcancheatorlieasIplease.Iwon’tbeherewhentheycatchit.”Asapracticalmatter,Istronglycautionagainstthisattitude.Theoddsareyouwillend up spending a great deal ofmoney and preciousLifeUnits fixing things.Evenworse,insomesituationssuchasapplicationsforhealthorlifeinsurance,if you complete the application dishonestly, you may find that the insurancecompanyconteststheexistenceofthepolicyjustwhenyouneedit.

AsJacquesChambers,anationallyknownexpertonbenefitsforpeoplewithlife-challengingconditionssays,“Ineithercondonenorrecommenddeceptiontomyclients.Myjobis toreducestress,andifsomeoneliesonanapplication,Idon’tthinktheirstresshasbeenreducedverymuch.”

Section3.StudentLoansStudentloansareforgivenwhenyouleaveworkandgoondisability.

Caution. If you change the terms of the loan, such as the amount of yourperiodic payments, it is considered a new loan and not forgiven if you weredisabledatthetimethechangewasmade.

Section4.Pets

Petscanbegoodforyouremotional/physicalhealth.However,theycanposeariskofinfectiontopeoplewithaloweredimmunesystem,whethertheloweredlevelofimmunityistemporarysuchasduringchemotherapyormorepermanentaswithHIVdisease.

Anyonewithacompromisedimmunesystemshould

•avoidcontactwithanimalsthathavediarrhea.•avoidcontactwithpets’feces.•besurethatlitterboxesareemptied(notjustsifted)daily.•washhandswithsoapandwaterafterhandlingpets,especiallyaftercleaningtheirlitterboxesorlivingareasandbeforeeating.

•havepetbirdscheckedbyaveterinarianforpsittacosis.• have any sick pet checked promptly by a veterinarian. Neither sick pets nor their excretions

shouldbehandledbyapersonwithareducedimmunesystem.•avoidcontactwithreptilessuchassnakes,lizards,andturtles.

If you need help with pets, and friends or family can’t take over thenecessarychores,thereareorganizationsaroundthecountrythatassistwithdogwalking,changinglitter,providingfostercarefor theanimalincasetheownergoes into the hospital, and even planning for the animal’swelfare in case theownerdies.Sincethegroupsarelocal,theirservicesandclientbasesvary.Ifagroupexistsinyourarea,itcanbelocatedthroughyourlocalHumaneSociety,orperhapsyoucanfindassistancethroughyourGuardianOrgorsupportgroup.

Section5.TransportationtoandfromPhysiciansorTreatmentCentersIftransportationisaproblem,thereareservicesthatprovidetransportationtoandfromyourmedicalappointments.ContactyourlocalGuardianOrgorsocialworker.YoucanalsocalltheEldercareLocatorat800-677-6116.Perhapsyourphysicianand/orthefacilityin

whichyouwillbetreatedalsoprovidetransportation.

Section6.ParkingSpotsfortheDisabledParkingspotsarenotjustforpeoplewithavisiblehandicaporwhohavelosttheabilitytowalk.Theyarealsoforpeoplewhomaynotbeabletowalklongdistances.Inmostareas,youdonotneedtobeadriveroraregisteredownerof

avehicletogetapermit.

Contact your stateDepartmentofMotorVehicles todetermine • eligibilityrequirements.

•whatyouneedtoverifyeligibility.•howoftenyouhavetoproveeligibilityorotherwiserenewthepermit.•thecostofthepermit.

Tip. If you do not appear to be physically handicapped, prepare an answer in

caseanobnoxiouspersonquestionswhyyoupark ina reservedparkingplace.Yourresponse,ifany,shouldbewhateveriscomfortableforyou.

Section7.OtherLegalRights7.1PublicAccommodations

Under the ADA, protection against discrimination in public accommodationsextends to “the goods, services, facilities, privileges, advantages, andaccommodations of any place of public accommodation.” The term publicaccommodationisbroadlydefinedtoinclude•professionalofficesofhealthcareproviders,hospitals,orotherserviceestablishments.

•placesoflodging.•restaurants,bars,orotherestablishmentsservingfoodordrink.•placesofexhibitionorentertainmentsuchasmoviehousesandtheaters.•anyplaceofpublicgathering.•stores.•museumsorotherplacesofpublicdisplayorcollection.•placesorrecreation.•gymnasiums,healthspas,golfcourses,orotherplacesofexercise.

Private clubs and places run by religious organizations are not consideredplacesofpublicaccommodation.

Businessesmustmake reasonablemodifications to their policies, practices,orproceduresifitwouldrectifydiscrimination.Forexample,ifahoteldoesnotallowpets, itwouldbereasonabletorequestaSeeingEyedogexceptionforapersonwhohaslosthervision.

Questionsorcomplaintsshouldbedirected to theOfficeon theAmericanswith Disabilities Act, Civil Rights Division, U.S. Department of Justice, P.O.Box66118,Washington,DC20035-6118(202-514-0301).

7.2Communications

TheADArequirestelephonecompaniesthatofferservicestothegeneralpublicto provide telephone relay services for people with hearing or speechimpairments.SimilarrequirementsareimposedbytheFederalCommunications

Commission (the FCC). If you have a problem, contact the FederalCommunications Commission, 1919 M Street NW, Washington, DC 20554(202-632-7260).

7.3FederallyAssistedProgramsandActivitiesAnotherfederallaw,theRehabilitationActof1973,affordsindividualswithdisabilitiesprotectionagainstdiscriminationinallfederallyassistedprogramsandactivities.Thislawhasbeeninterpretedbroadlysothat,for

example,anentireuniversityorcorporationisbarredfromengagingindiscriminatorypracticesifanyofitsdepartmentsorunitsreceive

federalfunds.Theactalsoprotectsagainstemploymentdiscriminationbyfederalagenciesorfederalcontractors.

7.4NewConstructionandAlterations

Newconstructionandalterationsofbuildingsopentothepublicaresupposedtopermitaccesstopeoplewhoaredisabled.Ifyouhaveaquestionaboutwhetherabuilding complies, contact the Architectural and Transportation BarriersCompliance Board, 1331 F Street NW, Suite 1000, Washington, DC 20004(800-USA-ABLE).

The Job Accommodation Network (JAN) provides free “public access”information tobusinesses and services thatmust complywith the accessibilityrequirementsoftheADA.Call800-232-9675.

7.5Transportation

Public.Individualswithdisabilitiesmustbegivenspecialpublictransportationservicescomparabletothoseprovidedtothegeneralpublic.Hoursanddaysofservice, service areas, response time, and fares are also covered. Contact theDepartmentofTransportation,400SeventhStreetSW,Washington,DC20590(202-366-9305).

Private.TheprovisionsoftheADAapplytobusinesseswhoseprimarybusinessistransportingpeople.TheADAPrivateTransportationHotlineat800-605-6605(9 A.M. to 3 P.M. central time, M–F) answers questions, makes referrals toexperts, and has free publications concerning the ADA regulations on privatetransportation providers. Ask for a free copy of “The ADA PrivateTransportationHandbook.”

AfterwordInmylifeIhavehadtofacethepainofmanypersonalchallenges.Astheyearsgoby,Ihavebeguntoseehowmeetingthesechallengeshas

alwaysprovidedmewithanopportunitytogrowortoperceivelifefromanenrichedperspective.Thisisthe

perspectivethatconvincedmeIshouldwritethisbook,topassonthepracticalknowledgeIhavegainedwiththehopeofsavingtime,money,andemotionaldistressforotherpeoplefacingpersonal

challenges.

Researching andwritingBePrepared has reinforced the version of realityI’vecometothroughlivingwith,andcaringfor,peoplewithalife-challengingcondition. It has been particularly gratifying for me to work and exchangeknowledgeandexperienceswiththecourageoussurvivors,experts,friends,andfamily mentioned under the pseudonyms and in the acknowledgments of thebook.

Please shareyourcommentsand suggestions tohelpmakeBePrepared aspracticalaspossibleforfuturereaders.IfIdidthejobIsetouttodo, thiswillonlybethefirstofmanyeditions.Inthemeantime,Iwillbepostingsuggestions,updates,and“Tips,”aswellasother informationof interest,on the Internetatwww.be-prepared.com. Please E-mail me or write to me care of St. Martin’sPress.

DavidS.Landay

NewYorkCityApril1998

Resources

Asasupplementtotheresourcesandinformationsourcesspecifiedinthetext,thefollowinglistcoversareasofbroaderinterest.Ifyoudon’tseetheresourceyouneedwithrespecttoaspecifictopic,youcanaccessinformationinthetextthroughthetableofcontentsandtheindex.

AdvanceDirectives

• Choice in Dying, 200 Varick Street, New York, NY 10014 (212-366-5540 or 800-989-9455). State-specificadvancedirectiveswithinstructions.

•GentleClosure,Inc.,60SantaSusannaLane,Sedona,AZ86336(520-282-0170).Formsandadviceforafee.

•Stationerystoresusuallystockformswithinstructionsforexecution,includingsuchpublicationsasLivingWillsandMorebyTerryJ.BarnettandtheLivingWillKitpublishedbyRediform.

AlternativeTreatments

•AMAReader’sGuidetoAlternativeHealthMethodsbyS.BarrettandW.Jarvis.•FundamentalsofComplementaryandAlternativeMedicinebyM.Micozzi,forewordbyC.EverettKoop(ChurchillLivingstone,1996).

•OAMInformationCenter,OfficeofAlternativeMedicine,NationalInstitutesofHealth,6120ExecutiveBoulevard, EPS Suite 450, Rockville, MD 20892-9904. Telephone 888-644-6226 or 301-496-4000 tospeak with a specialist, 8:30 A.M. to 5 P.M. EST, M–F. Fax back system at 301-402-2466. A federalgovernmentofficetoinvestigateandshareinformationwiththepublicabouttheeffectivenessofvariousforms of alternative medical care. The agency also provides a directory of alternative health careassociations.

Children

•FacingtheFuture:ALegalHandbookforParentswithHIVDisease.Aprimerforanyparentwithalife-challenging condition, by Brooklyn Legal Services Corp. and Gay Men’s Health Crisis. TelephoneBrooklynLegalServicesCorp.at718-237-5546orGMHCat212-807-6664.

•How toHelpChildren through aParent’s Serious Illness byKathleenMcCue,MA,CCLS,withRonBonn(NewYork:St.Martin’sGriffin,1994).

•Kidscope,3400PeachtreeRoad,Suite703,Atlanta,GA30326(404-233-0001),anonprofitorganization,publisheseducationalmaterialforchildrenofaparentlivingwithcancer.Evenifyouaren’tlivingwithcancer,theideasmaybehelpful.

Credit

• Cardtrak, at 800-344-7714 or 301-695-4660 or www.cardtrak.com. Cardtrak provides credit cardinformation including a survey of banks or savings institutionswith low interest rates; a no-annual-feesurvey; a survey ofwhich cards providewhich bonuses (e.g., airlinemiles and forwhich airline) andrebates;andasurveyofwhichfinancialinstitutionsoffersecuredcardswithdetails.Amonthlynewsletteroflistingsis$15.

• Consumer Action. Publishes “Rebuilding Good Credit” as well as separate surveys of secured andunsecuredcreditcards.Availablefreebysendingastamped,self-addressedenvelopetoConsumerAction,717MarketStreet,Suite310,SanFrancisco,CA94103(415-777-9648).Annualmembershipsincludingupdatestothesurveysare$25.

DailyLiving

•AdaptiveResources:AGuidetoProductsandServices.PublishedbytheNationalStrokeAssociationat800-787-6537. A free catalog of suppliers of equipment, clothing and dressing aids, services, andmiscellaneousresources.

•AmericanMedicalAssociationCatalogofProductsforFamilyHealth.P.O.Box7104,Dover,DE19903-7104(800-864-5050orwww.amaassn.org).Health,exercise,andsafetyproducts.

• Backsaver Products Co., 53 Jeffrey Avenue, Holliston, MA 01746 (800-251-2225) has a mail ordercatalogofproductstohelprelievebackpain.

•EasyStreetCatalogue.EasyStreet,8EqualityParkWest,Newport,RI02840-2603(800-959-EASY).Afree catalog of helpful products such as a digital blood pressure monitor, inexpensive medicationorganizers,apillsplitter,andeasy-gripknobs.

•TheMatureMart,145FifteenthStreet,Suite1031,Atlanta,GA30309(800-720-6278or404-881-9816orwww.maturemart.com).Thecompanycarriesproductsthatare“disabilityfriendly,”suchaseasy-to-gripkitchentools,bathroomaids,andmedicationaids,includingapillboxgearedtomultipleprescriptionsthatmustbetakenondifferentschedules.

• National Association for Continence, P.O. Box 8310, Spartanburg, SC 29305-8310 (800-BLADDER).Hasaresourceguidetoincontinenceproducts($10plus$3s/h).

•ProjectLink,StateUniversityofNewYorkatBuffalo,515KimballTower,Buffalo,NY14214(800-628-2281).Anonprofit,nationaldirect-mailinformationservicethattakesinformationfrommanufacturersofproducts that assist daily living and distributes it to individuals. Specify your ailment or the type ofassistanceyoudesire.ProjectLinkalsohasinformationonpossiblesourcesofpayingfordevices.

Funerals

Caskets

•CarpenterplansmaybeorderedfromRichardJohnstone,P.O.Box1062,Pioneer,CA95666,$19.50.•ConsumerCasketUSA,Erie,PA,at800-611-8778,awholesalecasketsupplier.•DirectCasket,CostaMesa,CA,at800-772-2753,awholesalecasketsupplier.•www.xroad.com/∼funerals/,anInternetsitethatlistsavarietyofwholesalecasketcompaniesaswellaspricecomparisons.

• Funeral and Memorial Societies of America (a nonprofit organization), P.O. Box 10, Hinesburg, VT05461(800-458-5563orwww.funerals.org/famsa).Informationonwholesalecaskets,cardboardcaskets,rentalcaskets,andcremation.

FederalRules

•FTCPublicReference,600PennsylvaniaAvenueNW,Room130,Washington,DC20580(202-326-2222or www.ftx.gov). Free publications include “Funerals: A Consumer Guide” and “Caskets and BurialVaults,” abrochure about theuse andprotective claimsof caskets andburialvaults, aswell as funeralplanning.

Preplanning

•NationalFuneralDirectorsAssociation,11121W.OklahomaAvenue,Milwaukee,WI53227-4096(800-228-6332).

•FuneralServiceConsumerAssistanceProgram,P.O.Box27641,Milwaukee,WI53227(800-662-7666).

Gifts(theproceedsofwhichgotocharity)

General

• Gifts That Make a Difference. Describes gifts sold through nonprofits, by Ellen Berry (FoxglovePublishing[1992],598DavidParkway,Dayton,OH45429).

Cancer

• American Cancer Society, Washington Division, Inc., at 800-729-1151. Holiday greeting cards andcookbook.

•JacquelineGreenat814-371-4331sellsitemswithacancer-survivorlogosuchascaps,lapels,keychains,Tshirts, and sweatshirts. All net profits go to Adult Getaway, a nonprofit that provides vacations forpeoplewithcancer.

HIV/AIDS

•BroadwayCares/EquityFightsAIDS,165W.Forty-sixthStreet,Suite1300,NewYork,NY10036(212-840-0770,ext.250,twenty-fourhoursaday),hasacatalogofgiftitems.

• The Names Project Foundation (the AIDS Memorial Quilt), 3310 Townsend Street, Suite 310, SanFrancisco,CA94107-1639(800-872-6263).Giftitems.

•TheNationalAIDSAwarenessCatalogat800-669-1078.ItemsfromdifferentHIV/AIDSGuardianOrgs.

GovernmentBenefits

•TheAIDSBenefitsHandbookbyThomasP.McCormack(YaleUniversityPress,1990).WhilethisbookiswrittenforpeoplelivingwithAIDS,itisanexcellentresourceforanyonewhowantstoaccessorhasquestionsaboutgovernmentprograms,includingSSD,SSI,Medicare,andMedicaid.

•ProBenefit$HandbookbytheBenefitsandInsuranceDepartmentofAIDSProjectLosAngeles(213-993-1409).AprofessionalguidetopublicbenefitsandprivateinsuranceforpeoplewithHIVbutapplicabletoeveryone applying for government disability benefits. Includes suggestions for completing appropriateSocialSecurityforms,copiesofwhichareincluded.

GuardianOrganizations:National

(For local organizations, either call the national organization and ask for local resources or look in theyellowpagesunderthenameofthepertinentcondition.)

ALS(LouGehrig’sDisease)

•AmyotrophicLateralSclerosis(ALS)Association,21021VenturaBoulevard,Suite321,WoodlandHills,CA91364(800-782-4747or818-340-7500).Provideslocalreferralsforcounseling,training,andsupport.

Alzheimer’sDisease

•Alzheimer’sAssociation,919N.MichiganAvenue,Suite100,Chicago,IL60611(800-872-3900or312-335-8700).Researchandadvocacy.Providessupportandassistancetoaffectedpatientsandtheirfamilies.

Cancer

• Alliance for Lung Cancer Advocacy, Support and Education (ALCASE), 1601 Lincoln Avenue,Vancouver, WA 98660 (800-298-2436 or 360-696-2436). Information (including customizedinformation),support,andadvocacy.

•AmericanBrainTumorAssociation,2720RiverRoad,Suite146,DesPlaines,IL60018(800-886-2282or847-827-9910).Conditionandtreatmentinformation;accesstosupportgroups.

• American Cancer Society, 1599 Clifton Road NE, Atlanta, GA 30329 (800-ACS-2345 orwww.cancer.org). Publications and information; referrals, research, education, and advocacy. Programsinclude “Man toMan,” a program formenwith prostate cancer, and “LookGood…FeelBetter” forwomen.

•AmericanFoundationforUrologicDisease,330W.PrattStreet,Suite401,Baltimore,MD21201(800-828-7866).Conditionandtreatmentinformationconcerningprostatecancerandotherurologicdisorders.

•CancerCare,Inc.,1180AvenueoftheAmericas,NewYork,NY10026(800-813-HOPEor212-302-2400or www.cancercareinc.org). Free professional counseling, support groups, education, condition andtreatmentinformation,referrals.

•CorporateAngelNetwork,WestchesterCountyAirportBuilding1,WhitePlains,NY10604 (914-328-1313).Arrangestraveloncorporateplanesforcancerpatientsundergoingtreatmentsinspecifiedcenters.

• Cure for Lymphoma Foundation, 215 Lexington Avenue, New York, NY 10016 (212-319-5857).Research;supportandinformation.

•Gilda’sClub,195W.HoustonStreet,NewYork,NY10014(212-647-9700).Supportandcounseling.•InternationalCenterforPost-LaryngectomeesVoiceRestoration,7440N.ShadelandAvenue,Suite100,Indianapolis, IN 46250 (800-823-1056). Condition and treatment information, support for people withcancer-relatedvoiceloss.

• Leukemia Society of America, 600 Third Avenue, NewYork, NY 10016 (800-955-4572 or 212-573-8484).Concernsleukemia,lymphomas,andmultiplemyeloma.Counseling,financialassistance,speakerbureau,research,referrals,andinformation.

•LymphomaResearchFoundationofAmerica,Inc.,8800VeniceBoulevard,Suite207,LosAngeles,CA90034(310-204-7040).Research,treatment,andconditioninformation.

•NationalAllianceofBreastCancerOrganizations,9E.Thirty-seventhStreet,TenthFloor,NewYork,NY10016(800-719-9154orwww.nabcoinfo.aol.com).Informationsourceandadvocate.Physicianreferrals.

•NationalBrainTumorFoundation,785MarketStreet,Suite1600,SanFrancisco,CA94103 (800-934-2873 or 415-284-0208). Research, counseling, support. PublishesBrain Tumors: The Resource Guide,free.

• National Breast Cancer Coalition, 1707 L Street NW, Suite 1060,Washington, DC 20036 (202-296-7477).Grassrootsadvocacytoeliminatebreastcancer.

•NationalCoalition forCancerSurvivorship, 1010WayneAvenue,SilverSpring,MD20910 (301-650-8868). A resource network linking cancer survivors nationwide to the support resources in theircommunities.PublishesNationalDirectoryofCancerSupportServices($10).

•NationalKidneyCancerAssociation,1234ShermanAvenue,#203,Evanston,IL60202(847-332-1051).Research, information, publications, and advocacy.PublishesWeHaveKidneyCancer, a fifty-six-page

bookforpatients.•Share(Self-HelpforWomenwithBreastorOvarianCancer),1501Broadway,Suite1720,NewYork,NY10036 (212-719-0364). Condition and treatment information, support groups of and for women withbreastandovariancancer.

•SusanG.KomenBreastCancerFoundation,5005LBJFreeway,Suite370,Dallas,TX75244(800-462-9273).Research,education,helpline.

•WellnessCommunity,2716OceanParkBoulevard,Suite1040,SantaMonica,CA90405-5211(310-314-2555).Psychologicalandemotionalsupportforsurvivorsandfamilies.

• Y-Me National Organization for Breast Cancer Information and Support, 212W. Van Buren, FourthFloor,Chicago,IL60607-3908(800-221-2141or312-986-8338orwww.y.me.org).Peersupport.Manualforstartingsupportgroups.Prosthesisbankforwomenwithfinancialneed.

CerebralPalsy

•UnitedCerebralPalsy,1660LStreetNW,Suite700,Washington,DC20036(800-872-5827or202-776-0406 or www.ucpa.org). Information and referral source. Direct services—including therapy, familysupport,recreationprograms,andemploymentassistance.

CysticFibrosis

•CysticFibrosisFoundation,6931ArlingtonRoad,Bethesda,MD20814(800-344-4823or301-951-4422orwww.cff.org).Research,carecenters,andclinicaltrials.

Diabetes

•AmericanDiabetesAssociation, 1660Duke Street,Alexandria,VA 22314 (800-232-3472 or 703-549-1500 or www.diabetes.org/custom.asp). Research, information, and advocacy. Referrals through 800-DIABETES.

HIV/AIDS

•NationalAIDSFund,1400IStreet,Washington,DC20005-2208(202-408-4848).Grantstocommunityorganizations.

•NationalAssociationofPeoplewithAIDS,Inc.,1413KStreet,Washington,DC20005(202-898-0414orwww.napwa.org.).Advocacy,publiceducation,treatmentinformation.

• National Minority AIDS Council, 1931 Thirteenth Street, Washington, DC 20009 (202-483-6622).Trainingprogramsandpubliceducation.

•WomenOrganizedtoRespondtoLife-ThreateningDiseases,P.O.Box11535,Oakland,CA94611(510-658-6930).SupportforwomenwithHIV.

Huntington’sDisease

•Huntington’sDisease Society ofAmerica, 140W.Twenty-second Street, Sixth Floor,NewYork,NY10011-2420(800-345-HDSAorhttp://hdsa.mgh.harvard.edu).Services,education,andresearch.

Kidney

•AmericanKidneyFund,6110ExecutiveBoulevard,Suite1010,Rockville,MD20852(800-638-8299or301-881-3052orwww.arbon.com/kidney).Education,financialassistance,information.

•TheNationalKidneyCancerAssociation,1234ShermanAvenue,Evanston,IL60202(708-332-1051).Acomputerbulletinboardsystemforsurvivorsandphysicians:708-332-1052.

Leukemia

•LeukemiaSociety ofAmerica, 600ThirdAvenue,NewYork,NY10016 (800-955-4LSAor 212-573-8484orwww.leukemia.org/).Research,education,advocacy,andsupport.

LiverDisease

•AmericanLiverFoundation, 1425PomptonAvenue,CedarGrove,NJ07009 (800-223-0179,800-465-4837, or 201-256-2550 or sadieo.uscf.edu/alf/alffinal/homepagealf.html). Research and assistance inlocatingdoctorsandmedicalservices.

LungDisease

•AmericanLungAssociation,432ParkAvenueSouth,EighthFloor,NewYork,NY10016(800-LUNG-USAor212-889-3370).Informationandspeakers’bureau.

Lupus

•LupusFoundationofAmerica,Inc.,1300PiccardDrive,Suite200,Rockville,MD20850-4303(800-558-0121orinternet-plaza.net/lupus/).Servicesandsupport.Newsletter.

MultipleSclerosis

•Multiple Sclerosis Foundation, Inc., 6350N. AndrewsAvenue, Fort Lauderdale, FL 33309 (800-441-7055).Conventionalandalternativetreatmentinformation.Referralservices.

•NationalMultipleSclerosisSociety,733ThirdAvenue,NewYork,NY10017(800-344-4867).Referrals,counseling,familysupport,independent-livingandemploymentprograms.

MyastheniaGravis

•MyastheniaGravisFoundationofAmerica,222S.RiversidePlaza,Suite1540,Chicago,IL60606(800-541-5454).Supportgroups,research,treatmentinformation.

Parkinson’sDisease

•NationalParkinsonFoundation,Inc.,1501N.W.NinthAvenue/BobHopeRoad,Miami,FL33136(800-327-4545orwww.parkinson.org/).Informationandsupportgroupreferrals.

SickleCell

•SickleCellDiseaseAssociationofAmerica,200CorporatePointe,Suite495,CulverCity,CA90230-7633 (800-421-8453 or 310-216-6363 orwww.icfs.org/bluebook/bb000291.htm). Public awareness andeducationalmaterials.Referralsfortreatmentinformation.

•SickleCell InformationCenter,P.O.Box109,GradyMemorialHospital,80ButlerStreet,Atlanta,GA30335(404-616-3572;fax:404-616-5998).

SpinaBifidaHotline

•SpinaBifidaAssociationofAmerica,4590MacArthurBoulevardNW,Suite250,Washington,DC20007(800-621-3141or202-944-3285orwww.sbaa.org).Informationandreferrals,newsletter.

OtherNationalGuardianOrgsofInterest

•AmericanCounciloftheBlind,1155FifteenthStreetNW,Suite720,Washington,DC20005(800-424-8666 or 202-467-5081 or www.acb.org). Referrals on all aspects of blindness, scholarship assistance,braillemagazine.

•AmericanPainSociety,4700WestLakeAvenue,Glenview, IL60025 (847-375-4700). Informationonpaintreatmentcentersaroundthecountry.

•TheHumorProject,110SpringStreet,SaratogaSprings,NY12866(518-587-8770).Catalogofhumorousmaterialforcopingwithachallengingcondition.

• National Stroke Association, 96 Inverness Drive East, Suite 1, Englewood, CO 80112-5112 (800-STROKESor303-649-9299orwww.stroke.org).Treatment,rehabilitationresearch,andsupportservices.

•UnitedOstomyAssociation,1111WilshireBoulevard,LosAngles,CA90017(800-826-0826or714-660-8624).Ostomyinformationandpeersupport.

Hospice

•HospiceEducationInstitute,5EssexSquare,P.O.Box713,Essex,CT06426(203-767-1620).Referralsto a regularly updated directory of hospice and palliative care programs nationwide, plus generalinformationonhospicecareandonbereavementissuesandservices.

•NationalHomecare andHospiceDirectory. Published annually by theNationalAssociation forHomeCare,228SeventhStreetSE,Washington,DC20003-4306(202-547-7424).$135.Adirectorycontaininginformationonmorethan18,500homecare,hospice,andhomecareaideproviders, including,inmanycases,theservicestheyprovideplusthegeographicareaserved.

•NationalHospiceOrganization,1901N.MooreStreet,Suite901,Arlington,VA22209(800-658-8898or703-243-5900). National organization for hospice care and hospice providers. Helps locate a hospiceorganizationinyourarea.

Hospitals

•HowtoFindtheBestDoctors,HospitalsandHMOsforYouandYourFamily,CastleConnollyMedicalLtd.(1995).

•TheSavvyPatient byDavidR.Stutz,M.D., andBernardFeder,Ph.D. (ConsumersUnionof theU.S.,1990).

•TakeThisBookwithYoutotheHospitalbyCharlesB.InlanderandEdWeiner(PeoplesMedicalSociety,1993).

•America’sBestHospitals,U.S.NewsandWorldReport,publishedbyJohnWylie&Sons.Rateshospitalsstatebystatebyspecialty.

InsuranceCommissions

Alabama:CommissionerofInsurance,135SouthUnionStreet,#181,Montgomery,AL36104(334-269-3550).

Alaska:DirectorofInsurance,P.O.Box110805,Juneau,AK99811-0805(907-465-2515).Arizona: Director of Insurance, 2910 N. Forty-fourth Street, Suite 210, Phoenix, AZ 85018 (602-912-

8400).Arkansas:InsuranceCommissioner,1200WestThirdStreet,LittleRock,AR72201-1904(501-371-2600).California:CommissionerofInsurance,300S.SpringStreet,LosAngeles,CA90013(fromLosAngeles:

213-897-8921;restofstate:800-927-4357).Colorado:CommissionerofInsurance,1560Broadway,Suite850,Denver,CO80202(303-894-7499).Connecticut:InsuranceCommissioner,P.O.Box816,Hartford,CT06142-0816(860-297-3800).Delaware:InsuranceCommissioner,841SilverLakeBoulevard,P.O.Box7007,Dover,DE19903(302-

739-4251).DistrictofColumbia:SuperintendentofInsurance,441FourthStreetNW,Suite870North,Washington,

DC20001(202-727-8000).Florida:InsuranceCommissioner,StateCapitolPlaza,Level11,Tallahassee,FL32399(904-922-3100).Georgia:InsuranceCommissioner,2MartinLutherKing,Jr.Drive,704WestTower,Atlanta,GA30334

(404-656-2056).Hawaii:InsuranceCommissioner,P.O.Box3614,Honolulu,HI96811(808-586-2790).Idaho:DirectorofInsurance,700WestStateStreet,ThirdFloor,Boise,ID83702(208-334-2250).Illinois:DirectorofInsurance,320WestWashingtonStreet,FourthFloor,Springfield,IL62767(217-782-

4515).Indiana: Commissioner of Insurance, 311 West Washington Street, Suite 300, Indianapolis, IN 46204

(317-232-2385).Iowa:CommissionerofInsurance,LucasStateOfficeBuilding,SixthFloor,DesMoines,IA50319(515-

281-5705).Kansas:CommissionerofInsurance,420S.W.NinthStreet,Topeka,KS66612(913-296-7801).Kentucky:InsuranceCommissioner,215W.MainStreet,P.O.Box517,Frankfort,KY40602(502-564-

3630).Louisiana:CommissionerofInsurance,P.O.Box94214,BatonRouge,LA70804-9214(504-342-5900).Maine:Superintendentof Insurance,StateOfficeBuilding,StateHouse,Station34,Augusta,ME04333

(207-624-8475).Maryland:InsuranceCommissioner,525St.PaulPlace,Baltimore,MD21202(410-468-2000).Massachusetts:CommissionerofInsurance,470AtlanticAvenue,Boston,MA02210(617-521-7794).Michigan:InsuranceCommissioner,P.O.Box30220,Lansing,MI48909-7720(517-373-9273).Minnesota:CommissionerofCommerce,133E.SeventhStreet,St.Paul,MN55101(612-296-4026).Mississippi:CommissionerofInsurance,1804WalterSillersBuilding,P.O.Box79,Jackson,MS39205

(601-359-3569).Missouri:Director of Insurance, 301WestHighStreet, Suite 630, JeffersonCity,MO65102 (573-751-

5107).

Montana:CommissionerofInsurance,126N.Sanders,MitchellBuilding,Room270,Helena,MT59620orP.O.Box4009,Helena,MT59604(406-444-2040).

Nebraska:DirectorofInsurance,941OStreet,Suite400,Lincoln,NE68508(402-471-2201).Nevada:CommissionerofInsurance,1665HotSpringsRoad,Suite152,CarsonCity,NV89701(702-687-

4270).NewHampshire: InsuranceCommissioner,169ManchesterStreet,P.O.Box2005,Concord,NH03301

(603-271-2261).NewJersey:CommissionerofInsurance,20W.StateStreet,Trenton,NJ08625(609-292-5363).NewMexico:SuperintendentofInsurance,P.O.Drawer1269,SantaFe,NM87504(505-827-4500).NewYork:SuperintendentofInsurance,InsuranceDepartment,EmpireStatePlaza,Building#1,Albany,

NY12257(800-342-3736or518-474-4550).NorthCarolina:CommissionerofInsurance,P.O.Box26387,Raleigh,NC27611(919-733-7343or800-

662-7777).NorthDakota:CommissionerofInsurance,CapitolBuilding,FifthFloor,Bismarck,ND58505(701-328-

2440).Ohio:DirectorofInsurance,2100StellaCourt,Columbus,OH43215-1067(614-644-2658).Oklahoma:InsuranceCommissioner,P.O.Box53408-3408,OklahomaCity,OK73152(405-521-2828).Oregon:InsuranceCommissioner,350WinterStreetNE,Room440,Salem,OR97310(503-378-4271).Pennsylvania:InsuranceCommissioner,1326StrawberrySquare,Harrisburg,PA17120(717-787-5173).PuertoRico:CommissionerofInsurance,MartinezJuncosStation,Box8330,Santurce,PR00910(809-

722-8686).RhodeIsland:InsuranceCommissioner,233RichmondStreet,Suite233,Providence,RI02903(401-277-

2246).SouthCarolina: InsuranceCommissioner, 1612MarionStreet, P.O.Box 100105,Columbia, SC 29202

(803-737-6160).SouthDakota: InsuranceCommissioner, InsuranceBuilding,910E.Sioux,Pierre,SD57501 (605-773-

3563).Tennessee:CommissionerofInsurance.500JamesRobertsonParkway,FifthFloor,Nashville,TN37243

(615-741-2241).Texas:CommissionerofInsurance,P.O.Box149104,Austin,TX78714(512-475-3726or800-252-3439).Utah:CommissionerofInsurance,StateOfficeBuilding,Room3110,SaltLakeCity,UT84114(801-538-

3800).Vermont:CommissionerofInsurance,89MainStreet,Drawer20,Montpelier,VT05620(802-828-3301).Virginia:Commissionerof Insurance,1300E.MainStreet,P.O.Box1157,Richmond,VA23218(804-

371-9694).VirginIslands:CommissionerofInsurance,KongensGade18,St.Thomas,VI00802(809-774-2991).Washington:InsuranceCommissioner,P.O.Box40255,Olympia,WA98504-0255(360-753-7301).WestVirginia:InsuranceCommissioner,P.O.Box50540,1124SmithStreet,Charleston,WV25305-0540

(304-558-3394).Wisconsin:CommissionerofInsurance,P.O.Box7873,Madison,WI53707(608-266-0102).Wyoming:InsuranceCommissioner,HerschlerBuilding,Room3E,122W.Twenty-fifthStreet,Cheyenne,

WY82002(307-777-7401).

GuaranteedIssueLifeInsurance—Sources

•CentralUnitedLifeInsuranceCo.(ages21–80),800-669-9030.•GerberGuaranteedLifePlus(ages40–80),914-761-4404.•IntraAmericaLifeIns.Co.(ages50–75),800-323-4542.

HospitalIndemnity(Income)InsurancePolicies—Sources

•AmericanAssociationofRetiredPersons,601E.StreetNW,Washington,DC20049(800-523-5800).•Citicorp Insurance, P.O.Box 7055,Dover,DE19903 (800-237-4365). For peoplewithCiticorp creditcardsorcheckingaccounts.

•GerberLifetimeHospitalcarePlan,204W.MainStreet,Fremont,MI49412-1179(800-253-3074).•Physician’sMutualInsuranceCo.,2600DodgeStreet,Omaha,NE68131(800-325-6300).

LegalRepresentation

•AmericanPrepaidLegalServicesInstitute,541N.FairbanksCourt,Chicago,IL60611(312-988-5751).Anonprofitorganization thatprovidesnamesofprepaidservices throughout theUnitedStates.Or look inyouryellowpagesunder“legalservices.”

•LegalServicesCorporation,750FirstStreetNE,EleventhFloor,Washington,DC20002-4250(202-336-8800).AnonprofitcorporationestablishedbyCongress“toseektoassureequalaccesstojusticeunderthelaw for all Americans”with limited financialmeans. The Legal Services Corporation publishes a freeprogramdirectorylistingallaffiliatedlegalaidorganizationsthroughoutthecountry.

•RepresentingYourself—WhatYouCanDoWithoutaLawyerbyKennethLassonandthePublicCitizenLitigationGroup(Penguin,USA,1995)(202-588-1000).Apracticalguidetorepresentingyourself.

Magazines—SpecialInterest(inadditiontonewsletterspublishedbyGuardianOrgs)

Cancer

•Coping,P.O.Box682268,Franklin,TN37068(615-790-2400orwww.copingmag@aol.com).Nationallydistributedconsumermagazineforpeoplewithcancerandtheirfamilies.

•MAMM,349W.TwelfthStreet,NewYork,NY10014(212-242-2163andsubscription@mamm.com).Nationallydistributedconsumermagazineforwomenwithbreastcancerandtheirfamilies.

Caregivers

•Today’sCaregiver,P.O.Box800616,Miami,FL33180-8616(954-962-2734;outsidesouthernFlorida:800-829-2734orwww.caregiver.com).

HIV/AIDS

• Art & Understanding, 25 Monroe Street, Suite 205, Albany, NY 12210-2743 (518-426-9010 orwww.aumag.org).Artistic,literary,creative,andculturalresponsestotheHIV/AIDScrisis.Monthly.

• Body Positive, Body Positive, 2095 Broadway, Suite 306, New York, NY 10023 (212-566-7333 orwww.thebody.com).Practicalinformationsource.Monthly.

•Positively Aware, Test Positive Aware Network, 1258W. Belmont Avenue, Chicago, IL 60657-3292(773-404-8726orwww.tpan.com).Medicalandsocialissues.

•POZ,349W.TwelfthStreet,NewYork,NY10014(212-242-2163andsubscription@poz.com).ArticlesaboutlivingwithHIV/AIDS.Monthly.AvailableinSpanish.

Hospice

•CrossroadsofLife,12125WoodcrestExecutiveDrive,St.Louis,MO63141(314-453-9993).Articlesforcaregiversandpatients.

Medicaid

•TheMedicaidPlanningHandbookbyAlexanderA.BoveJr.(NewYork:Little,BrownandCo.,1992).•AvoidingtheMedicaidTrapbyArmondD.Budish(NewYork:AvonBooks,1995).

Medicare

•MedicareHotline,HealthCareFinancingAdministration,OfficeofPublicAffairs,U.S.DepartmentofHealth and Human Services, 800-638-6833, 8 A.M. to 8 P.M. EST, M–F, or call the Social SecurityAdministrationat800-772-1213.

• YourMedicare Handbook, Health Care Financing Administration, Office of Beneficiary Relations N-1005, 7500 Security Boulevard, Baltimore, MD 21244-1850 (www.hhcfa.go). An excellent detaileddescriptionofMedicarecoverage(includingMediGapinsurance).

OrganTransplant

• Organ Transplant Fund, Inc., 1102 Brookfield, Memphis, TN 38119 (800-489-3863). A nonprofitorganization;informationandfinancialassistance;candidates.

PainManagement

•AmericanChronicPainAssociation,P.O.Box850,Rocklin,CA95677(916-632-0922).Offersasupportsystemforthosesufferingchronicpain,guidelinesforselectingapainmanagementunit,andreferralstosixhundredchaptersinternationally.

• National Chronic Pain Outreach Association, 7979 Old Georgetown Road, Suite 100, Bethesda, MD20814(540-997-5004). Informationclearinghouseaboutchronicpainand itsmanagement;publications;andreferralstopainmanagementspecialists,painclinics,andpainsupportgroups.

Physicians’Fees

•Physicians’FeeReference:ACompendiumofPhysicians’FeesProvidingHealthCareProfessionalswith50th, 75thand90thPercentiles inU.S.Dollars,WassermanMedicalPublishersLtd.,P.O.Box27365,WestAllis,WI53227(800-669-3337),$129plus$5s/h.Provides theusual,customary,andreasonablefeesforagivenprocedureinyourarea.

RealEstate:ReverseMortgages

•HomeEquityConversionInformationKit,D15601,AARPHomeEquityInformationCenterEE0756,601E Street NW, Washington, DC 20049. A free publication that includes an extensive state-by-state“ReverseMortgageLendersList.”YoucanobtainthenamesoflendersmakingreversemortgagesinyourareabydownloadingAARP’slistatwww.aarp.org.

•YourNewRetirementNestEgg:aConsumerGuideto theNewReverseMortgages, includingareversemortgage locator, byKenScholen, published byNationalCenter forHomeEquityConversion (1996),7373147thStreetW.,Suite1115,AppleValley,MN55124(800-247-6553).

RevocableLivingTrusts

•TheNewBookofTrustsbyLeimbergAssociates,$49.95(self-published,1997)(610-527-5216).•Understanding Living Trusts by Vickie and Jim Schumacher, $24.95 (Schumacher Publishing, 1998)(800-728-2665).

Transplants—BoneMarrow

•TheBMTNewsletter has a list of attorneyswhohandlebonemarrow transplant caseswhen an insurerrefusestopay(708-831-1913).Thenewsletterwilleitherrecommendanexperiencedattorneyinyourareaorwillsuggestattorneyswhowillconsultwithyourattorney.

Travel

• Access Travel—Airports, published by Airports Council International–North America, ConsumerInformationCenter,P.O.Box100,Pueblo,CO81002.Specifypublication580Y.Freeplus$1s/h.

•CancerCare,Inc.,at800-813-HOPEor212-221-3300,hasalistoforganizationsworldwidethatprovideinformationwithrespecttocancer.

•Moss Rehab Travel Info Service, a service ofMoss Rehab (a rehabilitation hospital). Provides travelinformationtailoredtoyourspecificneeds.Telephone215-456-9600.

•National PatientAir TransportHotline (NPATH) at 800-296-1217 is a clearinghouse for patientswhoneedbutcannotaffordfull-costtravelformedicalcare.Someresourcesarefreebasedonpatientstatus.

• Travelin’ Talk, 130 Hillcrest Plaza, Suite 102, Clarksville, TN 37043-3534 (931-552-6670). Containslistingsofan internationalnetworkofpeoplewilling toshare theirknowledgeof theirhometownswithtravelerswithdisabilitiesvisitingorpassingthroughtheirlocation.Italsolistsdiscountsforthedisabled.Theeditorisinawheelchairhimself.$35.

TreatmentInformation

AllConditions

•Centers forDiseaseControl and Prevention, 1600CliftonRoad,Atlanta,GA30333 (404-639-3534 orwww.cdc.gov/).Informationontreatments,research,andcommunityresources.

•Seechapter25,section3,forresearchassistance.

Cancer

•BreastImplantInformationNetwork,800-887-6828.Providesmedicalandlegalinformationforwomenwithorconsideringbreastimplants.

• Guardian Organizations: See the organizations for cancer under “Guardian Organizations: National”above.Most have newsletters.CancerCare, Inc. publishes “AHelpingHand:TheResourceGuide forPeopleWithCancer,”whichlistsnationalandregionalresources.

•Cancer InformationService,NationalCancer Institute,OfficeofCancerCommunications,Building31,Room 10A16, 31 Center Drive,MSC 2580, Bethesda,MD 20892-2580 (800-422-6237,M–F, 9–4:30,EST).AU.S.governmentagencythatprovidesinformationonalltypesofcancer,treatmentoptions,andmedical resources. Answers questions about cancer; makes referrals to local support groups and otherresources.Alsohasinformationonpainmanagement.

•PatientAdvocatesforAdvancedCancerTreatments,1143ParmeleeNW,GrandRapids,MI49504(616-453-1477).Informationontreatmentsofprostatecancer.

HIV/AIDS

•AIDSTreatmentNews.Biweekly;developmentsinresearch,experimentaltherapiesandtreatments.JohnJames, P.O. Box 411256, San Francisco, CA 94141 (800-873-2812 or www.immunet.org/-immunet/atn.nsf/homepage).

•AMFAR,212-682-7440.PublishesAIDS/HIVTreatmentDirectory.Updatedquarterly;$55ayear.•PositiveLiving, publishedbyAidsProjectLosAngeles, 1313N.VineStreet,LosAngeles,CA90028(213-993-1362orwww.digitopia.com/-apla).

•TreatmentIssues,publishedbyGayMen’sHealthCrisis,129W.TwentiethStreet,NewYork,NY10011(212-337-3695).Newsletteroflatesttherapies.

•NationalAIDSClearinghouse,aserviceoftheCentersforDiseaseControl,800-458-5231.Classifiesanddistributesinformationandeducationalmaterials.

TreatmentInformation:TheInternet

TheInternetprovidesinformationonthelatestmedicaldevelopments(seehere).

General

•www.achoo.com.Internethealthcaredirectory.•GuardianOrgsprovideinformationontheirsites:e.g.,theAmericanCancerSocietyatwww.cancer.org.•healthatoz.com,asearchengineforhealthandmedicine.• Healthfinder (www.healthfinder.gov), a government-sponsored search engine that is user-friendly. Itincludeslinkstohealthinformationandresources.

•Health-relatedlistswillE-mailyouwithnewlypostedinformationonthetopicofyourchoiceifyouareasubscriber.E.g.,www.liszt.com.

•Hospitalshavecreatedsiteswithinformationabouttreatments.SeetheDepartmentofNeurology’slinkattheMassachusettsGeneralHospitalsiteforagoodlistofhospital-affiliatedWebsites.

•Medaccessatwww.medaccess.com.Avarietyofhealth-relatedinformation,includinginformationabouthealthcarenewslettersandlinks.

•Medscapeatwww.medscape.comhasarticlesfromsuchsourcesastheNationalInstitutesofHealthandtheCentersforDiseaseControlandPrevention.

•NationalLibraryofMedicine,800-638-8480.InternetaccessatMedlineiswww.nlm.nih.gov.•NewEnglandJournalofMedicineison-lineatwww.nejm.organdatmedscape.com• Newsgroups. For anecdotal evidence about a treatment, consider posting a question on a newsgrouptargetedtoaspecificinterestsuchasDejaNewsatdejanews.com.

Cancer

• American Cancer Society, www.cancer.org, contains information about specific cancers, includingalternativetreatments.

•ASCOOn-Line.Anorganizationthatrepresentsovertenthousandcancerprofessionals.Seethe“patientpage”plusa“searchindex.”

• Cancer Care, Inc., www.cancercareinc.org, contains links to Web sites for information by cancerdiagnosis.

•CancerNet.Aquickandeasywaytoobtain,throughelectronicmail,cancerinformationfromtheNationalCancer Institute (NCI). You can request information from the NCI’s Physician Data Query (PDQ)databaseandfactsheetsonvariouscancertopics.E-mailaddress:cancernet@ici.cc.nci.nih.gov.OraccesstreatmentinformationattheCancerNetWebsite:www.nci.nih.gov.

• Cancer Research Institute site, www.cancerresearch.org, includes information about treatments andclinicaltrialsandaresourcedirectory.

• Cansearch, a site that provides access to cancer information sites, www.cansearch.org or typewww.access.digex.net.

• The Journal of the National Cancer Institute. Information and articles geared to the professional,cancernet.nci.nih.gov/jnci/jncihome.htm.

• Oncolink, a project of the University of Pennsylvania Cancer Center. Excellent research tool forinformationconcerningcancer,research,andtreatmentatwww.oncolink.upen.edu/.

HIV/AIDS

•AIDSResourceList,www.teleport.com/∼celinec/aids.shtml/.Comprehensivelisting.•TheBody,www.thebody.com/.Multimediainformationresource.•BulletinofExperimentalTreatment forAids,www.infoweb.org/treatment/index.html.Links todifferentHIV/AIDSnewsletters.

•HIVInfowebSearchableLibrary,www.infoweb.org.On-linelibrary.•JohnJamesNewsletter(concerningtreatments),www.jri.org.•NationalAIDSClearinghouse,www.cdcnac.org.Part of theCDC.Continuouslyupdated treatment andresourceinformation.

Water

•TheDrinkingWaterBook:ACompleteGuidetoSafeDrinkingWaterbyColinIngram(Berkeley,Calif.:TenSpeedPress,510-527-1563).$11.95plus$2.50s/h.

•“What’sOnTap,CryptosporidiuminU.S.PublicDrinkingWater,”publishedbyNationalAssociationofPeopleWithAIDS,202-898-0414.Free.

WillPreparation

•TheAmericanBarAssociationGuidetoWillsandEstates(TimesBooks,1995)(800-793-2665).•TheCompleteWillKitbyJensC.AppelIIIandF.BruceGentry(JohnWiley&Sons,1990).•KeystoPreparingaWillbyJamesJohnJurinski,JD,CPA(Barron’s,1991).•Nolo’sSimpleWillBookbyDenisClifford,Esq.(NoloPress,1989)(800-992-6656).•Willmaker6,NoloPress(800-992-6656).Acomputerprogramthat includessimplewillswiththe legalrequirementsforexecutionofawillineachstate.$49.95.

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AlthoughIamanattorneyandhavespentanumberofyearscounselingpeoplewithlife-challengingconditions,aswellasworkingtohelpprovidefortheirfinancialcomfort,nothinginthisbookismeantasasubstituteforlegaland/orotherprofessionaladvice.Itisprudenttoconsultanattorney,financialplanner,ortaxadviserbeforemakingdecisionsbasedontheinformationinthesepages.Thisbookwillattempttoenhanceyourdiscussionswiththeseprofessionalsbydetailingtheissuestobeconsidered.Everyefforthasbeenmadetoensurethattheinformationinthisbookisaccurateandup-to-date.However,constantlychanginglawsandproceduresaresubjecttoevolvinginterpretations.Theyshouldbeverifiedpriortotakinganyaction.

BEPREPARED.Copyright©1998byDavidS.Landay.Allrightsreserved.Nopartofthisbookmaybeusedorreproducedinanymannerwhatsoeverwithoutwrittenpermissionexceptinthecaseofbriefquotationsembodiedincriticalarticlesorreviews.Forinformation,addressSt.Martin’sPress,175FifthAvenue,NewYork,N.Y.10010.

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FirstEdition:October1998

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