Chapter 3

Gathering the Information You’ll Need

If you plan for the best case and the worst case happens, you are in bad shape. But if you plan for the worst and you end up with the best, then you are only slightly inconvenienced.

—David Petersen, founder, Affording Care

 

This chapter starts you on the path to understanding where you would be financially if you didn’t make any of the changes discussed in this book. It’s necessary to understand that reality before looking at the alternatives available to make it better.

Spending a little time now to obtain and check the information described in this chapter it will save you a great deal of stress and time in the future.

Tip. Making requests for information is standard and provides no clue about your health condition.

This chapter refers to “you,” but also applies to your spouse or significant other where relevant.

Section 1. Employment Benefits

Employer. Your employment benefits will be described in a document generally titled something like “Summary Plan Description.” This document summarizes your health, life, and disability insurance plans as well as your pension plan. If you don’t have this kind of description of your benefits, ask your employer or union, or both if appropriate, for a copy. You are entitled to this information from your employer under federal law, as well as various state laws, and you don’t have to give a reason for why you want it. If you have a retirement plan, ask how much your interest is worth. If you haven’t received reports lately that tell you about the finances of the plan, this would be a good time to obtain them as well.

Short-term disability benefits. Find out if your state law entitles you to any short-term disability benefits. Your state Labor or Insurance Department (see resources section) are good sources of information about the terms of the benefit including what it covers, how much it pays, and for how long.

Section 2. Other Insurance Coverage

Assemble copies, or at least summaries, of all your other personal insurance policies, including all life, health, hospital, disability, and long-term-care policies. Also, pull together all the policies that cover your property or liability, such as homeowners and/or fire and liability, automobile, excess liability, umbrella, and workers’ compensation coverage if you have in-home employees. Don’t worry about any business coverages. This book only deals with your personal situation, not any business you may own.

If you know you have a policy but can’t locate it, you can obtain copies from your broker or directly from the carrier if it is a company that writes coverage directly to the public. While waiting for the actual policies, your broker can supply a summary of your coverages (usually called a “schedule of insurance”). If you deal with companies that do not use brokers, you can get the basic information on the phone while waiting for copies of the policies. Most companies have toll-free numbers for their customers.

Tip. If you do not have any of the listed coverages, please review chapter 16 to determine what coverage you should obtain as soon as possible.

Section 3. Social Security Information

To find out how much disability, retirement, and survivor benefits you’re entitled to under the federal Social Security system, simply call the Social Security Administration (SSA) at 800-772-1213 and use the automated system, or visit your local SSA office to request the form known as “Personal Earnings and Benefits Estimate Statement” (form SSA-7004). The amount of your benefits depends on your contributions to the system throughout your working life. The form shows your earnings record, the taxes you have paid to the Social Security system, and the amount of benefits that you or your eligible survivor(s) would receive if you retire, die, or become disabled in the current year. Once you have sent in the completed form, it will take three to four weeks to obtain the information.

Tip. An immediate means of accessing these amounts is through the Internet at www.ssa.gov. After you complete a form on-line requesting the information, SSA will E-mail you a personal code (as a security precaution). You then have to return to the Social Security site, complete the form again, and submit the activation code. Earnings histories are not available at this site, so you will still have to obtain this information, as noted above, to confirm its accuracy.

When you receive the statement, check the numbers to see if they are approximately what you recollect and review the rest of the statement for accuracy. Even a minor error can complicate collection of benefits. It can take a long time, and a lot of work on your part, to correct the record. Do it now while you’re feeling up to it. You won’t want unnecessary delays when you are ready to apply for the benefits.

Usually errors are noticeable, such as having no entry where you know income should be. If it is wrong, call SSA to have the record corrected. If the error is a misspelled name or an incorrect address, you may be able to resolve the matter over the telephone. If the wages in the report are incorrect, you may need to submit copies of your W-2s and tax returns to get the record corrected. If you don’t have your old W-2s, you should be able to obtain confirmation of the correct facts from the pertinent employer.

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 General Accounting Office, earnings records are incorrect for one in ten people. I suggest also doing it within a year after changing jobs or if the continued existence of your employer seems shaky.

Section 4. Your Health

Switching conventional advice, your physical health rather than your age, marital status, or dependents becomes the most important part of your planning foundation. Two facts are important to learn: longevity on a statistical basis and anticipated costs.

“On a statistical basis.” Your longevity is the number of years you would live if you were a statistic, instead of the unique person you are. By definition, statistics only tell what happens to a large group of people at a similar point with a similar condition. It does not, I repeat, does not predict your personal outcome. I’ve had friends with a diagnosis that indicated they had a year to live, and they are still alive today, almost seven years later. You should treat this number as no more than what might happen. According to the doctors who study the mind/body connection, if you mistakenly focus on it as a reality, it may become a self-fulfilling prophecy.

Tip. If research into this area is a problem for you, ask a family member or friend to do it for you.

Costs. The second fact we need is the “average” cost timetable for treating conditions like yours, so you will know how much to prepare for, and when. For example, with cancer, the cost curve is generally like a barbell: costs are heavy just after diagnosis, then somewhat low until the end of life, when they tend to increase again. With HIV/AIDS, there is a high annual expense for drugs, which may be followed by heavy medical and hospital expenses toward the end of life. Alzheimer’s is characterized by a lot of expense for custodial care. Diabetes has a wedge-shaped pattern: the direct medical expenses keep increasing until the end stage.

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

Journal. It is helpful to keep a daily journal describing your symptoms and how they affect your activities, including work. The journal will help provide your physician with a complete picture of your health and the effect of various treatments; evidence necessary to leave work on disability if you have a choice as to the timing; and, if you receive disability income of any type, will help provide evidence of continuing disability if you are questioned. The journal should include physical and emotional reactions, and both positive and negative reactions to drugs. The descriptions should be specific rather than general. For example, if pain is involved, see the descriptions in chapter 24, section 5.

Section 5. Your Credit Status

Credit is an important source of cash when you need it, whether for medical bills, travel, or other expenses. If you don’t have credit accounts now because of a prior impaired credit history, skip this section and refer to chapter 21 for some advice on how to get credit.

Whenever you apply for credit or use your credit accounts, creditors forward information about you to credit bureaus. Because lenders make the decision to extend credit based on the information in the bureaus, and because errors are common, you will want to make sure that this information is correct. In a 1991 survey, Consumer Reports found that of 161 credit reports it examined, 48 percent contained errors; 19 percent of them contained errors serious enough to affect employment, credit, or insurance.

You have the right to correct any information in your file that is not accurate and current.

Step 1. Get a copy of your credit report. To review your records, request a copy of your report. There are hundreds of local and regional credit bureaus, but the most important ones are the three national credit information bureaus:

Experian

P.O. Box 2350

Chatsworth, CA 91313-2350

800-682-7654

Equifax

Wildwood Plaza, P.O. Box 740241

Atlanta, GA 30374-0241

800-685-1111

Trans Union

P.O. Box 390

Springfield, PA 19064-0390

800-916-8800

A credit reporting agency can charge $8 for a copy of your report. I suggest you order all three. If you only order one, I recommend that you obtain the report from Experian (formerly TRW). You are entitled by federal law to a free report if a company has taken adverse action against you based on the credit report and you request the report within sixty days of receiving the notice of action. The action against you can include such acts as denying you credit, rental of an apartment, or the opening of a telephone account. The letter you receive notifying you of a denial is required to specify the name and contact information of the bureau from which it obtained your credit report.

You are also entitled to one free report a year if you can prove that you are unemployed and looking for a job, plan to look for a job within sixty days, are on welfare, or that your report is inaccurate because of fraud. Entitlement to other free reports varies from state to state.

When requesting your report, include your name, addresses for the last five years, date of birth, social security number, and telephone number. Also, include any other names by which you have been known, such as maiden names or previous married names. In case there is a problem or no response, use certified mail, return receipt requested, and pay for the report with a check or money order. Keep track of the date that you make your request. If you do not hear from the bureau within thirty days, send another request with a copy of the first request.

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

The following checklist is a guide for reviewing your credit report. The report may include coded information. If it does, it should come with a key that explains the codes. Feel free to contact the credit bureau and request an explanation for any information you do not understand. Check the following information:

• Your name and Social Security number. It is possible that your report includes information about someone else who has a similar name or Social Security number.

• Make sure the report accurately reflects whether the account is single or joint with someone else.

• Account number.

• Is an account still listed as open, even though you closed it years ago?

• Type of account—is the type of account accurately reflected as installment, revolving, or some other kind?

• Is the outstanding balance on the account correct?

• Highest credit—this is the credit limit on the account or the highest amount you have ever charged.

• Status of account. This can be a difficult section to review. This section relates to your payment history on the account. Credit bureaus use codes to indicate the number of times you paid the account on time, or the times that you paid 30, 60, 90, or 120 days late.

• Late-payment history. This is a summary of your total late-payment history.

• Comments. Both you and your creditors may supply comments to the credit report. If there are any, are they accurate?

• If any suits, judgments, tax liens, or similar items are listed, are they still outstanding? If so, are the facts correct? These facts are important for your future credit.

• Are there any other claims against you listed on the report? Are they accurate? If so, consider clearing them up. At least provide the information necessary to defend against the claim to the person or people who would handle your affairs if you become incapacitated or die, “just in case.”

• Is there any other inaccurate information in the report?

Step 3. If there is an error—fix the report. If you find an error on your report, contact both the credit bureau and the creditor.

The letter to the credit bureau should identify who you are, your reason for writing, what is wrong with the report, why it is wrong (including any story and proof), why it won’t happen again (e.g., it was an aberration), and what you want them to do. Include a request for confirmation that the action you require was completed, thank them for their consideration, and sign the letter. Correspondence should be sent by certified mail, return receipt requested, and should include copies (not originals) of documents that support your position.

Once the credit bureau receives your letter disputing information in the report, the bureau must investigate the items in question, usually within thirty days, unless they consider your dispute frivolous. The investigation consists of the bureau contacting the creditor and forwarding all relevant data you provide about the dispute. After the creditor receives notice of a dispute from the consumer reporting agency, it must investigate, review all relevant facts you have provided, and report the results to the consumer reporting agency. If the creditor finds the disputed information to be inaccurate, it must notify all nationwide consumer reporting agencies so that they can correct this information in your file. When the investigation is complete, the consumer reporting agency must give you the written results and a free copy of your report if the dispute results in a change. If the creditor says the information is correct, you will receive notice from the bureau advising you that the information has been checked and is accurate.

If a creditor fails to respond to an investigation, the law requires that the disputed item in the report be removed until it is verified by the creditor.

Finally, if you still believe that the information provided by a creditor is not accurate, and the creditor won’t change it, you may exercise your legal right to have a hundred-word statement included in your file to explain your side of the story.

Tip. At your request, the credit reporting agency must send a notice of correction to anyone who received your report in the past six months.

Step 4. If there is an error—follow up. If you find an error in your report, chances are it is included in other reports maintained by the other credit bureaus. If you haven’t already done so, I suggest you request reports from the other credit bureaus as well.

Tip. Once all the errors in a report are supposedly fixed, request your credit report again to be sure the errors were really taken care of.

Step 5. Periodic reviews. Consider requesting your credit report annually to insure its continued accuracy.

Tip. At minimum, order an updated credit report before applying for any credit. It’s better to head off problems before they occur.

Credit fix-it services. There are services that guarantee to fix your credit, for a fee. They are a waste of money, since it is so easy to insure by yourself that the information in your file is accurate and current. Neither you nor anyone else can legally delete accurate, yet negative, information from your report, so don’t waste your time and money on services that claim this is possible.

Section 6. Life, Health, and Disability Insurance Information: The Medical Information Bureau

The Medical Information Bureau (MIB) is a nonprofit association that was created by and for insurance companies to protect against fraud by sharing information among member companies. When life, health, or disability insurance is applied for, the applicant is usually asked to sign an authorization granting the insurance company broad access to medical information concerning the applicant (including information from your doctor or hospital). This information, together with the results of the company’s investigations, such as the results of a physical exam, are submitted to the MIB. The MIB has records on approximately 13 million people.

As you will see in chapters 14 and 19, in spite of your condition, you can still apply for health and life insurance coverages. If you do, the insurance company will probably request that the MIB provide it with any information it has concerning you. The insurance company compares the information provided by you with the information in the MIB. If the two are not consistent, the insurer will seek clarification from you or other sources. Thus, it is in your interest to insure that MIB information concerning you is accurate. If you have not applied for health, life, or disability insurance in the last seven years, MIB should no longer have any information concerning you, as information is only kept for seven years.

There are two other activities of the MIB of which you should be aware:

• The MIB will tell member companies about claims filed against disability policies for the purpose of “coordinating benefits” between different policies. The MIB does not, however, receive information based on claims you make against any health or life insurance policies.

• The MIB maintains an Insurance Activity Index: a report by each member company of all applications for the purchase of life insurance. The file is kept for two years so a company can check to see whether you have applied for other life insurance in that period. If you apply for several policies within a short time, the activity may cause a company to question why you need so much insurance and/or question your health.

To obtain a copy of your record. Contact MIB at 617-426-3660 and ask that it send you the form necessary to obtain a copy of your MIB record. You can also mail a request for the form to MIB, P.O. Box 105, Essex Station, Boston, MA 02112.

In most cases, you will be charged $8 for your record. The record is free if within thirty days prior to your request, your application for life, health, or disability insurance was declined and the insurance company that declined the application provided you with notice that MIB was an information source. To qualify for the free report, you will have to provide with your request a copy of the notice denying coverage.

Correcting information at the MIB. If you find incorrect information in your record, you can request a reinvestigation by the insurer that provided the wrong information. You should also send a statement from your physician setting forth the correct information. If the MIB agrees, that’s the end of the story. If they continue to list the inaccurate information, you have the right to have a statement included in your file.

If you find information that was correct but was inappropriately reported to the MIB as a result of claims made on your health insurance coverage instead of as a result of applying for insurance, you can request that the information be removed from your record.

Section 7. Your Financial Information

It will also be helpful to pull together

• statements for all your bank accounts, including canceled checks, as well as your credit-card and investment statements for the last twelve months. Don’t worry if one or a few are missing: this information is used just to obtain your general financial picture. If your spending patterns don’t fluctuate greatly from month to month, you can reduce your data-gathering to one six-month period or to every other or even every third month for the past year. Be sure to include once-a-year items such as a major vacation or annual and semiannual bills.

• a list of all your stocks and bonds and other income-producing items.

• a list of your debts and other obligations.

• tax returns for the last three years.

• expectations of future income or loss that are out of the ordinary for you.

• any other information concerning your finances you may have on hand.

• a copy of your last will and testament.