Help me choose my health plan? HSA being offered.

[BuckyBadger]

We need to make a decision by the end of the week if we want to switch to the high deductible plan with the HSA, or stay with the traditional plan we have now. I was hoping to get some advice on what would be better for us. These are the facts about the plans. I have the paperwork in front of me, so let me know if there are any questions about anything. This is the first time this has been offered, so I'm not really sure what is the better idea.

Old plan (family, in network)

Monthly employee contribution: $229 ($2748 yearly)
Annual deductible: $500 (applies for medical only - no deductible for prescription drugs)
Co-insurance: plan pays 90%, you pay 10%
Prescription drug coverage: you pay co-insurance based on the type of drug and supply
Annual out-of-pocket maximum: $5,000


HSA plan (family, in network)

Monthly employee contribution: $174 ($2088 yearly)
Annual deductible: $2,500 (applies for both medical and prescription drugs)
Co-insurance: plan pays 90%, you pay 10%
Prescription drug coverage: you must meet annual deductible before co-insurance applies
Annual out-of-pocket maximum: $5,000

Company will put $1,100 into your HSA
Employee may put in up to an additional $5,150 a year (for family)


General health:

No children
No major health concerns
I'm 31, he's 32
He usually goes to the dermatologist once a year to have his moles checked
Only prescription is a brand name birth control at ~$40/month
I wear contacts, he wears glasses
Go to yearly dental and general health checkups

Other points of interest:

We (together) net $230,000 yearly and max out 401k/403b plans (Part of my $16,500 goes to a Roth 403b)
This is his plan, he makes $100,000, I make $130,000
We are not longer eligible for Roth IRAs directly, but will do $10,000 of backdoor Roth IRAs until we can't any more, then the $10,000 will go into taxable investments
We put an additional $26,000 into taxable investments a year ($1,000 per pay period)
If we put the max into the HSA we would probably put a less into the taxable investments
Only debt is ~$205,000 on mortgage

[riverwed070707]

My general opinion of HSAs is that if you are generally healthy (no kids helps because kids go to the doc a lot more than adults), get regular preventative care and can manage your money well enough to cover your deductible as needed that the HSA is the financially smarter way to go. Of course things come up, but if your max OOP is the same on both (which is awesome BTW, it's usually higher for the HSA) than there is no risk in going for the HSA option. If you don't go that route, you're missing out on potential tax-free savings.

It's essentially going to cost you $988/year for the HSA plan (your contribution less company contribution). Everything else is just a savings for expenses that you can carry over year to year if you don't use it.

Also, one thing most people don't know about HSAs is that preventative care is covered at 100% -- you don't pay toward your deductible like a sick visit. So your DHs dermatologist visits should be covered, annual physicals, regular OB appointments, etc. Not sure if they are all that way, but mine doesn't even have a co-pay.

[MonkeyMama]

I don't think the health insurance alone is a good deal. We switched to a HDHP because the overall costs were less than our prior insurance. (Even if we maxed out deductible every year, were saving money).

Don't get too caught up in your health. You need to figure if you get cancer tomorrow, would you still choose the HDHP plan? If not, maybe you shouldn't. (A number of people told me they switched to HDHP, then had one ambulance ride/emergency visit and couldn't afford it. As a cautionary tale. We couldn't be healthier and have maxed out our deductible every single year since we switched - we both had unexpected surgery, etc. & I think we did the ambulance/ER thing not long after we switched over - it's a curse! IT was cheaper than our old plan, overall, so no matter for us. We probably came out far ahead going to the HDHP before our own run of bad luck. But I know a lot of people who didn't choose so wisely).

All of that aside, in your shoes I would consider the HSA plan for the tax break. Just keep in mind that once you switch it is hard to go back. (If you do get sick or something and can't switch back to fuller coverage). So, to take another health plan just for the tax break is not something I advise, overall. BUT, in this case the plans seem pretty similar and you have the cash to cover any deductibles, easily. I would absolutely switch and max out the HSA every year. It essentially becomes a backup retirement account (if you don't use for medical expenses, it is treated like an IRA - often called a medical IRA). The tax break is nice for someone in your situation. (I'd use some of those taxable investment contributions to max out the HSA every year).

[cypher1]

As MonkeyMama said, this year I changed to HDHP with HSA for mainly tax reasons. While I consider myself fairly healthy, several months ago I had to go to ER which cost me just over 1200 OOP. While I don't factor my HSA as part of my EF, it was nice to not pay directly out of cash savings. So if you're fairly healthy, have no kids, and want another tax savings option, I'd definitely recommend HSA.

[dmontngrey]

Interesting... makes me wonder if you work for the same company my hubby does as this plan information is IDENTICAL.

I really like the HDHPs with HSA myself. I work in benefits, so I understand how these plans work. Even with me being so anti-doctor and DH being a hypochondriac, I think they're great! I would have been all over this HDHP if I had ANY confidence he'd stay with his job. As such, I need to add him to my plan to avoid paying 2 deductibles next year (by switching plans mid-year). My plan costs more than 2x his in premiums, but pays 100% medical after the deductible. With all the medical expenses I expect he'll have next year, they will work out to be almost the same price.

Good luck with your decision. It's not an easy one - too many variables!

[BuckyBadger]

Interesting... makes me wonder if you work for the same company my hubby does as this plan information is IDENTICAL.

I really like the HDHPs with HSA myself. I work in benefits, so I understand how these plans work. Even with me being so anti-doctor and DH being a hypochondriac, I think they're great! I would have been all over this HDHP if I had ANY confidence he'd stay with his job. As such, I need to add him to my plan to avoid paying 2 deductibles next year (by switching plans mid-year). My plan costs more than 2x his in premiums, but pays 100% medical after the deductible. With all the medical expenses I expect he'll have next year, they will work out to be almost the same price.

Good luck with your decision. It's not an easy one - too many variables!

Does your hubby work for a multinational Dutch company known for televisions, consumer electronics and, um, lightbulbs?

[dmontngrey]

Does your hubby work for a multinational Dutch company known for televisions, consumer electronics and, um, lightbulbs?

Ding ding ding... I think we have a winner!

That's rather scary I was able to identify it by the health plan.

[JoshuaHeckathorn]

Go with the HSA, sock away as much cash as you can, and pay for any minor medical expenses throughout the year out of pocket. If you can get by without touching your HSA at all, that's great. My situation is similar to yours and I've never looked back since switching to a HDHP/HSA several years ago.

If you ever plan on having kids, make sure you really do your research well in advance. Most HDHPs don't offer maternity care these days, so you'll really need to do some digging to find a plan that works.

[BuckyBadger]

As I see it, my worst case scenario is $2088+$5,000-$1,100 = $5988, which is actually more like $4200 when you consider the tax implications. This could easily be paid for if needed by decreasing the additional money outside of 401k and IRAs that we are already saving. If we DON'T have any significant issues, that money will be useful in the future, and essentially our first $1,800 in medical expenses are free when you consider the money his company contributes and the difference in monthly premiums between the two plans.

I signed us up for the high deductible plan last night and selected the maximum contribution to the account. Now we'll just keep our fingers crossed that our health continues to be as good as it has been.

[riverwed070707]

NM. I figured it out.

[dmontngrey]

I think you made a good choice. It's a gamble, but certainly one I would do myself. I did that for 2011 and it has paid off nicely I think. I'll have an HSA fully funded (single amount) by the end of the year. This will cover our deductible for next year and then some. I can't complain.

Hopefully you won't face worse case scenario, but at least you have planned for it!