How to make it through while protecting your assets.
By Sue Stevens, CFA, CFP, CPA | 04-14-05 | 06:00 AM | Email Article

Every now and then I receive a cry for help that really touches my heart. Read what "Paul" wrote:

My wife is currently five months pregnant with our little girl. Last week our unborn little girl was diagnosed with a rare heart disease known as Tricuspid Atrestia. The good news is that she will be able to live a relatively normal life; however, she will require several open-heart surgeries after she is born. In addition, she will need to have regular checkups with a cardiologist for the rest of her life.

Sue Stevens, CPA, CFP, MBA, and CFA Charterholder, runs her own financial planning firm, Stevens Portfolio Design, and manages over $100 million in assets.

My wife is home with our 2-year-old son, but fortunately I have health insurance with my employer. Having said that, I suspect I will be looking at astronomical medical bills despite insurance. At this point, I have a home with a mortgage and about $150,000 in my 401k, Roth IRA, and money market account.

Is there anything that can be done to help shelter my assets from the massive costs I will incur? I would appreciate any help that you can provide.

I read this e-mail to my staff at lunch one day last week. To my amazement, two of the five people at the table had relatives or close friends who had been through almost the same thing.

Mary's Story
One of my staff's cousins, Mary, went through a similar experience last year. She too had a young child at home in addition to a new baby with serious health problems. Sadly, her baby passed away after only eight months. But her story is full of hope and help for others.

Aiden was born with serious heart problems as well as Down syndrome. His parents also found out midway through the pregnancy that he would have to have surgery as soon as he was born. They too wondered how to manage the financial implications of this turn of events.

What Mary found was nothing short of miraculous. Through Aiden's life, she received an outpouring of love and support from friends and family, doctors and nurses, and people they didn't even know.

She and her husband, Tom, took turns going to the hospital and caring for their other child at home. Friends and family delivered meals to them on an ongoing basis.

Mary and Tom both wanted to share with Paul and his family some of the resources and advice they found along the way:

1. Check with the state of Massachusetts (where Paul and his family live) to find out more about Medicaid benefits. Mary's family was able to receive about $40 per month while Aiden was in the hospital and $500 per month once he was home (with a monthly deductible of between $6,000 and 9,000 per month).

2. See if Massachusetts has a Division of Special Care for Children.

3. See if your home town has a Children's Assistance Foundation or related type of support.

4. Consider a fund-raiser. Mary's sister organized a fund-raiser to help with some of the ongoing costs.

5. Find out which hospitals in your area do the kind of surgery your child will need. Talk to the surgeons about the procedure.

6. Don't forget to interview the nursing staff. They will provide constant care for your child after the surgery is done.

7. Know that the hospital will probably have a nurse case manager who will help you with follow-up care. The insurance company may also supply a case manager.

8. Check the maximum coverage for your health insurance. In Mary's case, both she and Tom worked. The maximum for each of their plans was $5 million. So between the two of them, they could have had $10 million in total coverage. They also made sure they talked to the insurance company to make sure the procedures, doctors, and hospital bills would be covered in the PPO network.

9. Talk to a lawyer. Mary and Tom talked to several. They were advised not to try to give away their home or attempt other types of asset-protection strategies.

10. Sign up for Medicare disability coverage for the baby. The deductible may be high ($9,000 a month in Mary's case), but you may receive some assistance.

Graciously, Mary and Tom have agreed to talk to Paul to offer their support and assistance.

More Resources for Paul and His Family

·        Recently the Supreme Court ruled in Rousey v. Jacoway that traditional IRA assets may be protected under federal rules that exempt certain assets in bankruptcy procedures. (This is a very complicated case that I will write more about in coming weeks.) This exemption would not apply to Roth IRAs. One of the conditions to being able to exempt traditional IRA assets from creditors is that the state you live in must allow you to file in federal bankruptcy court. It appears that this is the case in Massachusetts. Paul may want to consider contributing to a traditional IRA going forward to protect those assets. This is something he should discuss with an attorney who is knowledgeable in these matters.

·        Paul can learn about Massachusetts' Care Coordination for Children with Special Health Care Needs here.

·        For more on organizing a fund-raiser, try this Web site.

Many readers may want to offer Paul and his family helpful resources. Feel free to send me e-mail messages at, and I'll make sure they get to this family.

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Sue Stevens, CFA, CFP, CPA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.
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