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We've locked in low prices to help you save big storewide. Look for the locked in low prices tags and enjoy extra savings throughout the store. Ralph's fresh for everyone. Today on Radical Personal Finance, we kick off part one of a health insurance series. But I have to begin today's show in a slightly different manner with just telling you a little bit about the morass that I am stuck in at the moment.

See, as I speak these words into my recorder, it is 2 12 p.m. on Thursday, November 3, 2016. And since last Thursday, I have been working and trying to prepare my outline for a series of health insurance shows. I've got probably six to eight lined up here with different topics, and I began this with just a desire to do one show.

See, a couple days ago, November the 1st was the beginning of open enrollment for Obamacare. All of the health insurance exchanges opened up and we're currently sitting in open enrollment. And I wanted to provide some information on health insurance and I wanted to share some actionable tips and ideas that would help those of you who are going through open enrollment, either on the health insurance exchanges or at your job.

So I thought, okay, I'll just sit down and I'll punch something out for you. This is a subject that's very important. Many of you are spending over a thousand dollars a month on health insurance, and yet I haven't really particularly covered it in the archives of the show. And it's been one of those things that I know I need to cover.

But every single subject that I write, as usual, and I kind of prepare my outlines, leads to another one, leads to another one, leads to another one. And then I think, well, what's the right way to tackle this? Well, I don't know if I come at it from this angle.

That'll be helpful. Well, this will be too technical, but then that'll go over the head of these people. So how do I provide the big picture and then narrow in it? Blah, blah, blah, blah, blah. So I have had my feet firmly mired in the mud for going on a week now, trying to get this out.

And at this point in time, that's completely unacceptable. So at this point in time, I'm just hitting record. And today, I'm just going to share with you a little bit of an overview and tell you where we're going and give you some very practical advice, hopefully, on how to approach health insurance.

And then I've got lots of specifics lined up that I'm hoping to get to. Now, I can't commit to you that I will be able to get to them, because if I find that I'm stuck for a week on one of these things, for example, I'm going to go through all the strategies of how to get out of the Obamacare penalty and all of the exceptions.

But if I find that I get completely stuck on these things, I've got to just keep pressing forward instead of being bogged down. But we're just going to start. And this shouldn't have surprised me just because my experience of the last week trying to prepare these shows for you, I think is common to all of us in the United States and even all around the world.

Years ago, I did this financial planning designation that's called a RHU, registered health underwriter. And it was through the American College in Bryn Mawr, Pennsylvania. And it was supposed to be a health insurance educational plan for people who are working in health insurance. And I did a little bit of health insurance business in the past.

Not a lot, but just a little bit. And so I thought, this will be good. I'll look forward to learning about it. I'll get another designation and I'll learn all about it. Well, it's part of that I had to read this book and it was a textbook and the thing was hundreds of pages.

And it was written by one of the smartest, written and edited by one of the smartest people who is involved in setting up and establishing the health insurance policy in the United States. I think he's a professor at some Ivy League school and key consultant for the Affordable Care Act and all these different things.

I just came away from that convinced that the entire health insurance situation in the United States and in many countries is an absolute debacle. And it's so frustrating to figure out how to work through it. Now, I figured out some plans for me of ways to work through and I'll share that with you.

And we'll see where that information goes in coming days. But expect it. I should have expected it to be frustrating and I tell you this, expect your experience to be frustrating because it is a nightmare. Almost all of the easy solutions that that people talk about have pros, have cons.

We live in a difficult, difficult place and I don't think it has to be that way and I think it'll get better in the future, but we'll see. So here's what I'm going to talk about today. Just a couple of big overviews of health insurance design. I'm going to lay out just the major decisions that you'll have to face and how you can approach them.

And this will be helpful to you if you are trying to lay out your own choice on your open enrollment at your job or open enrollment for Obamacare or whatever. I'll lay out the big picture ideas for you. I am intending to do a show on the current situation of Obamacare.

And that show, again, the scope of that is hard to know. There have been tons and tons of premiums of excuse me, tons and tons of news articles about the changing premiums and these things are all true, but yet you have to look a little bit deeper and it's not quite all as simple as it would appear.

There's always rebuttal and counter arguments and the disaster of the Affordable Care Act is it was entirely predictable. So I'll talk a little bit about that. We'll talk a little about the politics. I'll remind you how it came into being. I'll share my opinions on that. That show will be political.

So those of you who don't like political arguments, you can skip that one. I intend to dig into the actual technical planning aspects of how the premium assistance tax credits work so you can understand those on tax returns because they do make a big difference. I intend to dig into in a separate show for you on the Obamacare penalties and explain how those are actually calculated.

And how you can approach the question of whether or not you should even bother to sign up for health insurance. Many people, it's cheaper and perhaps better to simply avoid buying health insurance. I actually don't own health insurance. I participate in a health care sharing organization. And in the past I've gone completely insurance free.

And so and I don't think that's quite as what's the term, quite as risky or quite as irresponsible as other people say. And we'll talk about that. I'll go into what happens if you don't pay the penalty. For example, did you know that you can just simply, you actually can just simply skip health insurance in the United States and not pay the penalty?

And as long as you don't ever owe the government taxes, under the laws that currently is written, they can't come after you. So I don't think that's a bad planning strategy that some of you should know about. We will talk about the methodologies and strategies for how to avoid the penalty with the exemptions and things that are actually listed.

I'll make you aware of those and talk about some of the strategies to get the government to pay more money for you. I would like to do an entire show on health care sharing ministries because that's one, that's what I actually participate in. I don't, I use a health care sharing ministry called Samaritan Ministries and it's fantastic.

It's so much better. So much better than dealing with health insurance. As far as I'm concerned, I never want to go back to the world of health insurance, but many of you are not familiar with those. There are a few options. I'd like to do an exhaustive comparison and contrast for you and explain what those options are and who's eligible for those and how you choose between them, do reviews of the different ones because when I was choosing Samaritan Ministries as being appropriate for me, I did exhaustive research on that.

I'd like to do an entire show on health savings accounts. I've been meaning to do this for a while and I've wanted to cover that subject for you because health savings accounts can be very flexible. It's interesting to see even in the current political debate in the United States how those are once again playing a role.

I'd like to talk about medical tourism. I probably won't at this point in time tackle that but medical tourism is a powerful, powerful strategy that I think many of you should consider. You should consider it very seriously. Medical tourism is the idea being where if you need some kind of medical treatment and this is the type of medical treatment that's known in advance, you just simply go to a part of the world where the medical treatment is cheaper.

If you're gonna have a baby and the cost of having a baby is too expensive in the United States, just go to Mexico. Have your baby in Mexico. If you need a tooth pulled or you need some crowns or something like that, get on an airplane and go to Costa Rica and have your dental work done there and you'll have world-class dentists who can do it at much cheaper rates.

If you need to have serious surgery, there are various countries that specialize where doctors come together and their entire medical tourism communities that have come together. So it's a powerful planning concept that I think has a huge deal to offer. It has a lot of benefits to offer. So we'll see if we can cover that.

That's about nine minutes of preamble here, but I just had to turn the microphone on and share my frustration. I apologize. I've been so utterly overwhelmed by this topic that and I just said, that's it. I'm cutting it off. We've got a ship. I'm seriously feeling the effects of what is it, Parkinson's law, right?

That work always expands to fill the time allotted and I have experienced that this week. So let's talk a little bit about health insurance. Let me give you a few ideas about it. And I want to start with one important differentiation and distinction that I believe you should recognize right up front.

It's this health insurance is not health care. Again, health insurance is not health care. Now in my saying that you probably immediately say, oh, okay. Yes, I see that. But the problem is in our culture at large people confuse health insurance with health care. And there are a couple of reasons why this is the most important two that I want to focus on.

First, many people refer to their health insurance by using health care and they say, well, my health care is going away. No, your health care is not going away. Your health insurance may be going away, but your health care is not going away. Your health care can be referred to as the system, the medical system that exists of doctors, nurses, various medical providers who come together to care for you in your time of ill health.

Insurance is the details of the payment system that you've established for yourself. But your health care and your health insurance are not synonymous. You can lose your health insurance. You can choose not to have health insurance and that could actually have very little or no effect on your ability to receive health care.

In the United States of America, where the majority of my listening audience exists, if you are in an accident they will take you to the hospital and the hospital will give you the best health care possible regardless of your health insurance ownership. I've seen this happen many times. I've had friends who had no money and I've watched them receive hundreds of thousands, in one case over a million dollars of health care even though they didn't have health insurance.

So we need to disconnect the use of the word health care from health insurance and that will be very useful to you because then you can look and say what is the appropriate funding mechanism that I should use for my health care expenses? And that may or it may not be health insurance.

Or that may be one type of health insurance as compared to a different type of health insurance. But your funding mechanism is not synonymous with your actual health care that you're receiving. Big big deal. So don't use the word health care when you actually mean health insurance. Use health insurance when you mean health insurance and use health care when you mean health care.

Now, let's attack health care to the second level. Do we need, do we actually mean health care or do we mean medical assistance or medical care or sickness care, etc? Because again, there's a big difference between these two things. When you're in a car accident and the paramedics come and transport you to the hospital, are those people giving you health care and administering health care or is it sick care?

Meaning, are they just trying to enhance your good health or are they trying to bring you back from sickness or from disease or from injury back to a state of health? I don't know the right word to use on this because in the English lexicon, we don't particularly have terms that refer to this.

But it's a very important for you to recognize that there's a big difference between figuring out what would I, how would I receive medical care in my time of sickness or in my time of injury versus how do I actually care for my health? This is a much larger problem than we can tackle in the context of financial planning, but it seems to me like the vast majority of the medical system in the United States exists around sick care and it's not necessarily intended to develop and to improve health care.

It's not intended to help people maintain and improve their already existing good health. It's intended just to help sick people get back to a state of health. Now, of course, I'm not the only one who recognizes this. So for example, the medical system you see is a fundamental pillar of the changes in the Affordable Care Act.

By the way, I'll use both terms. The Affordable Care Act is synonymous with Obamacare. Those are the two names. Those things are synonymous. Sometimes I say ACA or Affordable Care Act. Sometimes I say Obamacare. So one fundamental component of the Affordable Care Act in the United States was the fact that there would be a hundred percent coverage for preventive medicine, your annual checkup, your vaccines, things like that.

These things that are preventive in nature. And that's good. The whole idea is it's easier to help healthy people stay healthy than it is to help sick people get healthy. And so you see that I'm not the only one that recognizes this. But you in your own life and me in my own life, we should probably go far beyond what is actually stated in our health insurance.

Meaning your doctor may say, "Hey, you should exercise more or you should eat healthier foods." But if you just see that doctor once a year and don't do anything about it, you might delude yourself, as I certainly have in the past, you might delude yourself into thinking you're actually doing something.

Well, you're not. And the reason I am focusing on this is because I believe we need to tackle things on their face and not be scared to take a position that's politically incorrect, but that's actually in line with our own situation. For example, if you had to choose between buying good food and buying health insurance, which would you choose?

I think you should choose good food. Getting the absolute cheapest food possible and existing on that diet, if you have the means to get food that's of a higher quality, that might not be the best financial decision. I think you can make a powerful argument to say that when looking at the law of averages and looking at things statistically, you should choose better quality food and maintain your health with better quality food than spending all your money on health insurance.

And many people are facing this actual decision right now with health insurance premiums massively increasing. Some people's having bills of hundreds or over a thousand dollars a month and they're sitting there saying, "I can't afford this." You may not be able to afford it. Now, I'm not saying that you shouldn't make a plan for that.

Please hear me clearly. I'm not saying that you should just be irresponsible and not have health insurance. But you should first start with health care, your own care for your own good health. And if you need to spend money on caring for or improving your own good health, you should start there before you go to health insurance.

For about the 18th time, you probably need to do both and most people can do both. But I think you will be much better served if you start and give yourself the permission to look first at your health care. What do you need to do to maintain your good health?

If you open up your mind to this, you'll see that there might be a lot of things that you could do, which, on average, could dramatically decrease the likelihood of your needing care for sickness. Now, of course, we can't reduce that completely. You certainly have a genetic predisposition towards certain medical conditions, certain debilitating sicknesses.

There are some things that are completely inescapable. You can't predict the fact if you're on holiday in Thailand and there's a tsunami coming in, you might get your legs crushed in the tsunami. You can't predict the fact that you're driving down the road perfectly safely and all of a sudden a drunk driver on the other side turns into your lane and obliterates your car.

You cannot control those things, and so it's important to have a plan in place for those eventualities. But that's not the majority of expenses that most people face. Many of the diseases that we in the United States suffer are lifestyle diseases. They're diseases that are a result of the standard American diet.

We all sit too much, we're way too fat, we eat the wrong food, we don't move, we don't have a healthy lifestyle, we maintain lives filled with stress, and thus we wind up with long-term chronic illnesses, which are entirely preventable. Excuse me, that was too strong. Which are largely preventable.

Many of the leading causes of death in the United States are lifestyle diseases. Now you're not gonna find a federal agency that's gonna solve that for you. A multi-million dollar boondoggle of redesigning the federal recommended dietary percentages is not gonna solve your personal health issues. That's your job. That's my job, and it's hard to do.

But it's important, and it will make a big impact on your life. I don't know what specific financial planning suggestions to make to you. Based upon my lack of expertise and my lack of desire to to make statements that I can't prove or to get in trouble delving in areas where I shouldn't, I can't tell you what what areas are the most valuable for you to focus on.

And I think most of the things that people say are not as simple as they say. I can't say that if you eat all organic food or all conventionally raised food that you're gonna be better or better off or less worth better off or not better off. I can't say that if you eat grass-fed meat versus conventionally raised corn-fed beef that you'd be better off or worse off.

I don't know the impact of your cell phone radiation on your likelihood of receiving a brain tumor. I don't know the potential damaging effects of living under a power line or living in a city that has a bad water supply. I don't know the damaging effects of your maintaining a stressful lifestyle.

Stress kills you. Whether it's due to the acidity that it creates in your body, which leads to disease, whether it's... I don't know. I'm not qualified to remark on those things. I don't know whether it's the level of sugar or the level of wheat or the level of carbohydrates or the level of animal flesh or the level...

I don't know any of that stuff. All I know is that a lot of those things do have an impact. And when approaching this subject, we should start with what's most important. And what's most important is not your health insurance. What's most important is your health. I repeat, what's most important is not your health insurance.

What's most important is your health. When I did the series on disability insurance, I explained to you why I personally place the importance of health insurance at a much lower level than disability insurance or life insurance. And in component with that, I talked about what's most important. Your physical health is the most important asset that you have.

Here in South Florida, we have beach climate. And you can go down to the beaches and sometimes there's homeless people that are down at the beaches. And I often have thought to myself, "Man, if I were homeless and living in Chicago, Illinois or Indianapolis, Indiana or Minneapolis or, you know, I would start hitchhiking across the country and I would go to Miami or Fort Lauderdale or West Palm Beach.

I would go to a beach climate. Because I could sleep on the beach every night and have a beautiful, enjoyable life. It's warm. It's tropical. There's a shower right there. There's plenty of people to panhandle from if that's what I'm doing. I don't have to deal with the freezing cold and the fear of winding up frozen to death on the, you know, on the back alley somewhere.

But when you do that and you look at that, I'm being a little bit silly just to make dramatic impact. When you think about that, that perspective, you could be completely broke. And if you're in good health, you're active, you're strong, and you can go down to a public beach and you could play beach volleyball all day long.

That's what I would do if I were single and homeless. I'd go down and I'd play beach volleyball all day long. I'd be a valuable teammate. I'd have people buying me drinks, buying me food, offering me places to stay because I was just good company. If you're in good health, you can enjoy a great life even without money.

You really can. But if you're in ill health, the money almost never solves it. So the point is focus not first on the money, focused on the health. And think about your health care and your health improvement. Then think about your sick care or your accident care or your injury care.

If you were in bad health, for whatever reason, how would that be improved? And then go to the funding mechanism. Free your mind from this, from these chains that have been put on you by the insurance industry. It's your life first and foremost that matters, not them selling you a health insurance policy.

There are lots of ways for you to receive excellent medical care under a variety of health insurance systems. Just because you're focusing on your health, just because you're avoiding purchasing health insurance, does not by definition mean that you're foolish. Does not by definition mean that you're stupid. Does not by definition mean that you don't receive medical care.

I hope that that concept is helpful for you. I hope I haven't overstated my case. I must reiterate, I'm not opposed to good financial planning. What I'm opposed to is seeing people buy bad food or living unhealthy lifestyles because all they can do is make their health insurance premiums.

I'm opposed to seeing people live bad lives because of health insurance costs. When statistically, they might as well dump the health insurance and go focus on living a healthier life. The best plan is to do both, but focus on your health. And you're the only one who's going to be able to care for that.

We all can do a better job. We all can do a better job. It's important. And if you provide the care now, early in your life, you'll reap the financial benefits later in life. Let's talk for a few minutes now about health insurance. The majority of people in the United States receive their health insurance through their place of employment.

Certainly, there are some who and more and more who buy it in the individual marketplace or who buy it on the Obamacare health insurance exchanges or who receive it through some other methodology. But the majority of people receive their health insurance through their employment. So in that circumstance, your decisions as far as how to buy health insurance, what type of health insurance to buy, are going to be just simply what's being offered to you.

And I'm going to tell you kind of the big picture decision you have to make on that regard. Most people who want to own health insurance can afford to own health insurance. It's really a choice. And there are now, with the passage of the Affordable Care Act, there are now options available to every person to be able to buy health insurance.

That was not the case in the past. And it's a different show. We'll talk about the politics. We'll talk about that, why that in and of itself has led to very difficult circumstances in the health insurance marketplace. But today, the reality is that you can choose and you can have health insurance.

And with the premium assistance, tax credits, et cetera, the cost of owning health insurance, it's affordable for most people, especially if you are low income. So your decision is basically to sort through the options that you have presented to you at your job or on the health insurance exchange.

Now, in reality, there are only a couple of decisions that you have to make. The biggest decision is just simply how much do you want to pay every month guaranteed versus how much do you want to pay if you need substantial health services? That's the biggest one. You also, many of you will need to decide, for example, between an HMO or a PPO.

HMO is an acronym that stands for health maintenance organization versus a preferred provider organization. I think that's PPO. So the decision there is largely going to be based on whether or not you have a specific doctor that you want to be involved with and whether they're available on the plan.

And what's the in-network versus out-of-network? I don't want to do a lot of shows on that because that information is broadly available. For those of you who have specific medical conditions that are being managed, for example, you have a chronic illness, you have a specific set of doctors that you need to work with.

In that case, you'll be the expert on your health insurance needs and you'll just simply know how to look at those because you know what doctor you need. Those of you who aren't managing those types of conditions will probably just do like I've done and say, "Well, I don't know.

They're probably all about the same." And I'll just pick whatever. I'll pick it based upon financial considerations. So let's talk about the financial considerations because that's the information that's the most relevant for radical personal finance. Your major decision is do you want to pay a lot of money every month and not pay much money if you need to go to the doctor or do you want to pay a little money every month and pay a lot of money if you need to go to the doctor?

And you can only choose one of those options. Now, there are various scales between them, but you don't get to have both. You can either pay a lot regularly and a little when you go to the doctor or a little regularly and a lot when you go to the doctor.

What you should choose will be based upon your personal risk. Again, if you are managing an ongoing chronic illness of some kind or if you have a high propensity towards incurring medical costs because you're sick, in those circumstances, you'll probably want to pay a higher amount every month. So that you can manage the expenses on a consistent basis or so that you can pay lower out of pocket total over the course of the year, you'll probably go with that option.

If you're generally pretty healthy, then you probably just want to take whatever is the plan that is the cheapest on a monthly basis. And if you have savings to be able to make up for your deductible and your co-pays, if you need sick care, you're probably better off with that.

And that'll probably come out financially better. You'll have to actually calculate these in your own situation. And that's where oftentimes it comes down to the incidence of when you expect to -- how often you expect to need medical services. If I could make a blanket statement that was applied to me and to every one of you and to all of us, I would have all health insurance be catastrophic coverage only.

Now, that wouldn't work for people who have a chronic illness. But if I had to choose, that's really the best design. And by that, I mean health insurance works the best when it's only used for those big expenses that you can't pay out of pocket for. If you've got a flu and you've got the flu and need to go to a doctor and get some antibiotics or whatever the situation is, most people with a little bit of savings in the bank could be able to plan for that and handle that.

And if our medical system worked primarily on a cash basis, it would probably be significantly more efficient. And that would be the best for you. It would be the best for the doctor. It would be the best all around. And then if you could pay into a health insurance system where it only provided coverage for the big illnesses, the cancer, the heart disease, the heart attack, the big stuff, the massive accident that has you in the hospital for four months, that would be great.

Pick a big deductible, 20 grand, 10 grand, 30 grand, something like that. If I had the choice, I would just buy that type of insurance that just covered everything over 30 grand. And the reason is that anything under that, you could make a payment plan and pay that off over a couple of years if you needed to.

I just want coverage for basically cancer. I just want coverage for, again, that six-month hospital stay because of the catastrophic car accident. That would be how health insurance would work really, really well. If you look at your options and if you're healthy and you're in good financial standing, you have savings enough to cover deductible, generally your best bet is going to be to go for that type of catastrophic coverage.

So seriously calculate your expenses on that. And that will probably be the best type of coverage. Now, where those plans don't work is if all of a sudden you start incurring significant health expenses every year. Examples would be you have a child who has special needs and you need some kind of significant medical treatment.

You have some kind of chronic ongoing diseases and you need significant medical treatment every year. Pregnancy, you have pregnancy, baby-related expenses regularly. So every time you reach open enrollment, sit down, look at the year ahead and think, "Do I need to change?" and calculate the numbers for your situation.

Calculate it based upon the total out-of-pocket maximum, the total that you're paying for premiums and see what option is the best for you. Generally, lean towards large deductibles and small premiums if you're healthy. And if you're not healthy, calculate the exact numbers based upon your situation. I can't give any better advice than that.

That's really how it comes out in terms of most people. Now, what I have found is often the plans are very, very similar. When I always did this with my own insurance every year, when I had regular health insurance, I would just sit down and calculate it every year during open enrollment.

And I always found that in general, they were very similar, especially if you knew you had medical expenses coming up. I remember the birth of our first child. We knew, OK, there's going to be – we knew what the midwife bill was going to be. I knew what that is.

I could calculate it out and figure out. And even in those cases though, it was still cheaper to go with the low premium and the high deductible. I think that's everything I have to say as far as large general design ramifications. I feel – forgive me. I feel like today's show is very clumsy and awkward and rough.

But that's the reality. It's hard to know how to tackle this subject. In future shows, I will give you specifics and I'll focus primarily on – I'm going to talk about Obamacare. I'm going to give you details on that, again, penalties, how to get out of them, how to understand the premium assistance, tax credits, et cetera.

I'm going to talk about healthcare sharing organizations and how those work and do extensive comparison and contrast with them. I'd like to do about HSAs and I'll cover some of those topics in the future. For now, if you have specific questions, what I plan to do is I've received some questions from some patrons of the show and others that I will try to do a Q&A format in this series at some point.

So if you have a question on health insurance, feel free to email that in to me at joshua@radicalpersonalfinance.com and I'll be happy to sort through those questions. That will help me to do some Q&A. So send me your questions, joshua@radicalpersonalfinance.com. For now, I said back in – what was it – 379, I said I was going to be more rough and straightforward and that's what you got today.

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