Being self-employed doesn’t make it easy to get affordable health insurance for you and your family. Today, Jim Ingersoll explains how he uses money from his real estate investing to fund the amount he needs for the high deductibles each year.
Listen to Jim Ingersoll’s first hand experience on making sure your Health Savings Account is funded so that you aren’t left scrambling to come up with a large chunk of money when a medical emergency pops up.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.
Jim: Hi, everybody. Jim Ingersoll here. I want to talk to you about a very serious topic regarding investing. This is a topic that really creates a lot of fear and anxiety among real estate investors who are doing real well with investing, but they’re afraid to go over the hurdle and quit their J-O-B, their job. I want you to be able to quit that job, leave that 9 to 5, get out of the corporate mindset, and be able to carve out your own path.
Well, one of the big fears that a lot of people are facing right now, especially if you’ve got a family is, “How am I going to pay for my medical care for my family, for my kids, for my wife?” Things like that.
Mike: This REI Classroom Real Estate lesson is sponsored by VirtualStaffNow.com.
Jim: I understand that fear because 10 or 12 years ago I left Corporate America. I left a really good job and started to carve out my own path in investing. Things have changed a lot in healthcare over the last few years. They’ve gotten a whole lot more expensive. So this anxiety is even higher now than it used to be.
I’m going to tell you how to do it, and I’m going to give you some specific steps to take today on how you can pull this off. First of all, you’re going to want to go out there and shop for your healthcare account. I don’t want to tell you how to go out and select the best account and plan for your family. But in a lot of cases, you’re going to find that the cheapest monthly payment plan is what’s called a health savings account, HSA.
So the upside is that it’s the most affordable monthly plan. The downside to an HSA is that it’s got an extremely high deductible. It’s almost like a catastrophic insurance plan. So typically, your out-of-pocket deductible on an HSA is going to be like $6,000 a year. Now, that creates anxiety for people looking to leave corporate America if you’ve got a comfy little, warm and fuzzy insurance plan.
But I’ve got some really great news today, because I’m going to show you some specific steps you can take to get rid of that fear, go ahead and get rid of your 9 to 5, quit trading your dollars for hours, and build your life as a successful entrepreneur. The way this works is go ahead and pick out a plan. Shop out there and find an HSA, and feel confident about looking around for the plans.
You’ll find that you can find one with a good monthly rate, and it will be a high deductible. So personally, my deductible through Anthem is $6,000 a year. That’s a lot, because one week from today I’m due for a hip replacement. When I go in for that hip replacement surgery, I’m going to immediately get stuck with that $6,000 out-of-pocket expense.
But I’m not worried about it, and the reason I’m not worried about it is because I took my medical expenses into my own hands. What I do is I invest in real estate to fund my medical expenses. Take what you know how to do really well, and apply that profit into your health savings account.
So what you do is you open a health savings account with a self-directed IRA custodian, like I like to use Quest IRA. You can check them out at QuestIRA.com. You can open your account. It’s similar to a self-directed IRA, but it’s a self-directed HSA. You put a little bit of money in there to get it funded, and from there you can invest that account into any kind of real estate transaction you want.
If you’re a wholesaler like I was when I left Corporate America, you can fund your medical expenses by doing some wholesale deals. So like if you need $6,000 a year to feel safe, warm and fuzzy to get out of your job, well just do an assignment contract for $6,000. Put it into your account, and if something goes wrong or God forbid you need a hip replacement like I do, you’ve got the money there to cover you.
If you’re good at being a landlord, then you might want to do what I did several months ago, and had my health savings account buy a rental property. I did it on a joint venture. I injected private capital into the deal. See, all the deals you’re already doing, you can do inside of an HSA.
So the way that it works for me is my net profit on my rental is just over $500 a month. You do the math, $500 times 12, $6,000 a year. See how I set that up so easily? So right now, I’ve got a four-bedroom, two-bath house in Richmond, Virginia that dumps about $500 a month into my health savings account. That’s how I’m going to pay for my hip replacement.
It isn’t hard. It’s a matter of getting your HSA plans set up, setting up an account, tax-deferred by the way so it’s a huge tax advantage, with a self-directed IRA custodian. Put some money into it. Put that money to work, and pay for your healthcare. That’s how you’re going to get it done. That’s how you’re going to get out of that 9 to 5, take care of your family, your kids and your wife, without worrying.
I’m Jim Ingersoll and I want to thank you so much for tuning into the REI Classroom and all the content that they provide for you.
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