| As one gets older healthcare expenses are | | | | $2,000,000 today and may never pay back |
| almost certain. That's why health insurance cost | | | | anything. Those that buy the health annuity could |
| go up as we age. Currently Medicare promises to | | | | write off the capital gains at 17% of $340,000 in |
| pay 80% of hospitalization costs, and for the | | | | tax savings at a tax bracket of 24% it would be |
| current $1,200 per year, you can buy Medicare B | | | | $480,000 saved. |
| which will cover 80% of our outpatient costs. | | | | We know that there will be about 200,000 |
| Then there is long term care, and what if the | | | | 100-year-old people in the USA 25 years form |
| Medicare plan changes, due to the expected | | | | now. That means that less than .7 in 10,000 will |
| increase cost burdens? Many of us can self insure | | | | need care from 85 to 100. That's 15 years of |
| for a few years out of our savings if the health | | | | care at say $100,000 per year, or $1,500,000. |
| impact is not too catastrophic. But what about | | | | Now you can start to see that of our group of |
| when we are 80 or 90 or 100 years old. How can | | | | 100 people there is just a slight chance of one of |
| we afford health insurance and what vendor can | | | | them living to 100. To 90 lets say there are 10 or |
| make a profit if they will almost certainly pay out | | | | 10% chance of living. That means that at |
| on policies issued to 90 year olds within the next | | | | $100,000 per year cost 3 years for 10 people or |
| few years. | | | | $ 9,000,000 would be needed. |
| At age 61 it is time for me to look at future living | | | | So what could the vendor keep? What does the |
| expenses, but the wild card is Healthcare, and long | | | | vendor has to work with? The vendor would |
| term care. Like most people I really don't want to | | | | have the original $2,000,000 plus interest on |
| feel that I need to save everything for the future | | | | $2,000,000 for 25 years. With the rule of 72 at |
| no mater how old I am. But with healthcare costs, | | | | 10% earnings that is another $24,000,000. As you |
| an unknown, it seems that I could never have | | | | can see the vendor could pay a lot of healthcare |
| too much saved. Do I really want to chance dying | | | | expenses and still make a great profit. The |
| or surviving to live in poverty, because I spent | | | | customer would not have to worry about |
| my money on dinners and Vacations during | | | | healthcare insurance being just too expensive for |
| retirement, instead of saving right to the end? | | | | him at age 80 or 90 etc. The customer also can |
| What about any heirs, do I spend it all? | | | | then afford to spend down his wealth with out |
| Healthcare annuities could be my answer but no | | | | the wild card of unlimited medical expenses |
| one seems to offer them. Here is the idea. Buy a | | | | looming. |
| tax-deductible purchase of Healthcare that kicks in | | | | For this proposal to work the government would |
| at some time in the distant future. If I am lucky | | | | have to insure that the vendor is there 20 or 30 |
| enough to live a long time then the annuity would | | | | years in the future to take care of their |
| star covering my health related expenses if they | | | | obligations. This would mean a FDIC style back up |
| materialize. I could buy a health annuity when I | | | | to create confidence in the vendors selling these |
| need some tax write off. (Say selling my | | | | annuities. There would have to be enough buyers |
| company or that second home). With a purchase | | | | willing to create the pool of money to work from. |
| of deductible healthcare, I could let the | | | | And the actuaries will need sharp pencils to factor |
| government pay for some of my health costs by | | | | in the effects of medical technology's, on life |
| avoiding taxes on some of my profits. | | | | expectance, hospitalization, medication, medical |
| A win, win situation for the vendor and consumer | | | | procedures, implants, government programs etc. |
| could be established with some volume and good | | | | But this modest proposal could be a way for |
| actuarial planning. Let's say that at age 60, 100 | | | | those of us over 60 to fund our futures in a way |
| people buy for $20,000 a comprehensive | | | | that will remove the uncertainties that even |
| healthcare starting at age 85. Currently a | | | | actuaries may have a hard time predicting. Lets |
| non-smoking man in good health is supposed to | | | | find a way to carry our own weight, live within |
| die at about age 85. So the vendor gets | | | | our means, and insure our own futures today. |