Quantifying Optionality?

Every now and then I post about how fouled up the healthcare system is in the US and how it has been getting worse by sharing my experience paying for insurance as a self-employed person. I was very critical of the Affordable Care Act from when it was first proposed, I believe the ACA essentially broke the system (earlier than would have happened naturally?) and whatever we have now has actually made it worse. I am not making a political statement, I believe the system is broken and no one seems to know how to fix it.

Taking a quick side step, given how fouled up the system is, I think the best thing is to modify behavior to give yourself the best chance of bypassing the system entirely. The health benefits of lifting weights and cutting sugar consumption are almost endless and it is never too late to start and make improvements. Do the research and see for yourself.

I've written about the financial benefits of good health habits (lifting weights and cutting sugar) as greatly reducing the chance of having chronic maladies (things like T2D, hypertension and so on) and having to pay to medicate those chronic maladies. The savings could be enormous, financial plan altering.

We've been contributing to an HSA since 2005. Our monthly premiums for the insurance part of our HSA has gone from a little under $300/mo to potentially $1500/mo for 2020 and of course the deductible has about tripled. I was able to get health insurance (an HSA) through AdvisorShares when I had my side gig there. I left the company in May 2018 and my COBRA coverage ended this past October. The cost of the COBRA was $934/mo which is several hundred dollars less than what we would have paid through ACA for 2019.

At $1475/mo for 2020, we essentially take on another mortgage payment, the mortgage on the house we live in is $1350 (we have always been under mortgaged). We do not qualify for a subsidy, the threshold for that is somewhere around $70,000 and we are lucky enough to do a little better than that. But what about someone applying for this insurance, making $80,000 with a $1500 mortgage? Being self employed, they would have to come up with about $12,000 for the employer/employee contributions to Social Security plus the mortgage plus $1475 for health insurance leaves $2690 left over for everything else. My hunch is this scenario would owe very little in federal income tax but I am not certain. Factoring in groceries, various utilities, other insurances (like auto), a car payment and there is really no way these people could save any money. The numbers will likely be worse in 2021 based on the rate of inflation for premiums over the last however many years.

If Warren wins the 2020 election and gets Medicare for all then the dollars and sense aspect will be solved (not an endorsement for M4A, I think the inefficiencies from this would be catastrophic) but however important it is now to adopt good health habits to stay out of the system, I think it would be even more so if Warren won and actually got M4A passed.

I have quite a few motivations for preaching about lifting weights and cutting sugar; my own health, healthspan and finances, it is important to be able to have this sort of conversation if a client interaction calls for it, as fire chief I want to set an example for the crew and it is a relevant theme with my blogging.

For 2020 my wife and I are taking a risk with our health insurance by getting temporary insurance for the year. The coverage is certainly suboptimal but thankfully, all we use the healthcare system for is to get annual physicals. We don't visit the doctor, we don't have prescriptions, we don't have any chronic maladies so at $1475/mo we'd be paying $17,700 for the year (plus another $7000 to contribute to our HSA) to have 2/3 or 3/4 of the cost of our physicals covered.

Our temporary insurance will be $285/mo or $3420 for the year which is a savings of $14,280 versus ACA. We are very fortunate to have this optionality but we have invested many years in exercising vigorously and in the last few years we've improved our diets. Pre-existing conditions can disqualify you from temporary insurance, we each had our annuals in October and were good (thankfully). We will get our 2020 physicals in November or December and if we're still good then we'll have the option to go the temporary route again otherwise we can pay up for ACA which has no pre-existing condition exclusion.

If we are lucky enough to go this route for the next 12 years until I am 65 we would save $171,000 versus signing up for ACA. I realize there are all sorts flawed assumptions in the previous sentence including limits on how long you can get temporary insurance but it stands up for 2020, it seems unlikely that much will change in the system for 2021 and we will continue to invest our time into having the best chance at good health.

I will close out by repeating the importance of lifting weights and cutting sugar consumption. If you do the research you will see that many people have reversed chronic medical issues that doctors typically prescribe expensive medication for. Everyone would obviously be better off if they improve their fitness and metabolic health markers and weren't spending money on prescriptions. There are no absolutes but no one will be worse off for being in better shape and consuming less sugar.

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