Keep medical expenses under control

Health-care expenses are one of the largest line items on most family budgets. According to consulting firm Milliman Inc., in 2005, the average family of four covered by an employer-sponsored PPO plan is expected to spend $12,214 on health-care costs, more than $2,000 of which will be spent on out-of-pocket expenses. That’s a 9.1 percent increase over last year.

What that $2,000 does not include is the cost of your precious time dealing with medical paperwork. With more than 50 million Americans between the ages of 18 and 64 dealing with a chronic health problem, we may be facing a serious forestry shortage.

Intuit, the maker of the ubiquitous Quicken money management system, is now offering Quicken Medical Expense Manager software. (The $50 package is available at Quickenmedical.com.) It helps log the medical and billing history for each member of a household (including pets), with details such as the amount billed, the provider write-off, co-payments, contact information and doctor’s orders. It even has drafts of dispute letters to deal with billing errors that you catch.

Medical record-keeping is an increasingly important part of family finances, particularly with more consumer-directed health plans putting the burden on patients to keep track of costs. (If you’ve ever lost money at the end of the year because you failed to spend the funds in your flexible spending account, you recognize the sting of poor personal accounting.) The program helps you track expenses such as over-the-counter supply costs, drug co-payments and even mileage, providing a running total that you can transfer into your tax software.

Intuit’s medical software is probably most useful for those who are enrolled in paperwork-heavy PPOs (which more than half of insured individuals are). If you’re enrolled in an HMO plan, the paperwork is pretty contained, unless you go out of network for a lot of your care.

Yes, it’s much more fun to track your portfolio than it is to track your medical expenses. But whatever you can do to free up time for the fun stuff is worth a few minutes at the computer after each of your doctor’s appointments, no?

Ask the Fool

Q: Does it make any sense to invest in companies with a history of losses, and even more losses projected, when there are so many profitable companies out there? — H.W., Chicago

A: Some people have rules against investing in companies without a track record of profitability. That’s fine and even sensible. Consider, though, that many (if not most) great companies started out losing money. Enterprises in their infancy typically have to make large investments in order to ramp up and grow. So while a firm might be generating hefty revenues, it might be spending even more on advertising and expanding its infrastructure to establish a strong position in its industry. At a later date, it can spend less and enjoy profits.

It’s not stupid to invest in unprofitable companies — as long as you’ve done enough research to be confident that they’ll one day be profitable. These firms can be riskier than more established companies. Many will end up failing, while others may become companies like Amazon.com and Coca-Cola.

If you want to invest more conservatively, there’s nothing wrong with focusing on profitable businesses, as there are plenty of them. You can look up companies’ historical performances online at http://moneycentral.msn.com/ investor/research/welcome.asp and http://quote.fool.com.

Q: What’s the current tax rate on capital gains from sales of stock? — R.V., Opelika, Ala.

A: Gains from stocks held for more than a year enjoy long-term rates, which are 15 percent for most people (10 percent for those in the 15 percent tax bracket). Short-term gains, from stocks held a year or less, are taxed at your ordinary income tax rate, which can be as high as 35 percent. Patience can be profitable for stock investors.

My smartest investment

In 1989, with home prices rising in the Bay area, I told my husband we had to buy a house while we could afford to. He balked and said there was no way we could come up with the down payment. I told him he was oh so wrong. I found a two-bedroom, one-bath house in Oakland, Calif., that was up for sale for $100,000, and we managed to buy it. Three years later we needed a bigger house and decided to flee to the suburbs for better schools. We put our house up for sale and quickly got $160,000 for it. We then bought a bigger house for $212,500. I could sell this place tomorrow for at least $750,000 and probably more — even though it has a few “issues.” I wish I did that well with all of my investments. — P.H., Walnut Creek, Calif.

The Fool Responds: Real estate can be a wonderful wealth-building tool. Be careful in areas where prices have skyrocketed, though. Get many tips on home-buying and selling at www.fool.com/homecenter and www.hud.gov/buying.