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Be prepared for a hit to the paycheque

Painful price: healthcare will take a bigger bite out of paycheques from today

Today is the day that your monthly paycheques will become smaller.

This reduction is due to the significant increase in health insurance premiums caused by Government’s mandatory (now legislated) decree that private insurers remit each month almost 70 per cent ($231.33) of the SHB (standard health benefit premium for each insurance subscriber) to Government for further dispersion in the form of a $330 million grant to Bermuda Hospitals Board. Public servants are required to contribute as well, to a lesser amount of $50 per month.

You didn’t have any choice or say in this decision; nevertheless, without your consent, your health insurance premiums are increasing again to compensate for this reduction in the amount of remaining premium available for the rest of your health insurance benefits.

The Bermuda Hospitals Board will now undertake to care for its clients and bill itself for the same client claims.

It does not matter if you never use the local hospital, a significant component of your health insurance premium paid by you is now allocated to pay across the demographic health pool for everyone else who does utilise hospital services.

Regardless of how it is explained: more cost-effective, fair and equitable, effusive statements of new health benefits and so on, this is an implied unequal, divisive tax of anywhere from 8 per cent to 15 per cent (or possibly more) on you: retirees, and working people of all ages in the private sector, particularly the middle class.

There is much community frustration, probably some real depression in those just managing to get by, facing the continued spiralling of the cost of living in Bermuda. One only has to read the social media commentary to see that working people (and their employers) are feeling the impact.

An indicator of financial stress was last week’s money lender legal filings against defaulted borrowers, distressing to read. No one benefits from such news, nor is it small consolation to know that in similar reports from our neighbours: 40 per cent of adult Americans do not have $400 saved for an emergency, in Canada, 50 per cent have less than $200, and in the United Kingdom, 25 per cent have no savings.

So, you, dear readers, with your household survivor determination may now be considering what you can do to manage the financial fallout from another unexpected dent in your budget.

The new health expense hurdle for the middle-class Bermuda islanders — the drivers of the economy — is probably out of your control, but you can take action on what you can control.

• Exercise your privilege to express your serous concerns to your constituency representatives.

• Review healthcare plan choices with your health representative; you may want to opt for a less expensive plan, but keep in mind that those may require higher co-pays. Those medically necessary overseas treatments/surgery have co-pays ranging from 25 per cent to 40 per cent of the total bill. This means that a rainy day savings fund is very necessary. For an idea of costs see Statista: cost of various surgeries in the United States as of 2018, etc

• Readers and clients over the years have stated, “well, what about moving to another country: say, Canada, or the UK, they have free health insurance”. No, they do not! Healthcare is paid from taxes collected from everyone. One Bermuda family was shocked to learn that income and other taxes are significantly higher in both those jurisdictions, and, generally, any income they bring into their new country, as well as what they earn in the future, will be subject to taxation. Notice I stated income, not assets — but more on this later — cross-border planning is a complex, complicated topic.

• You can consider controlling your consumerism further. If your wages are reduced 10 per cent — then a 10 per cent reduction in your budget has to be taken along the line items.

The five basic necessities for humans: are sunlight, air, water, food, and shelter. We’ve got the first two in abundance, hallelujah. The third, water, is carefully regulated. We can’t control the cost of shelter (rent or mortgage) as much as we’d like, but we can be more mindful of how much emphasis we place on food consumption.

1, Eating less food will lower your food bill. The average adult female requires 1,600 to 2,400 calories per day, while an adult male needs between 2,000 and 3,000 calories.

2, Make simple foods. Avoid highly processed, more expensive foods.

3, You are eating to live, not living to eat.

The article, “Ultraprocessed foods are easy, cheap and could be killing you”, by Susan Scutti of CNN cites two studies in the British Medical Journal. UPFs are more expensive; add 500 calories or more to your diet every day, causing weight gain, and promote an increased risk of cardiovascular disease and early death.

Everyone is challenged to control the costs of, and better management of healthcare. We know that Bermuda has a massive health problem with third highest expenses per capita in the world — behind just the US and Switzerland. Diabetes, mobility problems, cardiac issues, and related are all concerning.

There is a rising incidence of kidney disease that brings with it enormous financial cost. The Fiscal Responsibility Panel’s annual assessment for 2018 stated that fewer than 200 individuals were on dialysis in Bermuda, but that this cost more than $20 million. Dialysis costs were 60 per cent higher than the US and four to 12 times higher than in Jamaica or Barbados.

Diabetes, type two, particularly, is well entrenched, but a healthier lifestyle can have a positive effect. Think less co-pays, fewer hospital visits, fewer doctor appointments, lower costs. The Bermuda Diabetes Association is always there to assist Bermuda islanders in this health challenge.

These two ordinary steps — listed above — can lead to better overall health.

Change can be overwhelming. Start small positive steps by using this opportunity to become more focused on yourself and your family’s well being, while keeping your budget controllable.

As for the government healthcare change transitions, we’ll just have to see how it all shakes out. Still too many questions and too few answers.

Many thanks to all who have written to me. I encourage you to share your stories and keep me posted on your progress at martha.myron@gmail.com. Remember, always confidential.

Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: martha.myron@gmail.com