In the United States healthcare has gone from crisis to tragedy. Double digit increases in insurance premiums for many years on one hand and a tax code that forces you to pay up on the other is a painful experience for many family budgets.
The current tax code contains a health insurance mandate; have health insurance or pay a tax penalty. Congress has unsuccessfully tried to end the mandate, but the current tax bill might contain language ending required health insurance coverage.
Even if the health insurance mandate ends there is the problem of affordable insurance. If you are fortunate enough to have an employer paying most or all of your health insurance premiums you are lucky. Small employers are far and few between who can shoulder the cost of healthcare. And large corporations are scaling back the employer paid portion of healthcare benefits.
An anomaly of the current economic expansion is the lack of wage increases. For employers covering health insurance the cost of each employee is exploding due to rapidly rising health insurance premiums even when they offer modest wage increases at best. It might be a good idea to have a Plan B.
Then we come to you, dear readers. Many of you are either running your own small business/side gig or are planning on early retirement. The FIRE (financial independence/retire early) community has one vital flaw! Saving and investing a large portion of your income creates a large net worth fast. Unfortunately, healthcare is probably your single biggest expense, even more than housing if you retire early before you qualify for Medicare!
The Right Man in the Right Place
A few months ago I was in Dallas at FinCon 17. I was busy with demands from readers and other bloggers keeping me from the sessions (now available on YouTube). That doesn’t mean I didn’t learn anything. No matter where I go I always pick up several tidbits of information I can use personally or for clients.
On Day 2 I decided to walk the vendors. Before long I was interrupted by adoring fans. I asked Mrs. Accountant to run the obstacle course of vendors and clue me into the ones I might be most interested in. It was a good strategy.
Mrs. Accountant knows the dire straights my clients are in (not to mention our own escalating health insurance issues). She had a list ready for me when I had a break.
I formulated a plan with my research. I was aware of most of the companies involved. What I needed to do was connect the dots. No one company provided a comprehensive solution. Like a jigsaw puzzle, I assembled the pieces into what is a working program to cut health insurance costs in half while reducing out-of-pocket expenses at the same time.
Connecting the Dots
My strategy uses a three legged chair. Each leg provides benefits, but if you are lucky enough to be able to use all three legs you are golden.
Medi-Share was the first stop. Medi-Share is NOT insurance, but satisfies the tax mandate requiring insurance. If the mandate is lifted Medi-Share is a powerful consideration for handling your healthcare needs regardless.
There is one very serious drawback to Medi-Share. Medi-Share is faith based and therefore is only available to Christians. Many readers will have no problem with this requirement; however, people of other faiths or no faith will probably not be accepted into the program.
Medi-Share looks and feels a lot like health insurance. You pay a monthly Share amount similar to a premium. The money is deposited into YOUR separate bank account which is completely different from insurance. There is an annual amount you pay first which feels like a deductible.
But it is different. As other members have medical bills come in the medical bill are matched to other members with excess funds in their account. The bills are matched until all medical bills of members are paid. Medi-Share uses technology to handle the management of member accounts.
The best part of Medi-Share is the dedication to wellness. Insurance companies have an incentive to keep costs high! Health insurance carriers can only have a certain percentage of premiums as profit so they are incentivized to waste as much as possible to keep premiums as high as possible as 20% of two billion dollars is more than 20% of one billion dollars. The more expenses the more profit the insurance company can keep.
Medi-Share is focused on quality of life and provides support to keep medical costs down while providing maximum health and wellness. Medi-Share is non-profit so they are service based versus profit driven.
The Second Leg
Medi-Share’s program cuts medical costs be half or more for most people. The U.S. has outrageous medical costs, but when common sense is added the cost become more reasonable.
If you don’t qualify for Medi-Share due to faith issues you can still use Leg 2 of The Wealthy Accountant program.
The way Medi-Share keeps medical costs down is by utilizing technology and preventative care. You can use the same tools to reduce your medical bills.
Leg 2 is a company called amino (they don’t capitalize their name).
Have you ever tried to get a hospital or doctor’s office to give you a firm number on the cost prior to a procedure? It’s impossible. You get every excuse and runaround imaginable! They act like they have no idea what it costs and have no way of finding out until they got you by the throat! Amino fixes that.
Amino tracks virtually every medical service provider in the country for cost and quality. Doctors and hospitals are not allowed to advertise or buy their way to the top of the list. You get an unbiased view of your medical choices based on price.
With amino you can track you insurance deductible (or Medi-Share share amounts) and even set medical appointments right through their portal. Finally, they analyze your bill.
Anyone with high deductible insurance (that should be all of us), paying their own medical costs and those using Medi-Share and other similar faith based healthcare management systems can’t afford not to include amino in their health management mix.
The Final Leg
Now that you have Medi-Share to manage medical bills and amino to get the best price on medical care, you need a tax deduction!
What I’m about to share is a down and dirty outline of an incredible tax advantage. As time permits I’ll roll up the sleeves and give this one topic an entire post. From the providers of this third leg it seems even accountants have a lot of questions on this. I’ll give you the details to get started so you can maximize your tax benefits.
The third leg is a Qualified Small Employer Health Reimbursement Account (QSEHRA). This only works if you have your own business or side gig. If you have an employer you will need them to engage this leg of my program as a traditional HRA or QSEHRA.
The first thing to remember is QSEHRAs only arrives recently (December 2016) with what is known as the CURES Act. There are still some issues needing clarification. I will share generally accepted interpretations.
QSEHRAs are only for small employers WITHOUT a group medical plan and with fewer than 50 full-time equivalent (FTE) employees. A FTE is defined as an employee working 30 or more hours per week or 130 hours per month for 120 consecutive days.
Section 213(d) of the Internal Revenue Code (IRC) states a QSEHRA can cover any DOCUMENTED healthcare expense, including health insurance premiums. As I understand it, Medi-Share payments would qualify. If I discover different I will update this post so check back if you plan on using this tax strategy in the future.
The employer funds 100% of the QSEHRA! There is a limit to how much an employer can fund: $4,950 for an individual and $10,000 for a family annually.
Caution: If employees receive a subsidy from a Healthcare.gov policy the subsidy is reduced by the amount of the QSEHRA provided by the employer. Talk to your tax professional on your specific situation and the tax consequences if you receive a federal subsidy.
The most important part of this leg is DOCUMENTED. You will need someone to manage your QSEHRA. Your accountant isn’t the person to do it!
I recommend Take Command Health. I was impressed by the depth of their knowledge when I met them at FinCon and through follow-up encounters. If you are planning on a tax break you may as well make sure it sticks.
The Triune Healthcare Solution
Healthcare and medical insurance are causing more gray hair than old age. No one solution solves the problem for everyone. Many readers should find value in all three legs. Others can benefit from only one or two legs. Regardless, containing and managing medical costs is a primary concern in most households.
To recap, there are three steps to taking control of your healthcare needs and costs:
- Use this link to review and join Medi-Share.
- Review amino and determine if their service will save you time, money and hassle. (I was reminded amino is only available for groups and not individual plans.)
- Have the government give you a juicy tax break with a QSEHRS managed by Take Command Health.
You will have lots of questions, I know. Leave your questions in the comments section below versus sending me an email. Many questions are repeats and it helps me manage time better. Some questions might take some research as the CURES Act is still being interpreted. Check back often to see if I found an answer for you.
Here is to clean living.