Did you know the average American can’t withstand an unexpected $1,000 bill? When it comes to paying for schizophrenia, the two biggest costs are medication, followed by hospitalization. For someone who has had psychiatric hospitalization, the average annual cost of mental health treatment is around $37,000.
Host Rachel Star Withers, a diagnosed schizophrenic, and cohost Gabe Howard search out options for managing the financial costs of schizophrenia in this episode of “Inside Schizophrenia.”
Greg McBride, chief financial analyst for Bankrate.com, joins us to discuss the best ways to approach unexpected expenses.
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Greg McBride is the senior vice president and chief financial analyst for Bankrate.com, the preeminent personal finance website. He leads a team responsible for researching financial products, providing analysis, and giving advice on personal finance to a vast consumer audience. With more than 25 years of experience in personal finance, he is a subject-matter expert who has the unique ability to provide both in-depth commentary and practical advice to consumers. Through Bankrate.com‘s Money Makeover series, he has helped consumers plan for retirement, manage debt, and develop appropriate investment allocations.
McBride has appeared on hundreds of national cable and network broadcasts, including NBC’s “Nightly News,” CBS’s “Evening News,” and ABC’s “World News Tonight,” and has been a frequent guest on CNBC and Fox Business. McBride is routinely quoted by major media outlets such as The New York Times, Wall Street Journal, and USA Today, and is a regular guest on financial talk shows throughout the United States.
McBride currently serves on the board of Money Management International of Sugar Land, TX, the nation’s largest nonprofit credit counseling agency accredited by the National Foundation for Credit Counseling, and is chairman of both the compensation committee and the investment committee. He has a distinguished record of serving on boards in the credit counseling industry.
McBride has also served on the funding board of the Consumer Financial Education Fund through the Rose Foundation of Oakland, CA.
McBride is a graduate of the University of Florida and has earned the designation of chartered financial analyst.
Rachel Star Withers creates videos documenting her schizophrenia, ways to manage and let others like her know they are not alone and can still live an amazing life. She has written Lil Broken Star: Understanding Schizophrenia for Kids and a tool for schizophrenics, To See in the Dark: Hallucination and Delusion Journal. Fun Fact: She has wrestled alligators.
To learn more about Rachel, please visit her website, RachelStarLive.com.
Gabe Howard is an award-winning writer and speaker who lives with bipolar disorder. He is the author of the popular book, “Mental Illness is an Asshole and other Observations,” available from Amazon; signed copies are also available directly from the author.
Gabe makes his home in the suburbs of Columbus, Ohio. He lives with his supportive wife, Kendall, and a Miniature Schnauzer dog that he never wanted, but now can’t imagine life without. To learn more about Gabe, please visit his website, gabehoward.com.
Producer’s Note: Please be mindful that this transcript has been computer generated and therefore may contain inaccuracies and grammar errors. Thank you.
Announcer: You’re listening to Inside Schizophrenia. Hosted by Rachel Star Withers, an advocate who lives openly with Schizophrenia. We’re talking to experts about all aspects of life with this condition. Welcome to the show!
Rachel Star Withers: Welcome to Inside Schizophrenia, a Healthline Media podcast. I’m your host, Rachel Star Withers, here with my incredible co-host, Gabe Howard. Fifty-six percent of Americans with mental illnesses don’t get the help they need, and often that’s because of the cost.
Gabe Howard: It’s straight-up money, it’s not stigma, it’s not discrimination, it’s they can’t afford it.
Rachel Star Withers: Mm-hmm. And I’ll go ahead and say, I’m very thankful for my parents because I had a rather large health care bill come in just yesterday and my mom was like, Yes, yes, we’re going to help you with it. And I was like, Oh, thank goodness, because the next two months of my life would have been very, very depressing. In more ways than one, had they not stepped in, which as an almost thirty-seven year old, that’s kind of sad that I had to immediately look to my parents and thankfully they were in a financial position to help me with this medical care bill.
Gabe Howard: Well, it’s worth pointing out that in addition to being sick, so sick that you needed expensive medical care, you now have to figure out how to pay for it. So you’ve got two problems now. You might not have food; you might not have transportation. This could impact your ability to work, which of course, would impact your ability to pay for health care. So it’s kind of a vicious cycle.
Rachel Star Withers: When it comes to paying for schizophrenia, the two biggest costs are medication, followed by hospitalization. The average annual mental health care treatment costs for someone who has had psychiatric hospitalization is around $37,000. So that’s a lot. Ok? Thirty seven thousand is what many people make a year, and so many people with schizophrenia make far, far below that. A big push that we hear so often is, well, people need money management, well, these people need to be able to manage their money better and they wouldn’t have these problems. Something shocking that’s just come out is that only 44% of Americans and that’s Americans in general, not just those with schizophrenia. Only 44% could cover an unplanned $1,000 expense. Ok, like that’s, that’s wild to me. A thousand dollars is not very much. Today our guest is Greg McBride, who is the chief financial analyst for Bankrate.com, and he’s going to come on and talk to us about how we should best approach unexpected expenses.
Gabe Howard: Rachel, whenever more than half of a population has trouble meeting basic needs, a thousand-dollar medical bill, and then you say, well, the solution is better money management. If 56% of the population cannot manage money, you have a problem bigger than individuals at this point. The reality is there’s a significant portion of our population that can’t get access to basic needs. And I think that that is a problem that collectively we need to resolve without staring at individuals and saying, Oh, it’s your fault because you got a coffee or an avocado toast, or because you subscribe to a streaming service. It’s much, much, much, much, much bigger than that, especially for our population, people living with schizophrenia, because they just can’t go out and make more money.
Rachel Star Withers: There has to be a problem. It’s not just I can’t balance a checkbook; I don’t know how to have a savings account. I have all of those things I have multiple. Something I found very startling was that when they looked at hospitals, they found out that when it came to psychiatric care, many times the charges were two point five times greater than the actual cost of delivering the care. When you’re looking at the cost of treatment for inpatient schizophrenia, it’s around $8,000 for 11 days. That wild, that’s an amazing vacation, Gabe. I would love if I had $8,000 to like, plan a two week vacation or a one point five week vacation. Oh, I would live it up. We could, Gabe, we could have the best time right now if we had that much money to spend. But when you think about it? If I have $8,000, I don’t want to spend it on inpatient schizophrenia treatment. However, that could be a necessity. That could be something I don’t have that option. If I need help, I need help and I need to get it.
Gabe Howard: I believe that any rational person who is confronted with a serious medical condition would say, Look, I need to figure this out loans, borrowing, whatever because I need medical care. But this presumes that the person doing it is able to think logically. In reality, somebody who needs psychiatric medical care to the point where they need to be committed to a psychiatric hospital, they’re not weighing the pros and cons of this. They’re scared to go and their family is weighing this or their friends, or in some cases, nobody. They just get committed by, say, police, for example. And then after they get out, they’re hit with this bill and the horror stories begin. They lost their car, their house. It becomes scary and it builds upon itself. And this becomes a real barrier to the people around the person with schizophrenia choosing to get them that care. I can’t imagine Rachel looking at you and knowing that you need help, but wondering if it’s worth the money.
Rachel Star Withers: Unfortunately, it’s a very real struggle for so many people, and especially if you have dependents, if you have children, well, am I going to risk spending all of this money for me to get help? When I know I have two kids, I have somebody who depends on me. And unfortunately, a lot of people then decide not to get help. Too many times people are like, Oh, well, you need insurance. I’ll be the first one to sacrifice myself here, Gabe. I have insurance. My deductible is still a couple thousand. Like it, just it is what it is. That’s the best insurance that I can get. And I’m still looking at a couple of thousand dollars for what ended up being four hours of treatment. And there are many state and federal mental health programs. However, many times there are a lot of criteria that you have to meet to even get that. And then of course, there’s a lot of times there’s a waiting list to be put on one of these treatment programs.
Gabe Howard: Well, and let’s talk about how we get insurance in America. We’ve decided that it’s from an employer. More specifically, though, we’ve decided that it’s from a full time employer. So if you’re a person living with schizophrenia and you cannot work full time and you cannot find a part time job that offers benefits, this becomes very problematic. You cannot get insurance this way and then people say, Well, it’s OK. You can get disability. There’s government programs. There’s welfare programs, you can get on those now that is a fair thing to say, except it’s incomplete. In order to qualify for these programs, you need to be diagnosed with schizophrenia. You need to be sick, which means you need to have been in treatment. So therefore you’re going to rack up all of these hospital bills before you qualify. So it’s quite possible that even if everything is working great, you have one hospitalization costing thousands upon thousands of dollars and then you immediately get disability. Now, that’s ridiculous. It never works that way, but let’s say that it did. You would still be in thousands of dollars’ worth of debt before you got disability, so maybe it would carry you for the future, but so many people are still bogged down by their past. And again, I just want to make it clear we have a society that just pushes this away. Oh, well, get on disability. Well, just go get help. Well, just be med compliant. Well, just listen to your doctor. As if these things are readily available and readily affordable.
Rachel Star Withers: Even something simple as take your medication. You have to go to a doctor to get the prescription to start with. So we’re already looking at that fee and you understand that when it comes, especially to schizophrenia, it isn’t just one doctor’s visit. Very rarely can I show up at a psychiatrist and they write me a prescription right away. If anything, when they write a prescription, it’s a very low dose to get you started, and you’re probably going to have to be back very soon for them to up the dose. So right away, just for me to get started on an antipsychotic, it could be upwards to a thousand to five thousand dollars just to get started. Even if you have insurance, you’re still looking at copays. Also, a lot of insurances don’t have drug plans with them, and so you could be paying out of pocket for that medication. There are two types of antipsychotics. You have what’s called first generation and then second generation. The first generation ones, if you’ve ever been on those, they can be rough. Those have the intense side effects. However, they’re pretty cheap because they’ve been around since the 50s, so you can usually get those for next to nothing. The second generation ones have less side effects. They’re generally better tolerated. However, those can be quite expensive. Ninety two percent of all of the medication for schizophrenia now is second generation, so we’re already looking at the main go to for schizophrenia is the higher costing drugs.
Rachel Star Withers: Is the ones that aren’t going to be the dirt cheap that have been around since the 50s, which is a good and bad thing. I’m not arguing which one you should and shouldn’t take. I just always want to make sure that people understand that the costs for treating schizophrenia is very high. Psychotherapy, you’re looking at $65 to $250 a session, usually, usually. And if you have a co-pay, that’s usually $30 to $50 per session. I know with my insurance, I can see my counselor twice a month. It doesn’t matter if I if I need more than that will be one hundred percent on me. So if I am having some sort of breakdown, if I’m going through a hard time. That’s a lot of out of pocket.
Gabe Howard: And once again, to put this in a little bit of perspective, if we remove the word schizophrenia and replace it with cancer, the world would be up in arms. Could you imagine if an insurance company said you can only see your oncologist twice a month? It doesn’t matter if you need more. Then that’s out of pocket. It’s a barrier that is often not discussed in schizophrenia treatment.
Rachel Star Withers: Something that’s absolutely shocked me, and I have noticed it, but I didn’t realize what the reasoning was. Is that just 56% of psychiatrists accept commercial insurance, compared to 90% of all other health physicians, just fifty six. I’ve always found that odd because all my insurance I would, you know, I have to type in every year when I renew, make sure my psychiatrist and whatnot is listed and there aren’t very many on there. And it’s even worse when it comes to Medicare. So if you’re on Medicare, only 23% of psychiatrists in the U.S. are available to you. So if one of those isn’t in your town or let’s say, the one that’s covered, you had a bad experience with, a lot of people on Medicare are out of luck. They’re going to have to pay out of pocket, which if you’re on Medicare, you’re probably already in a rough state to start with, to be expected to pay out of pocket.
Gabe Howard: This is the reality for many people, and it’s something that people don’t realize when they paint this, just go to the doctor. Just be med compliant. Just follow the instructions. There’s real significant problems with those statements that the average person who says them is not aware of.
Rachel Star Withers: A lot of you, like me actually might be something called treatment resistant schizophrenia, and that’s something we haven’t gotten into on this show yet, but I hope in the future we will. But treatment resistant schizophrenia, which makes up for 30% of those diagnosed with schizophrenia, is that they found that antipsychotics and other treatments might not work as well on these people. That means that it is usually three to 11 times more costly to treat a person with treatment resistant schizophrenia. At first, I thought that was a little odd, Gabe, because I was just like, I don’t think my costs are that much more. But then I thought about it. And I think how much that the past two years I’ve paid out of pocket just myself on new treatments, on trying out new things out of hoping it would work. And then that made perfect sense to me because I was like, Yes, a lot of like the new stuff, of course, isn’t covered by my insurance, and I had to pay quite a bit for it. Which is frustrating because you’re already you’re trying to get help, but you’re not getting it. So, you’re desperate. And a lot of times when you’re desperate, you’re willing to pay whatever. So let’s talk about some of these payment options.
Rachel Star Withers: Insurance? Yes, it’s great. It can be difficult because you usually have to make sure your insurance covers where you’re going. Medicare, Medicaid, if you’re in the U.S., patients with schizophrenia who aren’t able to work, may be able to apply for Medicare and Medicaid. This can be wonderful. However, like I said, only 23% of psychiatrists accept it. Something else is that there is a 190 day lifetime limit on psychiatric inpatient care. Now, at first, 190 days? That sounds like a pretty long time to be inpatient. However, if you think about it, you have to go for, let’s say, a month a year, that can kind of dwindle away. And once you hit that 190 day max, Medicare, Medicaid no longer can help you out there with inpatient care.
Gabe Howard: And once again, they’ve made this decision without ever laying eyes on a human. The number of days that you need in the hospital is not determined by an algorithm, it’s not determined by a panel, it’s determined by your illness. There’s no exact science to this, and it’s incredibly frustrating that the very systems designed to help people with schizophrenia have determined, ahead of time I guess, this is all you need and you’ll be fine. That is utter insanity the way that we treat people with mental illness. To think that we can determine how often they need care, what care they need and the maximum amount of care that’s reasonable without ever laying eyes on the patient.
Rachel Star Withers: And it’s funny when I think like with the limits, the day limits, no one shows up to a psychiatric hospital and says, OK, I’d like to be here for 10 days. Exactly 10 days. That’s not how that works. It’s not like I’m planning a vacation where I’m going to go in and tell them how long I plan on staying there. You know, and it’s the same thing, you know, if we’re looking at your example earlier, cancer, no one says, OK, this year, I’m only going to spend this much money towards my cancer. I’m only going to see the doctor this many times, my choice. But treatment for schizophrenia is still seen as a luxury. It’s still seen as just, you’re choosing this, you’re choosing to have this disorder. And I know no one wants to say that out loud, but that seems to be the way it’s treated. And that’s frustrating, because that’s old thinking. But what else am I supposed to take from all this?
Gabe Howard: I often sound like a broken record when I say this, but people living with schizophrenia are held accountable when they do not get better and when they do get better, we give all the praise to the systems that are in place, the doctors, the therapist, caregivers, family support, etc. And as we have talked about on other podcasts, we’re not even invited to the table to discuss mental illness care in America. It’s largely done by doctors, psychologists, family members, support systems. People actually living with mental illness, whether it’s schizophrenia, bipolar, etc., are generally excluded from the conversation about our care. Yet when the care doesn’t work, when the system fails, it’s always, well, were they med compliant? Did they see their doctor? You have to want to get better, you know. Once again, putting the outcomes of the system, the negative consequences of the system, we’re focusing that blame on the patient as if it is their fault, rather than focusing the blame on the people who created the system, which was largely not us.
Rachel Star Withers: Costs of everything is one huge issue, another when you’re dealing with schizophrenia is actual money management. I could be flush with cash, however, if I am having mental troubles, a lot of times I don’t make the best decisions. A lot of times caregivers have to step in and take over financial responsibilities, which in itself when you’re talking about taking over the financial responsibilities of another adult, that’s a whole other, just mess. When it comes to disability benefits such as Social Security, disability income, supplemental things like that, 20% of recipients have a payee. Of that, 20%, 30% is due to a psychiatric disability. There’s a big issue here that that’s kind of giving a lot of power over to someone else. Even if I work a full time job and my money is going into an account, but I need someone to help me with the management. I have to really trust that person if I’m going to put them on the account because they could very easily wipe me out. Personally, I actually have my mother on my accounts. I do trust her. But if she wanted to, she really could, Gabe. She could just kind of clean me out, head for the hills, take herself on a nice cruise, and I really wouldn’t be able to do anything. Unfortunately, there aren’t very many options where the person who has the disability is protected from that happening.
Rachel Star Withers: It’s scary to think that, yes, there could be someone who takes over who might not be a good person to kind of cover your money. So I started doing some research on this, Gabe, so I was like, there has to be some sort of program, right? So some sort of program that I can do that would allow, let’s say, my mom to help me with my finances and her also not be able to just wipe me out if she gets angry. There really is not that program. I went on some of the biggest banking websites for America, and one of them had a whole page about all the stuff, how they’re connected to helping people with disabilities. And I was excited because I was like, OK, let me read about their options. And instead, what I got was how much they like to volunteer with the Special Olympics. OK, so you have no actual banking that will support people with disabilities. You just give money to programs, which is great. I’m not saying don’t give money to these programs, but it’d be nice if I could open up a bank account that could help you know me navigate with my schizophrenia. And honestly, right now, there aren’t many options.
Gabe Howard: And therein lies the problem, Rachel. Somebody with disabilities has different banking needs. But the reality is the majority of people banking do not have disability. People like us need the product, and it doesn’t exist, forcing us to retrofit another product to our needs. And sometimes that works, and sometimes it doesn’t.
Rachel Star Withers: And retrofitting that product, the one that most works with helping out people with schizophrenia that are actually have been created to help the aging population. So especially if you’re worried about someone having Alzheimer’s where, as they get older, they want to have an adult child on the account, that kind of situation. There are different accounts and things you can do. And if we just take those accounts and those ideas, which are great and apply them to schizophrenia, there could be some wiggle room. One thing you can do is have an authorized representative and that could be on your utilities, that could be on your credit card. A lot of times this is simple and you just have to give a verbal permission. And that person, though, can make sure that, hey, you’ve been paying your electricity bill. All right, they don’t have to worry that their adult child with schizophrenia, who lives, you know, three states away doesn’t have electricity during this winter. They’re able to call in and make sure that person’s been paying. A lot of banks also have this, and it would be an informal financial caregiver. Ok. So again, informal and you would have to go and speak to the bank and you do have to do this with the person with schizophrenia.
Rachel Star Withers: A lot of the times the way it works is that person that you give the permission to, they will also get your transactions and they’re able to look over everything, kind of make sure that nobody is taking advantage of you and to make sure that you are managing your money correctly. However, they cannot step in and prevent you from taking money out of your account. I like this idea. And again, it’s advertised more towards the aging population. Personally, like I said, I trust my mom, but if I didn’t have directly my parents, I would look into one of my closer friends or my brother. I would probably go this route of the informal financial caregiver. I like having someone to at least know, Ok, Rachel hasn’t gone off the deep end. She’s paying all of her bills, so I don’t have to worry, she’s paid this, this and this.
Gabe Howard: What you’re describing is a situation where you are still in charge. You just have some guardrails in place.
Rachel Star Withers: And don’t forget that many times a symptom of schizophrenia is paranoia. So this needs to be a discussion with the person with schizophrenia. Hey, who do you trust most to add to your account? Caregivers, I know it’s very easy to just want to go in and kind of bulldoze and just be like, Look, I’m doing this. This is what’s happening because I have to. You’re irresponsible. You’re never going to learn. I’ll go ahead and tell you, that’s not going to work. Sit down, talk to them and be like, Hey, who do you trust most? And who do you want to be on the account? And let them know the options. Don’t just bulldoze and say, I’m doing a joint account. Because I know for me, if my parents had just said, Hey Rachel, you don’t get an option. I would not have been very happy about that.
Gabe Howard: I want to point out, Rachel, that that’s good advice for everything
Rachel Star Withers: Yes.
Gabe Howard: When talking to your loved one who lives with schizophrenia. Nobody likes being told what to do. I think it is a natural thing to want to feel like you are a part of the process. Now I understand in some certain situations, you may not be able to be part of the process. And this is why discussing it and partnering ahead of time is extraordinarily valid. You have to work together. I know it would be so easy just to say do this, but I think that you could ask anybody who has been married if they can just order their spouse around for efficiency. And I don’t think that there is a spouse in America that would be like, Oh, yeah, just tell your spouse what to do. Never explain it or discuss it. Just order them around. That’s the secret to a happy marriage. It works the same way for you and your loved one living with schizophrenia. They need to feel like part of the process. Being told what to do, it makes us all feel very childish and disrespected. And please keep that in mind, especially when dealing with something as personal as finances.
Rachel Star Withers: If you’re looking for different tools to help with money management, going the route of the elderly population is one option. Another one is going the opposite and looking at different products that are marketed for teens. There’s a lot of specialty debit cards and specialty accounts where the parents are over it and give the teen an allowance. It doesn’t have to be a teen, though, but that’s what’s marketed for. And if you’re someone, especially, you have just come out of a long stay in a psychiatric hospital, you’re trying to get back on your feet. You’ve been dealing a lot with hallucinations, and you don’t feel like you can trust yourself with your money and making sure things are paid, these could also be different options that can kind of help with that. The other great thing is that there’s tons of online banks with so many apps and like the app does all the work for you as far as how much money you have and how much you can allot towards food, towards this, towards that, and how you can start saving for different things.
Rachel Star Withers: Because unfortunately, mental health issues are going to happen to us. Ok, go ahead and accept it. With my schizophrenia, I don’t feel that I have a crisis on the horizon, but I might. It might come out of nowhere. Saving needs to be a priority for me. And it has been one of the things I’ve said on this podcast throughout the years is that I had looked up in my insurance once that I needed $10,000 to cover my psychiatric care. And so that’s what I immediately saved, put away and made sure my parents knew about it because I was like, Look, if this happens, boom, this is what I need to cover me. And pretty much I put them on that special savings account just so they could use it. So looking ahead to a potential future that you might have a crisis come up or issues come up with your schizophrenia and starting to set aside money for that.
Gabe Howard: Rachel, it’s interesting that you talked about setting aside money and saving for a medical emergency, because Bankrate.com just released a study this January and it said that just 44% of Americans could cover an unplanned $1,000 expense from saving. More than one third would need to borrow the money in order to accomplish that task. Now, a thousand dollars does not seem like a ton of money to me to be behind the eight ball that quickly. Now, one in five adults would put that $1,000 charge on a credit card, and they pay it off over time. But we’ve seen very high interest rates, as high as 25 and 30% on some cards, so that can be a very costly move. Now, the Bankrate.com study really stunned Rachel and I, so Rachel interviewed Bankrate’s Greg McBride about the best ways to approach unexpected medical expenses.
Rachel Star Withers: We’re speaking today with Greg McBride, who is the chief financial analyst of Bankrate.com. Thank you so much for being with us, Greg.
Greg McBride: Thanks so much for having me, Rachel, it’s great to be with you.
Rachel Star Withers: Now, when it comes to money, Bankrate, they just did this press release early this year, and I was kind of shocked by the findings that just 44% of Americans could cover an unplanned $1,000 expense. Wow. That blows my mind. Like, would you have expected that?
Greg McBride: We’ve been actually looking at this for a number of years, so I wasn’t surprised simply because we’ve seen these type of numbers for a long, long time. You know, the majority of Americans couldn’t cover an unplanned $1,000 expense out of savings. We see a high tendency to need to resort to other things like borrowing in lieu of being able to tap a savings account.
Rachel Star Withers: For me, I would have assumed that number was higher. If you had told me a $10,000 expense, I would be like, Yeah, that’s a lot. That’s, you know, a used, a well trusted used car or something, but $1,000, especially in this day and age, seems so low to me. And that’s scary.
Greg McBride: Yeah, I mean, it is low. A reflection of the fact that just collectively, we’re not great savers, Americans tend to be under-saved for both emergencies and retirement, but, you know, speaking specifically about emergencies. Yeah, it’s not great. And, that 44% was the highest it’s been in eight years. Best in eight years, but still not nearly good enough. We have seen some people make a little bit of progress over the course of the last year in terms of putting more money away or for the first time, putting some money in savings. The pandemic really underscored the importance of the need for that emergency savings and particularly with widespread income disruptions and job losses reduced hours. You know, a lot of people, I think, realized very quickly they were either glad they have the savings they did or realized they didn’t have enough. And we’re seeing some efforts to rectify that.
Greg McBride: There was a concerted effort to rebuild savings that had been depleted in the early stages of the pandemic, put money away where previously there hadn’t been. And just this constant pursuit of really kind of getting to what that ideal savings cushion is. And that ideal destination, it takes time. By time I mean it takes years and years of consistent savings to get there. The ideal cushion you want to have is enough to cover six months’ worth of expenses. Well, six months of expenses is itself a moving target that tends to increase over time, particularly through middle age as your expenses grow. So you’re constantly in this mode of sort of chasing that carrot, which is why consistent savings is so important.
SPONSOR BREAK
Gabe Howard: And we’re back discussing money management and schizophrenia.
Rachel Star Withers: Here on Inside Schizophrenia, you know, our main topic, obviously, is schizophrenia. Dealing with how it affects patients who have it, but also their loved ones. Just one trip to the E.R. is going to land you in the thousands. And for people like me who have schizophrenia, you know, monthly treatment honestly can run easily into a thousand. When you’re looking at, OK, I have to go to the psychiatrist once a month, which is a couple of hundred dollars. I talked to my counselor every other month, which is a hundred dollars, and that’s not even including medication. So I’m just looking at my basic health expenses for managing my schizophrenia, let’s say around $1,000. And then having an unexpected health expense on top of that, for people with schizophrenia like me, that’s probably going to be upwards, let’s say 10,000. What can people like me do? Because saving can be so difficult when you have a major disability.
Greg McBride: You’re absolutely right, and you know, I think you highlighted very well just sort of the barriers to that that not only do those type of expenses run down your savings, but even under normal circumstances where you’ve got a stable income, you haven’t seen any income disruption or reduced hours at work like so many did during the pandemic. Even in that instance, it’s difficult to make headway on savings because of the amount of the budget that’s being consumed by those expenses. So I’m a big fan of just automating as much as possible. The biggest barrier to saving is not being in the habit of saving, and that’s why it’s really important to pay yourself first, have that savings taken care of automatically. Too often, people try to wait until the end of the month, see what’s left over and then save. And problem with that is too often there’s nothing left over. Even when there is, there’s no consistency to that. Right? It’s different from one month to the next. And so it’s really important to sort of flip that equation around, pay yourself first and then a few different ways to do that. You can set up a direct deposit from your paycheck into a dedicated savings account that you have for those rainy day expenses, you’re saving for emergencies the same way you would save for retirement through payroll deduction.
Greg McBride: You can also contribute, a lot of employers offer flexible spending accounts where through payroll deduction, you’re putting money in on a pretax basis that can be used for medical expenses throughout the course of the year. The thing with a flexible spending account is it’s use it or lose it. So it pays not to overestimate too much, but it’s the difference between being able to pay for something on a pretax basis or having to pay for it on an after tax basis. That could be a pretty significant difference, depending on which tax bracket you’re in. You know, that could easily be, say, a 25% difference in price. It’s like getting a 25% discount if you’re paying for it with pretax dollars. And then there’s another option, a health savings account is a great option where it works. You have to have paired that with a high deductible health plan, which is not always available or just not viable given the costs involved.
Greg McBride: But the way a health savings account works is you contribute money on a pretax basis, like you did with, say, the flexible spending account I mentioned a moment ago. But that money continues to grow. You invest, it’s like an IRA or other retirement account. You’re investing that money and you can make withdrawals to pay for or reimburse yourself for medical expenses. And unlike the flexible spending account, this is not use it or lose it. There’s not a calendar year limitation on this. This is something that you can accumulate over time. So the money you put into your health savings account this year that you don’t use can not only carry over to next year, but you can invest that for longer term growth. With the idea being that as you get into your later years, if you have higher health care expenses, you have money put aside. Fidelity Investments, there’s a big survey every year what the average 65 year old couple is likely to incur in out-of-pocket health expenses during the course of their retirement, number’s upwards of $300,000. And so that is itself, I think, a strong selling point for a health savings account that it’s essentially retirement savings that’s dedicated specifically to future health care costs.
Rachel Star Withers: I know this is a difficult question I’m about to ask, but it really applies to unfortunately people who have a serious mental disorder and their loved ones. So health savings account, that’s great, if I’m able to work full time and do all that. What about for parents or loved ones who might have an adult child they’re trying to take care of? Is there any options for them as far as kind of the health savings account, but that you can use on family members?
Greg McBride: Yeah, some of those same options are still available if they’re considered a dependent. If they are, for example, on your medical insurance, then the flexible spending account or the health savings account could also be used in those instances as well.
Rachel Star Withers: What could my mom do, for instance, if she knows I’m in inpatient care, it’s going to be $10,000? What can she do financially to help out?
Greg McBride: You know, I think a lot of this traces back is what we were talking about at the top with the $1000 expense, right? We’re going to erase that number and we’re going to pencil in a different number. But I think a lot of the answers are pretty similar in the sense that if you have one of these tax advantaged accounts, that’s where those are considered eligible expenses if it’s, you know, a dependent. In the case where it’s not, you know, then that emergency savings that it could be an option. Borrowing becomes another viable option, whether it’s that unplanned $1,000 expense or the planned $10,000 expense. In lieu of savings, borrowing does tend to be the most common choice, and there it’s all about really limiting the interest cost that you’re going to incur. You don’t want to put $10,000 on a high cost, high interest rate credit card. You can get a better rate if you have good credit, maybe on a fixed rate personal loan. There are other loan options. Generally, if you’re putting up some sort of collateral, you’re going to get a better rate because it reduces the risk to the lender. Those that don’t put up collateral, not only does that put a ceiling on how much you can borrow, but because that poses a higher risk of default for the lender, they charge a correspondingly higher interest rate as a result.
Rachel Star Withers: Something I thought that was really interesting in the study that Bankrate did was that different age groups tend to finance expenses in different ways. Generation Z versus X versus Baby Boomers. Can you tell us a little about that?
Greg McBride: Yeah, I think the pandemic has really impacted the readings that we’re getting on this. So for example, younger millennials, those that are between the ages of 26 and 32, they were the most likely of all age groups to need to finance an unplanned $1,000 expense with a credit card. When it comes to savings, more than half of millennials and Gen Xers say that inflation is actually causing them to save less for unplanned expenses. Mentioned how a lot of this ties with the pandemic millennials and even the younger Gen Zers. We see that they were more directly impacted by income disruption, particularly in the early stages of the pandemic, whether it was outright job loss or just reduction in hours, business wasn’t as good, so they didn’t earn the same income, and that’s really impacted ability to pay for unplanned expenses. The tendency to have to finance that with something like a credit card. Oftentimes young workers that they may have done a good job of saving for the early years of their career, get then derailed by an instance like that. And they find themselves in a situation where an extended period of joblessness not only wiped out the savings that they had built up, but now they’ve accumulated some debt from it as well.
Rachel Star Withers: And it’s funny because when you just said that what immediately went to my mind was credit card is going to be my go to. If I had upwards to $5,000 unexpected expense, I can put it on my credit card. No problem. But yeah, I don’t think that’s what my parents would do. Their mindset would definitely be more along the lines of let me look into a loan situation. Would personal loans be a better option for, let’s say, more of our Gen X to Gen Z people to look into? Just something we don’t normally consider?
Greg McBride: It is something that in recent years in particular, I think has become a really viable consideration, especially for those who have established credit and their credit is in good shape. Some of these personal loan rates can be substantially less than what you would pay on a credit card. And the particularly relevant point at this point in time is those personal loan rates are fixed. Those are fixed interest rates. So if you borrow at six and a half or seven and a half or eight percent, it’s fixed for the life of the loan. With credit cards, not only is that rate starting out at something in the neighborhood of six percent, but it’s a variable rate and it’s going to go up over time. We are at a point where we’re on the cusp of a swing higher in interest rates, and that’s going to mean that a lot of credit cards out there, the rate is going to be much higher a year or two from now than it is today. And so you don’t want to be putting debt on a card that’s already at a very high rate, but a high rate that’s about to get even more expensive.
Rachel Star Withers: I’m going to give you a scenario, a young lady in her early 30s has schizophrenia and she wound up in-patient hospital and she was treated for a month, got out, doing great, feeling great and was then hit with a $40,000 hospital bill. What would be your advice for her?
Greg McBride: You know, I think some of the advice here is really sort of even before we get to the talk about finances, I think some of that is exhausting the avenues through insurance, just to make
Rachel Star Withers: Yes.
Greg McBride: Sure that every part of it that was eligible for coverage was in fact covered and that there wasn’t something that was denied because of a technicality or an incorrect code in the system, that type of thing. In the instance where all of a sudden, you’ve got this big, massive medical expense, and if it’s just an overwhelming expense, not one that you see an easy pathway out of, nonprofit credit counseling agencies can be a tremendous help in this area. They offer budgeting tools and budgeting advice. They look at the expenses you have, the debts you have, the income you have. Many of them have debt management programs that can work with your creditors to get you on a debt repayment plan that’s affordable for your budget so that you’re actually making progress on paying down the debt and that there’s an end date in sight and you’re not just spinning your wheels. In those instances where the debts are significant and there’s just no prospect of being able to repay that, bankruptcy is the viable option. They provide pre-bankruptcy counseling. So a great resource for people to utilize. Nonprofit credit counseling agencies accredited by the National Foundation for Credit Counseling can be a tremendous resource in that area. Now, full disclosure, I happen to be on the board of the largest nonprofit credit counseling agency, but it is an unpaid position and it’s one that I proudly serve because of the good work they do for people.
Rachel Star Withers: That’s amazing. And unfortunately, I think so often people don’t look into nonprofits like that and kind of those options. A lot of it, I know for people with schizophrenia is we’re so overwhelmed trying to deal with the mental disorder to then on top of that, think, OK, now I have to try and find, how am I going to pay for this? And I’m dealing with hallucinations. A lot of it really is the wonderful support systems, the families, being able to look into these options, like Greg is saying, before they happen. Before this unexpected $1,000 on upward hits us, before this unexpected thing. Mr. McBride, where would you suggest that support, loved ones, friends and family of people with schizophrenia, where should they go to look for information about this?
Greg McBride: Yeah, a lot of resources available. You know, Bankrate.com, a website I work for, is free to the consumer. Lots of great content tools like calculators that can help you figure out the aspects of your finances, whether taking a loan, how much is that going to cost every month? Trying to work out your budget and see how much you’re able to afford, how much in the red you’re going to be? We have free tools like that. Also free search engines where if you’re in the market for that personal loan, if you’re looking for a zero percent balance transfer offer on a credit card, so you can get that debt paid off once and for all. We do have those available to the consumer where you can compare among various providers and see which option is best for you. To circle back to something we are talking about a few minutes ago, just nonprofits. You’re right, particularly in an overwhelming situation that it’s probably not the first thing that comes to mind, but I’ve done a lot of work with different entities in the nonprofit sector, and there are a lot of resources out there, foundations that exist to benefit those that are most in need. And spending some time investigating those avenues. They can point you in a lot of great directions for the types of resources that are out there that we’re not aware of and often don’t even know exist until we’re in a situation where we need what they have on offer.
Rachel Star Withers: I’m actually looking at Bankrate’s website right now, and one thing I like is that it goes through all the different types of state savings accounts. I didn’t realize all the different rates that are going on. When it comes to saving, I want to set aside eventually $10,000 for unexpected health care costs. Do you suggest going the route of an interest savings account or normal savings account? Should I just put it in checking? Or should I invest it?
Greg McBride: Depends on the time frame that you’re looking at. You know, just the unplanned or
Rachel Star Withers: Yes, just unplanned.
Greg McBride: Uncertain time frame
Rachel Star Withers: Yes.
Greg McBride: On this. Yeah, that certainly suggests keeping it in a liquid account like a savings account. And a couple of reasons why you want to keep it in savings and not the checking account. Too often, checking account, that’s where you’ve got a lot of transactions going on there. Your monthly bills, a lot of money coming in, coming out. Well, it’s easy if that money gets commingled that it can work its way out of the account on one thing or another. And then when you need it, it’s not there. So I’m just a big fan of segregate that money into a dedicated savings account. It’s still liquid. You can get to it when you need it. Oftentimes, if you have an online savings account, you can link that to the checking account at your current bank so when you need some money, it’s literally a few clicks to move that money over. But those high yield savings accounts, they also offer much better rates than you’re going to get, not only in checking, but at most banks. So as you pointed out, there’s, wow, a lot of different rates available on savings.
Greg McBride: Seek that out. The top yielding accounts can give you a much better return on your money, and it’s still protected by federal deposit insurance. I’m not in favor of tying that money up in investment if there’s the chance that you’re going to need it in the short term. And the reason for that is you don’t want to be a forced seller. So where that investment angle, I think, is particularly helpful is for something like a health savings account where you’re putting aside money that has a much longer use time frame to it, the money that you may not be using until retirement. I think that’s where the tax advantages and the investment, the compounding that’s available for investment is really beneficial. But for the money that you could need at a moment’s notice, it needs to be in a liquid account and something where it’s federally insured and there’s no risk of loss, so it’s there when you need it.
Rachel Star Withers: That makes perfect sense. Thank you so much for being on our show today and just d definitely opening our eyes because people with schizophrenia, we do have a lot of these health costs that pop up. Thank you for sharing your knowledge with us from Bankrate.
Greg McBride: Oh, my pleasure, Rachel, thanks so much for having me.
Gabe Howard: Rachel, great interview. Were you surprised to hear that bankruptcy is a money management technique?
Rachel Star Withers: Yes, I think I choked a little bit when he said that, because it seems like to me such an extreme thing to do. But we were talking about extreme cases. When you’re looking at schizophrenia, there is a very real chance of you having to be in a mental hospital for a period of time every single year. And I don’t think I can just keep going the bankruptcy route over and over again. I think it’s very sad that there aren’t more options for people with schizophrenia because I see it over and over that for many of us, this is going to be a reoccurring problem, financing help that we need.
Gabe Howard: It very much seemed to me that your quandary was this rock and a hard place, you want to do the right thing, you want to contribute, but you also want to get well. There doesn’t seem to be another option. You can’t absorb tens of thousands of dollars’ worth of medical bills year in and year out. But you also don’t want to have this reoccurring financial problem because you’re trying to get on your feet. And sincerely, it’s just a ludicrous way of approaching health care for people living with chronic illnesses to put them in this position.
Rachel Star Withers: Yes, I was very frustrated because I am someone, I’ve worked to some capacity my entire adult life, and yet I could easily see myself being the person who has racked up ten thousand plus in medical bills due to a two week stay at a psychiatric hospital. And now what? I would have to take out a loan, but so many people who are in this situation, that won’t be an option for them. One thing we haven’t even mentioned is how many people with schizophrenia end up homeless. Ok. And if you’re in the middle of a crisis, how in the world are you supposed to be able to try and apply for a loan? And then there’s, of course, the fact that I might not get the loan. There’s a very good chance that they’re going to look at me saying, I need my loan to help cover my psychiatric treatment because I’m a crazy person. Will you please give me a loan and trust me with money? I don’t know. I haven’t tried it, but I don’t feel that going well for me. Even if, let’s say I have perfect credit, I don’t see that going well for me, showing up at the bank, saying This is the reason I need money, not just normal medical expenses, but medical expenses for a psychiatric hospital. To me, that’s a lot of red flags that would probably prevent me from being able to get a loan.
Gabe Howard: And it’s very important to remind our listeners that you’re doing all of this after you got out of the hospital, so this is not when we are at our best. We are better. Whatever crisis put us in the hospital should hopefully be stabilized. But I don’t believe that anybody honestly believes that the day that you walk out of an inpatient hospitalization stay for any reason, for any reason. Physical, mental, for any reason, is your best day and being burdened with figuring out how to pay these massive bills, apply for loans, even considering bankruptcy. You’re supposed to focus on healing. You’re supposed to focus on getting well. You’re supposed to focus on the things that you learned while you were in the hospital. But instead, we’re batting around scenarios like contacting lawyers for bankruptcy, figuring out what our interest rate on our credit card is, trying to figure out if we can borrow money from family, applying for loans and hope the stigma and discrimination that comes with a psychiatric diagnosis doesn’t impact our ability to get that loan. In the meantime, if we do have work, whether it’s full time or part time, we were definitely off work while we were in the hospital. And generally speaking, you don’t go back to work the day that you get out. We haven’t even covered how many people lose their jobs after an inpatient psychiatric hospitalization, especially one that’s one, two, three, four, five weeks. It’s just one more thing, Rachel. It’s just one more thing in a sea of just really scary times. It’s just one more thing that’s unnecessary.
Rachel Star Withers: It makes me think that that should be part of the hospital treatment is preparing people for what happens next financially. To go ahead and break it down before they leave. Look, we need to go ahead and have a plan just for the money situation. I’m someone who worries about money more than I should, and I feel that me getting out and then being hit with a bill like this, let’s say two weeks later would definitely send me into another crisis. It’s definitely caused some sort of problems that I wouldn’t know how to handle. I think all of us need to focus on saving more and preparing for what could happen. But it’s very difficult. If you’re in the U.S. and you’re on Social Security or Medicaid benefits, you aren’t able to actually save over $2,000. So that’s another issue. It’s one thing to say Hey, save up your money. Do this, do that. It’s another thing when wait a second, I actually can’t, or I’ll lose those benefits. There is an option that’s been passed in the past few years, and it’s something called an ABLE Savings Account, ABLE, A B L E. And it’s through the government that these are special bank accounts for individuals with disabilities, and it allows you to save money and it not go towards that $2,000 where you might lose your different benefits. It also allows other people to contribute.
Rachel Star Withers: So whether you’re talking about relatives or any other situations like that, they’re able to contribute up to $15,000. That’s good. Kind of how we’ve been throwing out all these numbers, though, $15,000 is almost on the low end of what I might need. So it’s kind of like a step in the right direction. But it’s a baby step. Another option would be a special needs trust, and that’s something that friends and family can set aside funds for disabled people and you would still qualify for Social Security, Medicaid, Section 8 housing and all that. And the money in the trust can only be used for certain expenses kind of dealing with medical needs. But it would also cover things like assistive technology, transportation, if you had to pay for a caregiver. So the extra stuff that insurance and government programs don’t cover. Another step in the right direction, however, I would need some well-off family and friends, and I would have to go through a lawyer and whatnot to even set up a special needs trust. So we’re not talking about, Oh, this will be really helpful for, you know, someone who’s living on the street struggling with schizophrenia. We’re talking about a situation where, hey, my family has an adequate amount of money to help me, but at least it’s another baby step in the right direction.
Gabe Howard: Rachel, during the research phase of this podcast, you were able to find an incredible amount of resources to help manage money for people living with schizophrenia and mental illness.
Rachel Star Withers: Yes, and you can see the list by checking out the official page on PsychCentral.com/IS. Some wonderful resources like the National Association of Free and Charitable Clinics and Open Path Psychotherapy Collective. They actually are a very large group, which provides a locator tool to help you find mental health services at discounted rates. Another one, one of our favorites, of course, is NAMI, National Alliance on Mental Illness. When it comes to paying for medication, there are always different drug discount cards. There’s a new one on the block, though that is CostPlusDrugs.com and that’s actually created by Mark Cuban, and it only charges a 15% markup from the manufacturer’s price. What’s really great is right on their home page, they have a link for mental health drug prices. And they do have a lot of, earlier we talked about those first-generation and second-generation drugs. They have second-generation on there. So you can kind of scroll through, those might be an option you can look into for some cheaper drug costs.
Gabe Howard: Rachel, it’s a really good list of resources, and I hope that people take full advantages of checking it out. Obviously, it is not exhaustive. It is not every single resource that is available in the whole world, but I think it’s a pretty cool list. And of course, you can find it on the episode page. Just go to PsychCentral.com/IS.
Rachel Star Withers: Nothing involving finances is ever easy. And that is across the board, whether we’re talking about people who have schizophrenia, whether we’re talking about caregivers, whether we’re talking about just everyday normal Americans, finances can be a big stressor. However, when it comes to your schizophrenia and mental disorders, the biggest thing is to get help. And if you’re having trouble, speak up, talk to your doctors, tell them, Hey, I’m having a hard time paying for my medication that you’re prescribing. Hey, I’m having a really hard time being able to afford to meet you once a month. Is there anything you can do to help me out financially? Is there another option? Talk to different people. Talk to your doctors. If you have insurance, talk to them. Say, Hi, I need this. Call them up. The point is to find help. There are lots of different options and resources out there, and we just have to find the ones that are going to work for our situation. Thank you so much for listening to this episode of Inside Schizophrenia. Please, like, share, subscribe and rate our podcasts and we’ll see you next time here on Inside Schizophrenia.
Announcer: You’ve been listening to Inside Schizophrenia, a podcast from Psych Central and Healthline Media. Previous episodes can be found at PsychCentral.com/IS or on your favorite podcast player. Your host, Rachel Star Withers, can be found online at RachelStarLive.com. Co-host Gabe Howard can be found online at gabehoward.com. Thank you and we’ll see you next time.