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Patient Solvent in Sickness and in Health


Ten years ago, Carlos Sifuentes made two important moves that saved his financial life.

One, buying disability insurance, is highly recommended by financial planners. The other, buying supplemental hospital insurance, is often dismissed as being too expensive. But having both policies turned out to be wise when Sifuentes was found to have AIDS.

Not only has he been able to stay afloat financially, but the policies also helped him set aside $30,000 even as he had to quit his job, move in with his mother and deal with health crises. He was also lucky that his medical costs, co-payments and out-of-pocket expenses have been less than those of many AIDS patients.

Now his health is more stable and he wants to start planning for the future, investing some of the money for growth. But like many people with a serious illness, he also wants to preserve his principal.

Financial planning for people with AIDS, as well as other life-threatening conditions with unpredictable outcomes, requires that two-track approach.

"The key to living successfully with a life-challenging condition is to strike the critical balance between expecting the best and preparing for the worst," said David S. Landay in "Be Prepared: The Complete Financial, Legal and Practical Guide for Living With a Life-Challenging Condition," published by St. Martin's Press.

Improvements in AIDS treatments have allowed 34-year-old Sifuentes to gain more sway over his own life and think about longer-term possibilities. "For the past four years, many aspects of my life have been in the hands of others," he said. "Now it is time for me to regain control."

But he still needs to think conservatively. "There may come a day when the condition you have is cured or goes away. Or there may come a day when the condition gets worse and you may need to use some of the money," said fee-only certified financial planner Margie Mullen, who reviewed Sifuentes' finances for The Times. "That second part I need to be careful of."

Sifuentes learned he was HIV-positive seven years ago, but even five years ago he was feeling pretty good. He had an interesting, $33,000-a-year job as an architectural designer for a small New York firm whose projects included an annex at the Guggenheim Museum and renovating Sony Music's offices in Miami's South Beach. He shared a rent-stabilized apartment but allowed his credit card debt to rise steadily to $12,500.

Then, in 1994, he received the AIDS diagnosis.

Too sick to work, Sifuentes returned to his native East Los Angeles to live with his mother, now retired. Since then, he has been hospitalized five times.

"When I found out my condition, it really dawned on me that I had to be realistic," Sifuentes said. "Then I stopped the spending."

Insurance His Best Investment

His basic needs--such as his basic health-insurance premiums--are paid for out of his $1,145 in monthly Social Security disability payments. In addition to that, the private disability coverage paid $9,000 in benefits. Although it was exhausted in 1996, the policy can be reactivated if Sifuentes goes back to work for two years.

The extra hospital insurance is a limited policy that pays a set amount for each day spent in the hospital, regardless of other insurance. Sifuentes receives about $200 a day when he is hospitalized from two policies that he obtained through credit card company offers. He considers it the best investment he ever made. Tucking away some of these benefits while keeping other costs down is how Sifuentes accumulated any savings at all.

In "Be Prepared," Landay suggests buying several of these policies, although they are not as easy to find as they were a decade ago. While most financial planners consider the coverage a waste of money, it certainly can be valuable for someone with a good chance of having several hospitalizations. The payments can fill in the gaps not covered by regular insurance or allow financial flexibility for other reasons. Sifuentes was glad to have it when he paid his $2,000 share of the cost of a recent hospital stay.

Sifuentes, who bought his policies before he knew he was HIV-positive, made a wise decision. But many people put off buying disability or supplemental health policies until it is too late.

Financial planners typically recommend disability coverage for just about everyone--the independently wealthy or people with complete confidence that their families would take care of them if necessary are the only exceptions. Supplemental hospital policies, if you can find one, are valuable in fewer situations and thus less likely to be worthwhile.

In any case, either coverage is difficult, if not impossible, to obtain when someone is already sick or found to have a disease. Most disability providers require a physical exam that would turn up health problems.

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