Mark Elliot: Welcome to the Retirement Income Show. I’m Mark Elliot, alongside the CEO and founder of Oak Harvest Financial Group, Troy Sharpe. Troy is also a certified financial planner professional, but he’s created a great team here to help you come up with your plan, your strategy for retirement. The Retirement Success Plan is all about whomever Troy and the team are sitting down with getting ready for retirement or already retired. Income, investment, taxes, it just keeps going, healthcare, estate planning, it’s all part of the Retirement Success Plan. The idea is that Troy and the team are here to help. They just don’t know if they can help you, though, until you reach out. There are ways to do that, certainly.
The number, if you want to give them a call, it’s 800-822-6434. No cost to chat with the team. 800-822-6434. We’ll give you that number throughout the program, and you can always go to the website to find out more, oakharvestfinancialgroup.com. Great information there for you, but also you can find out more about Troy and the team as well, oakharvestfinancial group.com. Of course, their office is located right off I-10 in Bunker Hill at 920 Memorial City Way. Then, of course, there is the infamous YouTube channel, Troy Sharpe Oak Harvest, over 300 videos on there. Great place to find out more about some of the questions and concerns you may have about your upcoming retirement or your retired, and you’re like, “Wow, this isn’t really going the way I thought it would.” Troy’s probably done a video on it.
Just search Troy Sharpe Oak Harvest on YouTube. Troy, welcome to the show, and today Grace Gosnell is with us. You’ve got a special guest. Tell us about it.
Troy Sharpe: Yes, so we don’t probably have enough guests on the show, but I had a chance to meet Grace almost a month ago, I guess. We had a chance to kind of get down and formulate either a video for the YouTube shoot, and then I was like, “This is such a great concept and something the listeners probably really would like to hear about,” so I invited her to come on the radio show. Grace is from Scoop Health, and we talk a lot about healthcare planning in retirement when it comes to people who retire prior to 65. Health insurance premiums can be very, very expensive.
Grace Gosnell: Oh, yes.
Troy: Oftentimes $2,000 a month, give or take, $100 or $200 here for someone retiring at age 60 or 61 or 62. Grace is with Scoop Health and they are a medical cost sharing,
I guess would you say company or platform or collective?
Grace: Yes, platform would be a great word.
Troy: When we start doing retirement planning and we’re looking at the costs for medical insurance, and then the copays, and deductibles, and prescriptions, some people have more health expenses than others, of course, but everyone needs to be covered prior to Medicare in case something catastrophic happens. It’s one of the big, hidden expenses for a lot of people who say, “You know what, I’ve accumulated $1 million dollars or $2 million and I’m tired of work. I just want to retire at age 61 or 62.” They come in for planning and we go through the health costs and some people say, “You know what, I think I want to go back to work, or maybe I should work for another year or two so we eliminate that item from the budget.”
What I want to do today with Grace is go through the basics, the history of medical cost sharing, how it’s evolved over time, and we’re going to get into some questions and ask Grace some tough questions here because I’ve been talking to clients leading up to this interview, and they all basically have the same questions, “If I get cancer, can I go to Memorial Hermann?” “Am I going to have my choice of doctors?” The big one, of course, is, “If something happens to me, how do I know that the money will be there to help me pay for the expenses that I need for my health or my loved one’s health?” We’re going to get into those questions as well. Grace, welcome to the show.
Grace: Thanks so much for having me.
Troy: Very, very glad to be here. We’re going to turn this actually into a YouTube video, but then we’re going to do a separate YouTube shoot as well. Grace has a YouTube channel. What’s the name of your YouTube channel?
Grace: We’re The Health Benefits Network.
Troy: The Health Benefits Network. If you want to learn more about medical cost sharing after The Retirement Income Show here, feel free to go to the YouTube channel there and check it out at Health Benefits Networkon YouTube. I’m sure there’s a lot of great information there-
Grace: Of, course.
Troy: -where people can learn more about medical cost sharing. Let’s just start at the beginning. How old is medical cost sharing? Where did it actually begin? Then we’ll have a conversation about how it’s evolved.
Grace: Gosh, medical cost sharing, about 40 years ago. It started in the Christian-based health-sharing communities, and over time it’s evolved, of course. 40 years ago is the benchmark that we see cited most often. Nowadays, there are hundreds of cost-sharing communities. Some are very small, some are very large. We work with several that are not faith-based anymore. That’s one of the biggest evolutions that we’ve seen, is that eventually over time some of us realize that not everybody shares the same faith-based beliefs, but a lot of us share the same ethical beliefs that if we strive to live a healthy lifestyle, we should be rewarded for that, and as a community of like-minded people focused on our health, focused on our needs, and taking care of those unexpected health events in life, we’ve found that we can get a pool of people together to share in each other’s medical bills, and it works out really pretty fantastic.
Troy: How long have you been involved with the Health Benefits Network or Scoop Health in the medical cost sharing?
Grace: I’ve been involved with Scoop Health for almost a decade now. To medical cost sharing, almost about seven years is how long I’ve personally been a member. Of course, like everybody had needs come up in seven years from time to time, things pop up. I personally would never leave it. Seven years is quite a long time, and I don’t see that changing.
Troy: When we look at just health insurance in general, even though it’s not called medical cost-sharing, the concept is pretty similar with health insurance. The health insurance companies collect premiums, they have actuaries determine, “Okay, what type of investment return can we get on the funds that we have invested?” What are the expected claims that we’re going to have? Then, of course, they are the middleman. This is one of the big problems in the medical world today, is you have this middleman, the health insurance company or the government with Medicare, negotiating prices and cutting the individual consumer out of that process.
Troy: First, I want to just start with, tell me, tell the listeners, how does medical cost-sharing work in a very, very kind of basic fundamental level, if someone says, you know what, I don’t want to pay $2,000 a month for health insurance. I want to explore how this works. Are there premiums? Are there deductibles? Just a very, very basic level, how does it work?
Grace: Highest level. Everyone pays in a set of money each month. We call it a contribution. You’re contributing to the overall funds of this cost-sharing community, much like a premium. We call it a contribution. And then instead of a deductible, we have what’s called an Initial Unshareable Amount or IUA. Essentially that’s the amount of money that an individual member, say, me, you, whoever is responsible for before they can look to the cost-sharing community to share in the rest of those bills. It’s an individual burden and you get to pick that level. Of course, it could be as low as $500 per incident, could be as high as $5,000.
Everybody has a different comfort level. We’ve got a lot of 24-year-old guys who are healthy as a horse, and they’re perfectly happy with $5,000. I went with something a little lower, I’m a little more risk-averse. Everybody gets to pick that. Then when you do have a medical need come up, you’re responsible for that initial and shareable amount. Then after that, you’re able to look to the community and say, “Hey, I’ve met my burden that I agreed to, I’ve contributed money for however long I’ve been a member, now it’s my turn. Can I get the rest of these bills shared through help from the community? That’s at a high level how it works.
It is very similar to health insurance where they collect up money each month, they just pool it all together and pay for things as they come up, but it’s the same thing. We’ve got people who are looking at the numbers on a monthly basis and saying, “What do we think is going to come down the pipeline in terms of bills for the community? How much do we need to make sure we’re bringing in each month in order to take care of those effectively? What do we need to have in reserve just in case there were a really bad something or another that came along?” By and large, it’s the same concept of dollars coming in to share bills at some point down the road.
Troy: You have an initial unshareable amount, you guys call it an IUA. The consumer can choose what that initial unshareable amount is and that’s essentially like a deductible. Correct? It’s not called a deductible, but it’s ultimately what you have to pay first out-of-pocket before the community picks up the remaining costs for whatever health costs there is.
Troy: What is the difference between someone who has a $500 IUA versus a $5,000 IUA? Are there caps on the rest of the costs that can be shared? Why wouldn’t everyone just choose a $500 on an Initial Unshareable Amount, IUA?
Grace: Great question. Somebody who chooses a $500 unshared amount versus a $5,000 unshared amount, the $500 person’s going to pay a little bit more. They’re taking on a little bit less of that burden. $500 anybody can come up with if something really bad happened. $5,000 is a bit of a steeper climb to get there, so you’re going to pay less each month. The other thing about the initial unshareable amount that I think is really interesting is it’s tied to a health need. That could be a broken leg, that could be a cancer diagnosis. That initial unshareable amount, by and large, it’s tied to that need.
It doesn’t reset each year like a deductible would where if you’re in the hospital bed on December 31st, January 1 rolls around and you’re still there, you pay your deductible again. This is tied. I’ve had a surgery before, the whole process through recovery and everything lasted a good eight months. Had that rolled into the new year, that’s a new deductible and with cost-sharing, it wasn’t.
Troy: It doesn’t happen. The IUA is essentially the deductible, and the lower deductible would mean a higher monthly premium? Is that–
Troy: What are the monthly premium, so can we get into that? Are they called premiums and can we get into how they work a little bit?
Grace: Yes, so we call them contributions. We make them once a month just like you would an insurance premium. With those, there’s no caps, there’s no annual limits on how much you can share or anything like that. We make our contributions once a month. Generally speaking, we see them being somewhere 30% to 50% less expensive than traditional health insurance. Obviously, if we got to compare apples and oranges, there a little bit. If we try to line up the number so that deductibles look somewhat similar to the IUAs and what have you, 30% to 50% is not surprising at all.
Troy: Someone who has a larger unshareable amount would have a smaller monthly contribution.
Troy: Then the unshareable amount, is that similar to a maximum out-of-pocket cost? Let’s say I have a $5,000 Initial Unshareable Amount, and then I get into a car accident and my medical bills are $200,000. Is that $5,000 plus my monthly contribution that I make, is that the maximum out-of-pocket cost that I would pay, or is it possible I would have to incur some of that $200,000?
Grace: In terms of, say, the rest of that large medical need, we have a set of guidelines just like health insurance has an explanation of what your coverage looks like. There are limits on things, for example, physical therapy, I know it was one. You’ve got a certain number of visits per medical need. It’s a very fair number. Health insurance does the same exact thing. I personally went through that. It was more than enough for me. There’s certain things like that, but by and large, if you’ve got a large medical need, your initial unshareable amount generally speaking is going to be what you’re responsible for. There could be some small things here or there, but I would say those are pretty off the wall.
We don’t see those happening too often. Then with the initial unshareable amount, you’re essentially locked in at three of those a year. If you had three large medical incidents, you’re going to pay your initial unshareable amount on those three and then say you had a fourth something really crazy happened, another car accident or whatever it might be, after number four, if you’ve got another big one, you’re not going to pay that Initial Unshareable Amount again, you’ve paid those first three and the community’s going to say, “Gosh, you’re having a really tough year. You’re done. We’ll stop you there.”
Troy: I know there’s so many different networks out here, so many different, I guess, collectives or co-ops that provide these services here. With Scoop Health and the Health Benefits Network, how many individual contributors are inside the plan? Do you know that number?
Grace: Oh, gosh. I would say industry-wide, the statistics are a little hard to pin down because it’s always changing and it’s always growing. Industry-wide, the numbers I’ve heard are we’re into the millions, we’re into the two-plus million range. It’s a quietly growing movement where we don’t have big lobbyists out there. We’re not splashing out for ads on TV because we’re spending our money on members’ medical needs. We’re a quietly growing, little community, but it’s steady as people they do get these bills for $2,000, $3,000 a month. I was talking to a family yesterday, $3,000 a month for a couple of two and three kids. That’s not affordable. That’s more than a mortgage and people can’t do that.
Troy: When we look at millions of people contributing on a monthly basis into the medical cost-sharing community and a set of guidelines are established for how much will be paid out or how many physical therapy appointments and visits similar to health insurance there, have you ever had a client where they had paid in their monthly contribution, they hit their unshareable amount and then they had a medical need that their costs exceeded what the medical community would cover and they got stuck with the bill for $20,000 or $50,000 or more? Have you ever seen anything like that happen?
Grace: I personally never have. Quite the contrary, I’ve received stories from members who had a basal cell carcinoma removed, and the costing community helped them find a price that was lower than their initial unshareable amount even. This particular individual had a $5,000 unshareable amount. He was perfectly capable of paying for that, but the costing community said, “Hey, we found a really fantastic high-quality center right near you, actually, and the cost was $2,000.” Versus his unshared amount was– It saved him a good $3,000 on that. Yes, generally speaking, the experiences that we’re hearing are that people are taken care of, and they’re coming away from these situations feeling empowered, feeling like a consumer again and actually knowing what’s going on with their healthcare, being engaged and they’re getting their stuff taken care of.
Troy: Last question for this segment and we’re going to continue this conversation. I want to get into, in the next segment, how the medical cost-sharing community negotiates directly with doctors and hospitals. One of the big benefits from what I’ve learned so far has been the ability to bring costs down for the consumer through direct negotiation. That’s how the medical cost-sharing community really leverages the contributions that they have monthly plus the investment pool, the collective of contributions to really get the most bang for the buck for members in the community.
The question is, who is this right for and who is this not right for? When we look at someone coming into retirement and they’re looking at $1,800 a month, $2,200 a month, $2,300 a month just for medical insurance premiums if they go the conventional route, is that person a good candidate for, possibly, medical cost sharing?
Grace: I would say so. I think the biggest driver of who’s a great candidate, obviously, someone looking to save money. That’s a no-brainer. If I can cut that in half, that’s a great day. I think one of the biggest issues there is pre-existing conditions. If you went out and tried to purchase a medical plan in June because something came up, your pre-existing conditions are not going to be covered. It’s a similar concept with cost sharing. Instead of just saying absolutely not, we phase them in over time, and so the first year if somebody’s got something preexisting, there’s not going to be any sharing for that.
Now, I would say, probably at least 50% of the people who do join, have something preexisting. I did, most of us do. It all depends on, is it well managed? Are we able to tackle that with a simple prescription and maybe some lifestyle changes? Is it under great management with a doctor already? Or is it something that’s going to get worse or become surgical or be something that is going to require a lot of costly expense?” If it’s well-managed, they’re probably a great candidate.
Troy: It’s a good thing, it sounds like, because you don’t want people coming into the pool who are just going to be a tremendous cost without contributing into their share, at least, up to a certain point before they need hundreds of thousands or millions of dollars worth of care. We’re going to bring it back in the next segment. If someone has questions they want to reach out to you directly, how do they do that, Grace?
Grace: They can visit our website, scoophealth.com. We’ve got lots of information on there. Youtube videos like I know you do as well, phone numbers on there. Yes, if folks want to reach out, that’s the best way to get in touch with us and start to learn a little bit more.
Troy: Okay. We were with Grace Gosnell of Scoop Health. This is The Retirement Income Show. 1800-822-6434, if you want to reach out, have a conversation about how healthcare planning fits into your retirement plan. Give us a call, check out the website and of course, visit the YouTube channel at Oak Harvest Financial Group on YouTube.
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