Health Insurance and I are not friends

My Archnemesis

Health insurance and I are not friends.

Don’t get me started on medical billing; we’ve got history.  

In all seriousness, the whole healthcare system has been a major frustration of mine for years. As a single guy, I never had to interact much with my health coverage – I rarely went to the doctor. With getting married and starting a family, much of this changed.  

The Language of Insurance

In the first few years of marriage, I started by just learning the language of medical coverage. Everything from deductibles to out-of-pocket maximums to co-insurance, to premiums. I had an easier time passing Spanish in college than catching onto all of this insurance vocabulary.  

The next evolution of my education was having kids – this brought lots of doctor visits and the such. In 2017, we lost our first son in the final weeks of pregnancy. Our next three blessings – my two sons and my daughter – were all considered high-risk pregnancies. All of this meant more visits and specialists, and precautions.  

For the last 5 years of my life, my mailbox has been littered with medical bills. Collectively, these have been our single highest expense category.  

Frustrated with the System

To be clear, it’s not the costs that have caused me frustration, it’s been navigating the entire medical system. I’ve received bills that I should not have, I’ve been overcharged, I’ve received bills a year late, and the list goes on.  

Again, health insurance and I are not friends. We’ve put a man on the moon, and we have access to in-flight wifi, and yet in the world of medical insurance, we are still sending paper bills, asking people to fax documents, and communicating with a call center overseas to resolve billing issues.  

Sure, I could explore concierge care or something of that nature, but this is not the direction of today’s article. I know I am personally not going to revolutionize the medical insurance/billing system – although I hope somebody does – but I’ve relieved my own frustrations with my “Lifetime Medical Pension Strategy.” Catchy name, right? I came up with it all on my own.  

The HSA

At the end of 2003, George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law. Part of this act was the introduction of the Health Savings Account (HSA). Many in the financial planning world dub the HSA the only “Triple Tax-Free” investment account. This comes from the fact that contributions to the HSA are (1) tax-deductible, (2) grow tax-free, and (3) distribute tax-free when used for qualified medical expenses. That’s the 1, 2, and 3 of HSAs. Of course, there are other details, like having a High Deductible Health Plan (HDHP), the option to use taxable distributions after 65 for non-medical expenses, and other particulars that you should review with your advisor.  

Now, here’s the connection point for me. Many investors make annual contributions to their HSA and then use those very contributions to cover current medical expenses. In my “Lifetime Medical Pension Strategy,” I do not spend out of my HSA (yet), but rather I let the account compound and grow. I marry my HSA and The Bahnsen Group Dividend Growth Strategy to create what I’m calling a pension here. I maximize the annual contributions to my HSA, invest the entire balance, and I… wait. I wait for the balance of the HSA to grow to a level where the income – those growing dividends – covers my entire annual medical expenses. Essentially, the portfolio income from the HSA is greater than the deductible of my health plan. This is my Lifetime Medical Pension Strategy. 

Teach You How to Think

What was I able to do here? I took a financial topic that was causing me a lot of grief and created a long-term plan to solve this financial frustration. This is the heart of financial planning.  

So, maybe you don’t qualify to use an HSA, or for a handful of other reasons, this idea/strategy doesn’t apply to you or spark your interest. That’s ok. What you want to glean from this conversation is the approach and process of financial problem-solving. Like we often talk about here on TOM, we want to teach you how to think – crafting the right solution should be valued greater than the actual solution itself. Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime, right? 

With that said, what are those unsolved frustrations in your financial life? Sure, in my life, medical bills may be winning the battle today, but I know I’m going to win the war. My solution was this HSA strategy I settled on, for others, it might be some sort of concierge healthcare, and for some, maybe it’s a medi-share solution they concluded on. For my friends in Oklahoma, maybe they are resourcing the Surgery Center of Oklahoma (a great podcast listen, if interested).  The conclusion should always be based on the needs, preferences, and resources of the investor.  

Being a good steward means that you are going to constantly be solving different financial riddles – some simple, some complex. My hope is that these articles help you along that journey and that you have a trusted professional by your side to guide and advise you.  

As always, any and all questions, comments, and compliments are welcome – you can reach me at tcummings@thebahnsengroup.com.