Open enrollment time, considering HDHP

[sweeps]

It's open enrollment time at work again and I'm strongly considering the high-deductible plan for the first time. My employer keeps raising the premiums and the co-pays on the standard plan. Meanwhile they keep sweetening the deal on the HDHP/HSA.

It's a bit of a gamble because if we have to go to the doctor a lot (or especially the hospital) I could end up losing a bit. But the upside if we don't use a lot of healthcare is huge. Plus being able to invest the HSA funds is a bonus.

Anyone opting for their HDHP instead of their standard health plan?

[Daylily]

No. If it were just me, I'd do it; however my DH tends to have expensive medical bills on a regular basis. In making your decision, find out if you'll be able to switch back to the regular plan in a year if you decide you don't like the HDHP.

I have a feeling that sooner or later my company is going to stop offering the PPO plan and only offer the HDHP - especially considering that my company self insures.

[Diolla]

I considered it last year and will probably go for it next. The problem was that the premium for the regular health insurance went down making the spread not too attractive. Too much risk for what I would be saving.

I like the idea because it would let me set aside some to offset the higher costs of medical care/insurance when I retire. Since my employer would contribute to the HSA also it is the closest I will ever come to an employer match.

[MonkeyMama]

Yeah, we switched this year.

Funny enough, I was pretty anti-HDHP in recent years. We are a family of 4 and though we are healthy, it doesn't take much to run up a deductible to the max with 4 people, and small kids, etc.

But, like you, I noticed the HDHPs getting sweeter though, whereas our regular premiums have been completely unaffordable for a LONG while. This was the first year we felt comfortable making the jump. Of course, I went into it assuming we'd hit our deductible for the year. The year is young, but with an ambulance ride, emergency visit (not billed for either yet though was months ago) and dh just got a huge bill for a hearing test. Yeah, we'll probably pay the entire deductible. BUT it was cheaper than our insurance premiums last year (the premiums + deductible were cheaper). So I am rather pleased.

I find they are evolving to reward people who have cash reserves to pay for services, which sounds good to me. We have just been setting aside the saved insurance premiums to pay the deductible. IT has been rather advantageous that they are slower than molasses in billing. My son was rushed to emergency in an ambulance the first week of Feb. and I have yet to see a bill. More time to save up the cash.

OF course totally depends on the plan, they are all so different.

[Snave]

We went with the HDHP this past year. We ran the numbers and with what we put in the HSA it made sense. I want to say it is $1000 apiece with a max of $2000 for the 3 of us or something like that. We put the money in the HSA to cover this. Overall, it was a better deal from a net income perspective to do it this way.

[markusk]

If you are young and in good health, it makes sense.

If you have some type of chronic condition like diabetes, combo of high blood pressure and high cholesterol, multiple sclerosis, seizure disorder etc, HDHP is not a viable option.

[maat55]

Originally Posted by sweeps

It's open enrollment time at work again and I'm strongly considering the high-deductible plan for the first time. My employer keeps raising the premiums and the co-pays on the standard plan. Meanwhile they keep sweetening the deal on the HDHP/HSA.

It's a bit of a gamble because if we have to go to the doctor a lot (or especially the hospital) I could end up losing a bit. But the upside if we don't use a lot of healthcare is huge. Plus being able to invest the HSA funds is a bonus.

Anyone opting for their HDHP instead of their standard health plan?

Usually, your lower payment will cover your doctor visits. If your healthy, you may even save money, in the HSA, for later retirement medical costs. Only you know your family medical needs, but for healthy families, they are the way to go if it can lower your payment enough.

[disneysteve]

I've wanted to switch for a couple of years now, but the insurance industry in NJ is so screwed up. Premiums for the HDHP plans were same or more than for traditional plans so it made no sense at all. I'm hoping that next time around, that will have been corrected. I'd love to get an HSA and be able to pay stuff with pre-tax money. It would save a lot.

[jIM_Ohio]

I am HDHP (with HSA) and wife is on her own health plan with kids from her employer.

I have asked coworkers about this prior to enrollment (check YOUR plan)- well visits are FREE, immunizations are FREE, and my employer contributes to my HSA regardless of what I do ($750 each year). Our deductable is $1500, if I go 1 year without an expense, nothing out of pocket for me- prior to deductable kicking in (then it's 20-80 until out of pocket max of around 5k).

[MonkeyMama]

Originally Posted by disneysteve

I've wanted to switch for a couple of years now, but the insurance industry in NJ is so screwed up. Premiums for the HDHP plans were same or more than for traditional plans so it made no sense at all. I'm hoping that next time around, that will have been corrected. I'd love to get an HSA and be able to pay stuff with pre-tax money. It would save a lot.

Our HDHP plan would have been terrible last year Steve - why the whole thing was kind of lost me. So I was really surprised when our insurer really revamped it this year. We are coming out way ahead this year (after years of wondering how the heck we could afford another insurance increase - our premiums had been going up 15% - 40% every year).

I would be optimistic that they will get better, for you. Maybe give it a year or 2.

The HSA rules have gotten a lot better in recent years too. Our family deductible is $3k and qualifies as a HDHP. I think in years past we would have had to have a $6k deductible to qualify as a HDHP and be able to use a HSA. So it is improving all around. A $3k deductible is much easier to stomach.

[scfr]

We switched to a HDHP w/ HSA in November and so far are very happy with our decision.

DH is self-employed and we pay for our own health insurance, we are in good health, and we have no children. Given our circumstances, it was clearly the best choice for us. We cut our health insurance premium by $321 per month, which makes it easy to fund our HSA (especially considering the HSA contributions are pre-tax).

After blogging about making my decision, I put together some "Cliff Notes" on good sites where you can learn more:

HDHP & HSA Cliff Notes: Scfr's Personal Finance Blog

I think the David Bach article is an especially good place to start:
Yahoo! Personal Finance: Calculators,Money Advice,Guides,& More

[sweeps]

Definitely if you don't have kids and are in good health, it's a slam dunk. That's not my scenario.

Since I do have young kids and you have the inevitable doctor visits, it's not so easy. There are a lot of factors to take into consideration. Rounding off the numbers, if I go with the standard health plan, I will spend $4000 on premiums alone. With the HDHP, I will spend $1000 on premiums (after subtracting how much my employer will put in my HSA). You also have to consider the co-pays you still have to pay with the standard plan.

Am I missing something here? Is there a disadvantage if I put $6,000 in a HDHP/HSA vs. putting $6,000 in a standard plan with a flexible spending account? Both ways are fully tax deductible. But I could potentially end up with money left over in my HSA in the first case.

[scfr]

It has been ages since I had a FSA, so I am really out-of touch with the current rules, but here are some things you may want to think about:

- What sort of coverage would the HDHP plan offer after the high deductible has been paid. [With the plan we got, the post-deductible coverage is outstanding, much better than a lower deductible plan, so it was really a question of "could we handle the deductible on our own"?]

- What expenses are you currently paying for from your FSA? Will they be covered by a HSA? If my memory is correct, FSAs cover several expenses that HSAs do not (for example, perhaps pertaining to your situation, daycare).

- What is the max you can contribute to the FSA vs HSA? (For 2008, the max contribution to a HSA is $5,800, and the max would be prorated depending on how many months you had the HDHP)

- Where would you have your HSA? Do you get to choose, or does your employer specify where it has to be? What interest rate would you earn, and is there a monthly or annual fee (or other fees such as setup fee)? We found the interest rates paid to be quite a bit lower than the typical MMA, and some HSA providers provided rather high maintenance fees. But I have heard that some employers get special fee waivers for their employees. And while the interest rate paid may be low, if a FSA is paying 0% interest, any interest earned is better than nothing.

- Can you have both a HSA and a FSA? [I don't know if the law allows it, but if it does, does your employer allow it?]

- The HSA certainly offers advantages such as:
- Being able to carry it over to subsequent years (if your kids just needed routine care for several years but then one year one had a more serious illness or needed surgery, you might have a big cushion built up in your HSA. Unlike a FSA, you don't have to "use it or lose it.")
- Your HSA should be portable ... In other words, if you move to a different employer, you should be able to move the HSA money.
- You don't have to fill out paperwork and wait for reimbursement from your employer (that's what we used to have to do with our old FSA). Your HSA is like any other checking account ... You have checks and/or a debit card, and you just pay the provider with your HSA funds.
- Under current laws, if you don't use all of your HSA funds, when you reach retirement age those funds esentially become like an IRA.

I'm sure when there are kids involved emotions start to play a much bigger role, as in, "If something happens to one of them (God forbid), will they get the care they need?"

But to think of it as strictly a financial decision, it may be just like deciding whether or not to raise the deductible on your car insurance. If you can cover the deductible, you'll likely save money long-term. But if you can't cover the deductible, and a car accident would end up ruining you financially, it may not be worth the risk.

Good luck making your decision!

[jIM_Ohio]

HSA vs FSA differences

FSA is use it or lose it
HSA will allow unused money to rollover to next year
HSA also allows the money to be invested and compound when in HSA.

There are SOME expenses FSAs cover which HSAs (by law) do not. I think (check me on this) glasses/contacts and similar. Mt HSA has a vision plan (included at no charge), but I think glasses cannot be paid from HSA. I was given the choice of a "limited use FSA" to work with the HSA, but did not choose this (I wear glass and cAn SeE fiNE, btu smoetimes my spulleng is a lttile off). LOL

There was a 3 or 4 item bulleted list where FSA could be used and HSA could not during our benefits presentation.

Guessing: eye care, certain types of dental care, maybe psychiatrist care and maybe one other thing. These are SWAGs.

[sweeps]

I think I'm going to go with the HDHP/HSA. My employer contributes some money to my HSA, and I will max out the rest to the $5,800 limit. If my health expenses are relatively low, I'll have money to carry over to next year. If I blow through the whole amount, it's basically a wash.

[creditcardfree]

We don't have an HDHP option with the government, but if it came up I would go for it. I think that is the way healthcare is headed. It will put money back in consumers pockets and make them the decision maker when paying for health care costs...well to some degree. Power to the people!!

[LivingAlmostLarge]

Depends, DH covers the two of us for $80/month PPO plan. HDHP isn't even offered. And it'd have to be dirt cheap to beat what we have. We don't even get close to our $1k deductible. We spend $1200/year in a FSA on contacts, chiropractor, birth control. And our coverage is ridiculous. Scrips are $10, office visits $10, etc.

Granted it's worse than what we had 3 years ago where everything was free including DH's portion of the premium, but for now it's fine.