Protecting my assets
August 7, 2020 11:33 PM   Subscribe

I’ve been lucky enough to build up a net worth of about $2m through a combination of hard work, a high paying profession, small inheritances and a series of good investments. How do I protect it from being wiped out by emergency U.S. medical expenses?

As far as I can see, the biggest risk for my families long term well being is someone getting in a bad car accident or getting cancer. I have a family history of cancer. The bankruptcy figures due to medical expenses in the U.S. are frightening to me. I don’t like this risk profile. What can I do to mitigate my financial risk?

I think this has to do with forming some kind of trust, but I’d like to know how that all works and what structure it should take. Do I simply pay a lawyer a couple grand and I am good to go? What are my options and what do I need to think about?

Secondly, how will this play out if I do indeed have a very costly medical event? I have great insurance. When they ultimately decide they aren’t going to cover whatever treatment I need, do I just die? Do I get treatment, declare bankruptcy, still die, but my family has a offshore bank account in Cayman? Trusts seem kind of shady. But paying $2000 for an aspirin also seems shady. How do I handle this all ethically?

Do I move to Canada ( I have citizenship ) now and avoid all of this U.S. health care madness? How do I manage this risk?
posted by anonymous to Work & Money (27 answers total) 10 users marked this as a favorite
This is really not a great question for internet randoms. Much depends on state laws. Congrats on having this money. Spend some of it to talk to an accountant and an estate planning lawyer.
posted by His thoughts were red thoughts at 3:21 AM on August 8, 2020 [25 favorites]

How do I protect it from being wiped out by emergency U.S. medical expenses?

Become an activist for universal health care in the US.

Do your level best to convince everybody you know who has similar levels of assets to protect that it's also in their best interests to do likewise.
posted by flabdablet at 5:08 AM on August 8, 2020 [38 favorites]

FWIW: My partner has stage 4 cancer and we have great medical insurance (Medicare plus supplemental). We will not owe anyone. This is what great medical insurance is for. A good practice (in our case, oncology) will also have a financial team that can help you out. The nightmares are when people have iffy medical insurance. Get some advice from a health insurance broker about getting outstanding medical insurance.

Everybody deserves great medical insurance, and with your savings, you should divert some money so that you can afford it. But this is why we should all be activists for universal health care.
posted by Peach at 5:23 AM on August 8, 2020 [24 favorites]

Isn't this what health insurance is for? I pay about $600 a month, my employer is contributing about $125 a month, and my max out-of-pocket expense for the year for year is $4500 each for my wife and me. She has Type 1 diabetes, and she hits her ceiling in February each year. For the rest of the year it's like she lives somewhere with a humane health care system. She goes to the doctor, and we don't see a bill or even any paperwork.
posted by COD at 5:57 AM on August 8, 2020 [7 favorites]

Yeah, my husband is currently dying of brain cancer and we have great medical insurance through my employer. It has cost us so little that I am currently scrambling to use up FSA money before the end of my plan year. The things I’ve called to contest have been like $60 ointment prescriptions that they said we were trying to refill too soon. I feel sad and furious when I see other people going through what we’re going through with shitty insurance.

I don’t think medical bankruptcy is generally something that happens to millionaires with insurance. Can you afford to pay your out-of-pocket max every year? Even if you lost all our part of your income? If so, this isn’t something *you * likely need to worry about.
posted by mskyle at 5:59 AM on August 8, 2020 [13 favorites]

"The nightmares are when people have iffy medical insurance."

That or they just don't have the emergency funds to cover the worst case annual out-of-pocket maximum allowed by their insurance plan.

The ACA outlaws lifetime maximums and limits annual out-of-pocket maximums, so health insurance and a solid emergency fund should be all you need.

Republicans have expanded some loopholes allowing insurance that doesn't meet those requirements: news/features/ 2019-09-17/ under-trump- health-insurance -with-less-coverage -floods-market. If you have "great insurance" then you should be OK. If you're not sure then maybe it would be a good idea to meet someone who knows their way around this stuff and show them your current insurance coverage.
posted by floppyroofing at 7:43 AM on August 8, 2020

People over a certain age are either grandfathered into amazing health plans through their previous employers, or have access to Medicare.

For people under 65, it's not so rosy. The big problem with US health plans is preexisting conditions and balance billing. The ACA/Obamacare helped make healthcare accessible, but the GOP is trying very hard to reverse that.

The only way to have a good plan as an American is to be employed by a corporation or the government. If that's your life plan, you'll probably be ok. However, if you want to freelance or retire early, it's prudent to be concerned.
posted by dum spiro spero at 7:54 AM on August 8, 2020

This is really something you should talk to your financial advisor about, but look into long-term care insurance. My understanding is that long-term care needs are typically paid for by Medicaid, not Medicare, and that means that people have to spend down most of their assets before they can get access to that support. If you have long-term care insurance, than you can get reimbursed for a nursing home or for in-home nursing care regardless of whether you have assets or not.
posted by ArbitraryAndCapricious at 8:01 AM on August 8, 2020 [3 favorites]

And for what it's worth, if I had Canadian citizenship, I would be seriously thinking about moving ot Canada, for these reasons and a bunch of other ones.
posted by ArbitraryAndCapricious at 8:02 AM on August 8, 2020 [7 favorites]

ArbitraryAndCapricious is right about long-term care insurance--absolutely invest in that.
posted by schroedinger at 8:06 AM on August 8, 2020

As for taking care of your family after you die, what about life insurance? Depending on your age, you might be able to get a policy equivalent to your entire net worth for under $100/month.
posted by mr_roboto at 8:08 AM on August 8, 2020 [1 favorite]

The only way to have a good plan as an American is to be employed by a corporation or the government.

I don’t think this is the case. I just did a quick search on the California marketplace, and there are plans that I would describe as gold-plated (no deductible, $5 office visit copay, $3000 annual out-of-pocket for each covered individual, full mental health services, children’s vision and dental...) easily available. In CA, it seems like you’re looking at $1000-$1500/month for a family of three.
posted by mr_roboto at 8:23 AM on August 8, 2020 [1 favorite]

I personally know self-employed people who are insured with Kaiser and who are very happy with it.
posted by mr_roboto at 8:25 AM on August 8, 2020

If I were you, I would just move to Canada.
posted by overglow at 9:38 AM on August 8, 2020 [1 favorite]

Nthing move to Canada.
posted by ananci at 9:52 AM on August 8, 2020 [1 favorite]

A trust is a good answer for many questions, but not for your question.

You seem focused on catastrophic health expenses, but in truth the risks that a person with moderate assets (and $2 million is in the moderate range) faces are wider than just that one area.

The answer for most risks that life presents is insurance. Good quality insurance that you pay for and that puts your mind at ease.
posted by yclipse at 9:58 AM on August 8, 2020 [3 favorites]

It seems you can afford health insurance so just buy it. That's what it is for, to prevent being bankrupted by medical costs.

Thanks to the Obamacare ACA, there is a limit to your out-of-pocket costs and no limit on either annual or lifetime coverage.

One thing to be aware of is that some plans limit your coverage to in-network providers so choose your plan carefully. The cheapest option may not have the widest network.
posted by JackFlash at 10:04 AM on August 8, 2020 [3 favorites]

Both Ontario and BC health plans require your primary residence to be in the respective province and you must be within the province at least six months out of the year. I didn't check the other provinces, but my point is just because you move to Canada doesn't mean you have to stay in Canada all the time. Just most of the time.
posted by seanmpuckett at 10:06 AM on August 8, 2020 [1 favorite]

Your medical insurance isn’t going to deny your cancer treatment.

Make sure your auto insurance covers medical sufficiently and get umbrella insurance in case you or yours get sued over a bad accident.
posted by michaelh at 10:30 AM on August 8, 2020 [2 favorites]

You have Canadian citizenship and you still live in the US? Christ. Just move to Canada. This question is basically the gist of one of the top three reasons we are leaving the US for Canada. I don't have $2mil but I do have enough assets that losing a large amount of it to unforeseen medical expenses would be Bad.

In the meantime, because I unfortunately do still live in the US while we wait for our permanent residency, I have umbrella insurance, health insurance, auto insurance that covers medical expenses, etc. and if I had kids I would have life insurance as well. You should get long term care insurance as well if you can afford it or are in middle age/50s. I don't have personal experience with that product myself.
posted by zdravo at 11:08 AM on August 8, 2020 [3 favorites]

"Move to Canada" is not a solution, because the kind of gold-plated treatment that someone with good U.S. insurance won't have covered is also not going to be available under the Canadian public health regime - many rich Canadians with cancer are treated in the U.S. paying out of pocket.

Asset protection trusts won't work for your purposes because you are expected to show proof of funds and in many cases pay in advance in order to get such treatment. (Asset protection trusts are used against litigation creditors, tax collectors, ex-spouses, etc.)

Your solution is more, and better, insurance. You can step up to a traditional indemnity insurance plan where there is coverage, albeit after high deductibles, for the top U.S. cancer care centers that are out of network for almost every HMO and PPO. You can buy supplemental accident and cancer coverage which can provide for hundreds of thousands of dollars of additional, effectively unrestricted, payouts after a qualifying Dx.
posted by MattD at 11:50 AM on August 8, 2020 [13 favorites]

MattD is correct. I was going to type out a longwinded argument, but they summarized it nicely. If you want access to the most pricey chemo when the time comes, I don't think moving to Canada or setting up a trust are the best paths forward. (And I am also a Canadian-US citizen.) Get great insurance instead.

One crucial variable is the out-of-pocket maximum of your policy. I just went through a surgery and hospitalization that would have cost over $1.3 million per the statement I received. My out of pocket cost was $300 because I hit the out-of-pocket maximum at that point. (I'd already done some pricey testing which put me close to the OOP max before the procedure.) Also, pay attention to the breadth of the network and prescription drug coverage terms. I make a spreadsheet forecasting potential costs in different scenarios every time I need to switch coverage.
posted by reren at 1:25 PM on August 8, 2020 [1 favorite]

If you want to stay in the USA, and you don't have decent employer-based health insurance, I recommend getting the best plan you possibly can through your state's ACA marketplace.

I've paid for a Kaiser Gold Plan for years now, because I have some chronic illness issues, and I freelance. Last year, I ended up with three different out patient surgical procedures and an Endoscopy, on top of my normal medications - all I had to worry about was paying up to my Out of Pocket Maximum, as well as the monthly rate.

Even when I had to get a procedure at an out-of-network facility, it was covered as in-network, because I was referred there by a Kaiser doctor.
posted by spinifex23 at 4:16 PM on August 8, 2020

You can also buy supplemental cancer insurance. My wife did this when her sister was diagnosed with breast cancer at age 32. Ten years later, when my wife was also diagnosed with breast cancer, the cancer insurance kicked in. She has excellent health insurance through her employer and paid almost nothing out of pocket, but the cancer insurance still paid her directly for each procedure / test. She made about $10k on having cancer. For someone with less excellent primary insurance, this could be a good way to recoup some expenses. But ultimately, yeah, move to Canada.
posted by coppermoss at 6:18 AM on August 10, 2020

Like others have said, if you have good insurance you should be okay because that's what it's for and insurance covers you when you're sick.

Long term care costs, however, can really add up as I learned when my late father had a stroke. He had great insurance, which covered everything from ER, ICU and a week in the hospital. Since my dad was a senior, Medicare took over for costs for rehab. BUT, unless the patient is making 'enough' progress Medicare would only cover 21 days of rehab (we appealed for more time and lost).

From the insurer's POV my dad wasn't sick enough to need hospital care and from Medicare's POV my dad wasn't making enough progress in rehab for them to cover the costs. Since my dad had too many assets to qualify for MediCal, everything after the 21 days is out-of-pocket. He still needed 24-hour care from his paralysis and significant cognitive impairments. Where we live, skilled nursing facilities are about $400/night and rehab was about $1000/wk. In-home group or private care also ran 8k to 12k / month.

So, even though insurance would cover his visit to the ER or required tests, I was on the hook for everything else. Most folks cannot afford 10k/month for 24hr care for their loved ones and I heard so many stories and saw some really sad conditions for low-end private-pay group care.

My dad didn't have long-term care insurance, but I did some research and basically learned that if you have investments/nest egg then long-term insurance doesn't usually make sense. After what I went though with his insurance/care, I would really do my research with any kinda long term care insurance.
posted by homesickness at 10:18 AM on August 10, 2020

My suggestion is to talk with a financial advisor who is a fiduciary. Being a fiduciary means they have to look after your best interests. They should be able to help set up whatever is needed to protect your assets from a variety of possibilities.
posted by tman99 at 11:35 AM on August 10, 2020

First, allay your fears. Medical coverage for people with money (you) is not that expensive in the US. That's why rich peopled don't want to change it! It is not universally asset-destroyingly expensive!!!!!!!!!

I have friends who have had stage 2 cancer and now a friend is on the heart transplant list, and the expenses are simply not that high. There are out of pocket maximums, and since you can change coverage every year in the US, there is no need to load up on unnecessary medical coverage.

Heart transplant guy: $10k in total medical costs this year. Hasn't gotten a new heart yet, so this may be ongoing for a few years.
I had ankle surgery and my wife had a surgery + reconstruction on her nose for cancer: $7000 out of pocket.

Yeah, these examples aren't cheap by any means, but they aren't going to destroy a family's assets.

Not only that as you get old, you get Medicare. My inlaws have had several surgeries and out of pocket costs for the year are less than mine!

If you are that concerned, open a HSA. That will save up money over many years to pay for medical expenses.

Once you are really old and may have to pay for nursing home care, then you need a financial plan for that. But not everyone needs it.
posted by The_Vegetables at 2:32 PM on August 10, 2020

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