Ready to be a full time real estate investor but concerned about Health Insurance.

16 Replies

I feel that im ready to go full time as a real estate invester. I have rentals that are cash flowing well and doing ok as a realtor. Also in the process of looking for my first flip. The thing that is standing in my way at the moment is health insurance. I have a full time job now that has good insurance and planning on starting a family in the next 2-3 years but I hear its crazy expensive using a private company. Anyone else have this issue? If so is there a reasonable rate out there? Any info would be great. Thanks.

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Bradley, I hate to tell you, but insurance usually costs more through a group plan, you just don't see how much your employer is paying for you.  The AHA is a disaster, but its what we've got, so you just need to run the numbers and get where its comfy for you on managing those expenses before you go full time.  Its gonna get worse I think, the theory was that if everyone was insured we wouldn't have to pay bloated prices to cover the uninsured, but I think what'll happen is that without any downward pressure on costs and us being forced to pay whatever they say, the cost of care will continue to rise and with everyone 'insured' the utilization is going to go up, which eventually has to be paid for through premiums.  My costs tripled because apparently the feds know more about risk management than I do and disallowed my high deductible no frills plan.  Joy.

Anyway, options are pretty limited now, you just have to check the exchanges, read through the plans and budget for what you think is your best option based on your usage.  Ehealth has a pretty decent platform for checking things out.  I doubt there are any health agents out there anymore to explain them much, cant be any money in it these days...

The other thing you can do is check the subsidies and see if it makes sense to structure the business so your personal income is low.  

My advice?  Go make so much money it just doesn't matter!

Google the term "health insurance" with your state's name and navigate to your state's health insurance exchange.  You should be able to find out what the rates are for different plans in your state.  

Next, I would encourage you to compare the cost of paying for your own health insurance with your current opportunity cost of not working in real estate full time.  That is, how much more money could you conservatively expect to make if you were working as a real estate agent/investor full time?  

When the the opportunity cost of not working in real estate full time outweighs the salary and benefits of your current job, it's time to make the transition.  

@Bradley Gibson Health insurance rates are based on the health providers around your zip code so costs very from state to state and city to city.  I have been self employed ever since college, (20 years) and I consider it just a cost of doing business.  Yes, it's a ton of money, but you are also limiting your income when working for someone else.

I have to agree with @Darrell Shepherd  just go out and make as much money as possible so the insurance is just a drop in the bucket.

Call an insurance broker. Each state is different. I have a PPO that was costing $350 per month for a family of four and was grandfathered in until the end of 2015. They recently sent me a letter saying that they were extending it another eleven months at $385 per month. It's not the best plan. Office visits are $35 and there is a deductible of $5,000 and $10,000 per family. We rarely use it as we eat healthy and exercise. It's just there for emergencies.

Maternity coverage is very expensive. When my youngest was born in '08, I had to pay $7,000 out of pocket and that was for a natural birth with no drugs. If my wife had an epideral or was induced, it would have been more. Natural births are WAY healthier for mom and baby if she can take the pain. Have your wife nurse the babies and they will be way better off through their entire lives.

If you know you're going to have a baby, try and get on an HMO beforehand. That's what we did with our first child. There was an open enrollment window and the coverage in '04 was about $300 per month just for my wife, but it covered most of the delivery. I think new plans are requiring maternity care, which is ridiculous if you're done having kids.

On an individual plan, the maternity coverage can have an 18 month waiting period before there is coverage.  Policy starts 1/1/15, coverage will not be effective until 7/1/16

So, if the maternity endorsement is $250 per month you will need to pay in $4,500 before they will cover any part of the delivery.  Not to mention there is usually a separate deductible for the delivery of $1,000-$5,000  You are basically trading dollars with the insurance company.   

I have paid for out last 3 kids out of pocket, last one 18 months ago was about $18,000 for everything.  BUT, if you negotiate with the hospital billing department, they can discount you 40% for paying cash.  Back that up with they can not charge you interest, you can then pay a set amount per month for 18-36 months. 

Originally posted by @Jason Bott :

I have paid for out last 3 kids out of pocket, last one 18 months ago was about $18,000 for everything.  BUT, if you negotiate with the hospital billing department, they can discount you 40% for paying cash.  Back that up with they can not charge you interest, you can then pay a set amount per month for 18-36 months. 

We debated paying out of pocket for maternity/delivery for our second child.  Luckily, we went with coverage...due to some complications, wife ended up in the hospital for two months prior to delivery and the non-negotiated costs would have been upwards of $300K.

Thanks everyone for all this information.  We are currently covered by my husband's employer but we anticipate him leaving his job in the next year and will need to seek out private insurance so all this has been helpful

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

@J Scott @Brie Schmidt   The Maternity coverage "definition" in a policy can differ from state to state.  That being said, a typical definition covers "Routine Delivery".  Any complications to the mother are picked up outside the Maturity coverage under the main health policy. 

I really looked into this prior to having 3 out of pocket to make sure we weren't risking our future.  If something goes wrong, it can get crazy like in the case of J's wife.

It's best to run through all of these scenario's with an agent domiciled in your state.  These health laws have been all over the place the last few years and things can change at any time.

I went with insurance under the health care exchange when I left my employer.  I was actually surprised at how reasonable it was in terms of cost.  I'm just a single individual and do not have kids. I have both health and dental insurance.

I wouldn't recommend skipping maternity care. There's a lot that can go wrong. We thought about it as there was a hospital an hour away that was advertising that they deliver babies for $1,000. My concern was if we didn't get there in time or there were complications, it could end up costing a fortune.

A lot of people are tempted to go without insurance, but it can bankrupt you. My friend had open heart surgery at age 31 and the bill came to $800K. My next door neighbor is only 34 and had a heart attack this past summer. He had employer health insurance, but was still $8,000 out of pocket.

Originally posted by @J Scott:

Shop around and get some quotes.  Can't speak for others, but my insurance rates have gone down about 20% since Obamacare took effect...we pay about $8K per year for a family of four...

 This is nice to hear as I'll be facing this decision at some point.

I may be stirring up a hornet's nest, but I think Obamacare, while seriously flawed, is a step in the right direction--and I consider myself a conservative.

Imagine if we had some minimum of universal health care.  This would free up all sorts of entrepreneurs to start small businesses where right now they are shackled to their jobs because of health insurance concerns or the daunting prospect of providing insurance for 5 or 10 employees.

@Rob K.  

AS I mentioned above, all of the things that can go wrong will typically be covered outside of the Maternity endorsement and picked up by the main health policy. 

Lets please avoid political discussions.  @Bradley Gibson is asking a specific question here and I don't want this to devolve into a political discussion.  Political discussions are OK, but need to go into the off-topic forum. 

Thank-you for all the advice!

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