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We get it: Managing your personal finances isn't easy. And that's not just because modern life is expensive or because the math gets complicated. It's also because anything involving money can be inherently adversarial -- other people and organizations want a piece of yours, and if they can acquire more of it, they'll try to.

In the "What's Up, Bro?" segment of the Motley Fool Answers podcast, Robert Brokamp shares three stories in that vein with co-host Alison Southwick. The first illustrates why even if you can get low-cost health insurance, you might not want to. The second concerns the unpleasant fact that even if investors don't sell their mutual funds, they can still wind up paying capital gains taxes. And the third is a reminder that your broker could sometimes be steering you into investments that are better for them than they are for you.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This video was recorded on Oct. 15, 2019.

Alison Southwick: So, Bro, what's up?

Robert Brokamp: Oh, I've got a few things.

Southwick: Do you have three things?

Brokamp: As a matter of fact, I do.

Southwick: Do it!

Brokamp: There you go.

No. 1: The swelling inflammation of healthcare expenses. So the Kaiser Family Foundation released the latest results from its annual employer survey and found that, on average, the cost of employer-provided health insurance for a family is now $20,576. That's up 5% from last year. 71% is covered by the employer and the rest is covered by the employee. While the overall cost has increased 5%, the employee's share has increased 8%. We've seen this recently over the last few years, where employers are shifting more of the costs onto the employee.

Once again, we see another year of the cost of healthcare going up much higher than overall inflation, which these days is less than 2%. In fact, The Wall Street Journal had a little stat that said that in 1999, the cost to provide health insurance for a family was $5,791. I put that into an inflation calculator on the internet, and if healthcare only went up at the rate of inflation, today it would cost $9,000 a year, so it wouldn't have even doubled. But, of course, no, it's over $20,000 a year, so it's quadrupled.

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We've talked about this before. We've talked about, in particular, prescription drugs. It's a very long conversation, but basically this can't go on forever where healthcare just eats up more and more of our economy. That's a topic for maybe even another show, but I can tell you one thing that you shouldn't do, and that is you should not skimp on your insurance, which brings us to a Bloomberg article which told the story of David Diaz.

The Diaz family did have insurance, but it was short-term medical insurance, which was allowed under the Affordable Care Act as a bridge between jobs. You could have it for no more than three months. The Trump Administration changed that so that you could have it for up to a year and then keep rolling it for three years, so many people decided to get this lower-cost insurance and save some money.

What happened to David Diaz? He had a heart attack.

He thought he had insurance. It turns out it's not going to cover that. What's the bill for having a heart attack for this family? $244,447.91.

They also had this quirky tidbit in the article. One of the insurance companies that offers this type of policy is HIIQ. According to the article, there was a guy named Charley Butler, a truck driver. He gets cancer. HIIQ won't cover it, so he sues the insurance company. According to the article, during a deposition the following year, Lee Henning, an attorney for HIIQ, tried to undermine Butler's claim that the debt had left him anxious. "If you need money so badly," Henning asked, "why doesn't your wife get a second job?" He reminded Butler that the Bible says "a wife should be a good helpmate." Could you imagine this came out in a lawsuit? HIIQ fired that guy.

The lesson, here, is when it comes to health insurance, you don't get what you don't pay for. A low-cost policy could be low cost for a reason.

No. 2: Funds distribute capital gains. So throughout the year, your mutual fund manager is going to be buying and selling stocks, bonds, whatever the fund is invested in. If they generate a capital gain on those sales, to the extent that they exceed losses they have to get paid by somebody, and those are distributed to the people who own the fund, even if you didn't sell your shares in the fund.

So there you are, being a well-behaved buy-and-hold investor, and boom, you get hit with a tax bill for investment. You're still holding. Now if you hold your funds in an IRA or a 401(k), or another tax-advantaged account, it's fine. But this could be a particularly rough year for those of you who hold funds in a regular taxable account, especially for those actively managed funds, and that's one of the points made in a couple of recent Morningstar articles, one by Christine Benz and the other by Russ Kinnel.

The problem is actively managed funds have been seeing huge outflows and when a fund gets lots of requests for redemptions, they have to sell a lot of investments to raise the cash to meet the redemption requests. A lot of funds are probably going to making these distributions at the end of the year. If you hold a mutual fund in a taxable account, does that mean you should sell the fund before that happens? Generally no, if you like the fund, because when you sell the fund, you're also going to generate capital gains.

But if you were thinking of selling the fund anyhow, it may be a time to pare back. But also, you should wait until the distributions at the end of the year if you're going to buy into a new fund.

No. 3: "Wall Street Brokers Missed the Index-Funds Memo," and that is a headline from a Wall Street Journal article by Randall Smith. We just discussed why many people are dumping their actively managed funds in favor of index funds. Why? Well, it can be pretty tough to beat the index fund.

However, brokers are still mostly sticking with actively managed funds. The article quoted a report released last month by Cerulli Associates, which found that brokers at four major Wall Street firms have just 29% of their clients' managed fund assets in passive index funds. The majority are still in active funds, and it's even a lower percentage in passive index funds for smaller and regional brokerages. Compare that to overall, and about 40% of assets are invested in index funds these days, and in August it topped 50% for all U.S. stock funds. We actually mentioned that in one of our previous episodes.

So why are brokers not joining the exodus to index funds, or at least not as much? You can take a guess. It comes down, probably, to money. There are many reasons, but generally speaking, you're more likely to get commissions and other payments from the actively managed fund families. The article quoted Doug Black, a consultant who works with wealthy families.

He said that the big firms' active tilt is partly a legacy of Wall Street -- the relationships that these folks have with these big fund families -- but also that higher-fee active managers often make pay-to-play payments to big firms and, indeed, according to the article, two of the largest Wall Street firms [Morgan Stanley and Merrill Lynch] curtailed their brokers' use of mutual funds from Vanguard because they wouldn't do these pay-to-play payments.

As we regularly point out on this show, not all actively managed funds are bad. I have several of my own. We have several in The Motley Fool's 401(k). There are plenty of good ones, but if you have a broker and they have put you mostly in actively managed funds, you want to make sure that they have done it because those are the best funds for you and not the best for them.

And that, Alison, is what's up.

Alison Southwick has no position in any of the stocks mentioned. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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