Full-Time Investors: What Do You Do for Healthcare?

Question

Hi everybody. It seems like a huge number of BiggerPockets users are looking to quit their jobs and transition into full-time investing. A major roadblock to this, however, seems to be health insurance.

Those of you who are full-time investors, or self-employed real estate professionals, what do you do for healthcare once you leave full-time work?

Account Closed · Answer

@Scott Trench  When bending over, I just ask for vaseline....

Seriously it drives me crazy, we are young , healthy, pay a fortune in premiums. Self pay everything would be far better but then we aren't insured for catastrophes should they happen. I once heard of catastrophe insurance but only did a bit of looking.

Im interested if anyone has anything. I know there has to be an answer. Maybe whatever Buffet and his boys cook up.

The whole system is out of control .  We pay people to manage sickness but should focus on health :)

Unfortunately  just the cost of doing business .... write the check and move on.

Ashish Acharya · Answer

@Scott Trench ,

There is no way around it.

Good news you can take a tax deduction for health insurance above the line( do not have to itemize). If a marginal rate is 28%, and you paid 10k, you actually are paying 7.2k.

But still, I understand that it is frustrating to be paying so much in the insurance while you are young and healthy, but it all boils down to the risk management.

I am actually studying to be a financial planner and this is what I have learned. You transfer or share the risk using the insurance for the expense that is HIGH in Severity and Low in Frequency(see below). You health expense falls in this category. One serious diagnosis can wipe out your investment, and you would happily use it to survive.

While talking about risk management may this will help:

• LOW severity, Low frequency - Retain the risk ( eg car dents) 
• LOW severity, high frequency-  Reduce the risk ( eg common colds) 
• HIGH severity, low frequency - Transfer/Share via insurance(car accidents, health problems- cancer, personal/business liability) - So this is the most imp part of risk management. This can make or break your finances. 
• High Severity, high frequency-  AVOID it. ( DUIs)- this is mostly uninsurable or insurable with very high premiums. not worth it, just avoid it.

There are various kinds of insurance that are not as expensive and you can choose to insure against major health problems and not small ( less than 10k). The insurance company has a product for everyone.

Also choosing high deductible insurance product while you are young, and piling up HSA account now ( that also can invest in RE) can be very beneficial at an older age where you done have to pay expensive premiums because you HSA will cover the high deductible.

It got technical really quick. sorry

Richard Patrie · Answer

Obamacare killed health insurance for small entrepreneurs. Before Obamacare, I self paid all doctor visits, medicines, etc. and carried a low cost catastrophic plan to cover hospitalizations, surgeries, etc. Obamacare banned these policies for anyone over 30 and forced you into a comprehensive plan whether you needed it or not. My premium went from $395 to $2,100. Effectively killed my one-man gig and forced me to take a job with insurance. That is the only thing holding me back at the moment. If I could get a hospitalization plan, I'd quit my job today and dive in head first.

Samuel Glantz · Answer

This is something I have thought about as well. While I'm not at the stage to worry yet in the future I will be. Go on the bcbs or human website and get a quote like auto insurance and anticipate a 2 to 5% increase every year. If you have a spouse use their plan. If you both want to retire then budget for your cost of living plus monthly health insurance costs. I would guess it would be safe to budget an additional 1000 per person.   Also high deductible plans will help keep costs down as well. Just put away 5% per month away like a vacancy expense to save for your deductible.

Matthew Paul · Answer

Marry someone and go on their plan .

Mike Cumbie · Answer

I married a woman who works for a major health insurance company. She works with a couple of single people so if anyone needs an intro I can hook you up...... :)   It's really the best way to handle it.

Seriously though, within the next 5 years we would like her to be able to leave and just do assisting with the real estate endeavors. The Health Insurance is our biggest hurdle on how to handle. Most of the rest is a pretty easy transition.

Kim Hopkins · Answer

Liberty Healthshare. Google it.

Stacey Paulin · Answer

And that really is the key to managing one's health...prevention first! Eat well, exercise, minimize the risk of injury and thats6half the battle. The other 50 percent you can't control...that's the tricky part.

Account Closed · Answer

I use privatized coverage- I'm 29 and generally healthy so I don't need much but it's more or less equivalent to a "silver" plan offered through covered california. It's just under $290/mo, which is about $100 cheaper than publicly offered programs.

Account Closed · Answer

Just to update this , i went with a product called STM Short Term Medical , it is not a replacement for health insurance , has exclusions like maternity, pre existing etc.  I also looked at products called Health Care Ministries ( again understand what you are buying).  So this STM product costs about 350 a month.  Was previously paying about 1350 but with another baby we were going to be approaching 1650 for high deductible crappy insurance. Each month, i escrow the difference. So far ( only 4 months in) it is ok, we have done a couple claims, messed one up my fault , and its hard to explain to provider so we paid that one but will actually be getting reimbursed some.  I figure there will be changes in the next 3-4 years, in the mean time if i can get away with this maybe it will work.  And statistically speaking we have been and best I can tell we should be this way going forward.  This might not work if you are requiring care and meds and have lots of needs.  It took a lot of time and research and talking with my wife to get comfortable with this.  We asked our one doc what a cash visit discount was and it was like 90 to us.  Thats not a huge difference from a 40 copay then get slapped with co insurance and this and then and now i paid 100 with my insurance but have also had the pleasure of paying the extra 1k premium monthly. Then as the real estate investor, i started thinking time value of money on this.  Ideally if i get a lump sum and can invest this and grow it.... but you need the liquidity should you need it. So then started thinking like a credit line against something . Im not quite there yet but have this in the back of my head as part of a greater overall strategy.

Full-Time Investors: What Do You Do for Healthcare?

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