The Day after the Initial Diagnosis: MS and Financial Planning

This article is part of a series dealing with financial planning for multiple sclerosis. To see other articles, you can click here.

If you’ve just learned that you either might have multiple sclerosis and the neurologist or doctor wants to schedule a MRI or a spinal tap or you’ve received a confirmation that you do have multiple sclerosis, you’re going to have a ton of questions going through your mind.

The first ones will deal with your quality of life. Will MS shorten your life expectancy? How soon before you start losing motor control? Can you live life like you have up until now? What changes will you need to make?

Then, you’ll start to move on to treatment and therapy. What course of treatment will you receive? How often will you have to see your care team? How often will you need medicine? Will you have to move to a colder climate because of heat intolerance? Will you need in-home care and mobility assistance?

Eventually, once you work through the questions about the progression and treatment of the disease and its effect on your lifestyle, you’re going to start to wonder.

How Will We Ever Pay for This?

I’m not going to sugar-coat your reality. Your cost of living will go up, particularly if you do not have health insurance to mitigate some of the costs. A 2007 study from the University of Tennessee estimated that costs – at that time – for treatment drugs ranged between $16,928 and $22,557 per year. The average long-term inflation rate for healthcare is 5.5%, so bringing those costs to 2013 numbers would indicate a range from $23,341 to $31,103.

The other costs will be longer-term in nature. Those include:

  • Hospital care: estimated to be $4,845 per year
  • Lost time at work: estimated to be $6,306 per year
  • Early retirement: the equivalent of losing $17,857 per year of income

If you do have health insurance, then those costs will not be as high. Aside from the early retirement and lost time at work, you could reasonably expect to only pay 30-40% of the aforementioned costs. However, if you must acquire health insurance, your premiums will be significantly higher, as you will have a pre-existing condition to be underwritten.

In short, not only will you have higher medical bills as a result of the ongoing treatment of the disease, but you’re also likely to face a reduced career span in which you can earn income and be covered by employer healthcare if you are covered.

This double whammy to your nest egg means that you’re going to need to be meticulous about what you’re saving and where you’re saving from the onset.

Here are some steps I recommend to prepare yourself to deal with the financial challenges that long-term disease management will entail.

  • Don’t immediately start draining retirement accounts. The gut reaction that you’re going to have is to drain everything so that you’ll have liquid and readily accessible funds. There are two reasons why this isn’t wise:

    • You don’t know the course that MS will take with you. Some people don’t have disease symptoms for decades. You’d have lost a lot of time for growth of your assets if you pull out of the market now and don’t need the money for a long time.
    • You’ll have to pay taxes and you’ll probably have to pay fees. The Internal Revenue Service does generally allow for hardship distributions; however, a pending hardship doesn’t qualify. The hardship – the medical expense – needs to be immediate and the funds must pay for the medical expenses.
  • Prepare now for in-home medical care. Many times, inpatient care could be treated at home if there were skilled nurses available to provide the care. Instead of receiving a charge for a hospital stay, have a plan for getting treated – appropriately with trained staff – at home. This could potentially save thousands over the long run. There may be times when hospitalization is a necessity, but planning aforethought could result in significant savings.
  • Anticipate higher retirement expenses. It’s a fact of life that you’re going to have to deal with – expenses both now and in the future will increase. Furthermore, you can anticipate healthcare expenses to rise more quickly than your other expenses, as the inflation rate for healthcare is higher than the overall inflation rate.
  • Expect a shorter working career. Almost 30% of the overall costs of multiple sclerosis are due to reduced income because there will almost inevitably come a point where you can no longer work. Therefore, while most people can plan to a longer age and to work more to generate retirement income, you must be more scrupulous starting now.
  • Prepare to have a discussion about your disease with your employer. The disease will affect how you can work long before it will affect whether you can work. The most common symptom I’ve seen is fatigue, meaning that you might need to take more frequent breaks or even be allowed to nap in the middle of the day. Eventually, it may mean reduced hours as well. I’ve been an employer, and certainly have appreciated when my employees were upfront and honest with me about limitations. There are some downsides to this approach, but you are also almost certainly protected by the Americans with Disability Act. The page linked to in the previous sentence has other information about how and whether or not to have the discussion about MS with your employer and is an excellent resource.
  • Start evaluating cooler climate living arrangements. This doesn’t mean pack up the bags and move to Barrow, Alaska tomorrow, but a very common symptom of people who have MS is intolerance to heat. If you live in a warm climate, you may one day find that the heat is no longer tolerable. Have a list of desired cool weather locations in mind where you would like to investigate or live long before that day comes.
  • Be prepared to make some tough budgeting decisions. You’re probably going to have to forego some of the things that you really wanted to do because of money tradeoffs you’re going to have to make. This doesn’t mean that you can’t and won’t live a happy, fulfilling life, but you will probably have to say no to spending money on certain things because of the need to pay for your continuing care. If you prepare yourself mentally ahead of time, then it will be easier, and it will help avoid the temptation to let Monkey Brain have his say occasionally, particularly during periods when you’re in remission and feeling good.
  • Keep some of your assets liquid. This one is going to be a difficult balancing act, depending on your age and the progression of the disease. You’ll want to focus your investments in places where you can either sell if you need access to the money or ones which throw off steady streams of income. I wouldn’t advise on investing in your brother’s boss’s uncle’s neighbor’s technology startup which has a projected 10 year exit horizon.

Dealing with MS will probably put a financial strain on you and your family. Having a plan as early as possible will help reduce the stress and the displacement that the disease has on you. Act quickly to ease your money worries and stress caused by it. Stress is a known aggravator of MS, so anything that you can do early on to reduce or eliminate long-term stress will help you in your fight against multiple sclerosis.

About Jason Hull, CFP®

Jason Hull, CFP®, is the Chief Technology officer of myFinancialAnswers, an online comprehensive financial planning service.

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