HDHP/HSA or 0 deductible ppo?

[Rotish]

My employer offers both. Have a family of 4, all healthy, but do always have some occasional health related costs pop up every year.

The premium difference is about 200/month more for the ppo.

Deductible for hdhp is 3k, then 90% coinsurance. 10k max out of pocket.

Deductible for ppo is 0, just the usual copays.

The PPO seems like a much better option...but I know everyone loves hsa's. Is the HSA worth getting the seemingly more expensive plan?

[DMFA]

Rotish wrote:

My employer offers both. Have a family of 4, all healthy, but do always have some occasional health related costs pop up every year.

The premium difference is about 200/month more for the ppo.

Deductible for hdhp is 3k, then 90% coinsurance. 10k max out of pocket.

Deductible for ppo is 0, just the usual copays.

The PPO seems like a much better option…but I know everyone loves hsa’s. Is the HSA worth getting the seemingly more expensive plan?

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The HDHP should still cover preventive services for free.  IDK if the PPO does that or not.  The $10K out-of-pocket max is fairly good, tbh.

Remember, you're already spending $2,400 more with the PPO.  The HSA (assuming full contribution of $6,750 and 33% bracket) will save you $2,227.50 on taxes, so you're at $4,627 in savings if all you do is your preventive visits under the HDHP (and even more if you have a state tax deduction or are in a higher bracket).  You'd have to hit the entire deductible plus $1,327 in out-of-pocket expenses (basically run up $16k worth of bills) for it to lose its simple annual costadvantage over the PPO, and that doesn't even take into account the HSA's growth over time, no capital gains or dividend tax, and should you use it on healthcare, no tax at withdrawal.

Should a catastrophe occur and you hit your $10,000 OOP max, then you're *still* only out most of your HSA contribution: negative $10,000 in expenses, plus the $2,400 you saved in premiums, plus $2,227.50 you saved in taxes, means you're just out $5,372.50, which is less than you would have contributed to the HSA as it was, if you want to consider it money "lost" out of your daily account.  Of course, you could use the pre-tax dollars in the HSA to cover that amount (which would still bring you out ahead given what you'd have saved on premiums and taxes), or you could use your other post-tax dollars and leave the principal in your HSA to grow over time.

This is why HDHPs are so popular despite PPOs having better coverage on the surface: if you max an HSA along with it, it is superior.

[Rotish]

sure, if you don't have anything but preventative visits it's a no brainer. But I imagine most years meeting our deductible. for instance, this past year we would have met our deductible with a single ER visit for one of our kids. The year before, that same kid needed 2-3k worth of a super expensive cream (covered by insurance) to get rid of a nasty rash.

If we're meeting the deductible most years (or every year), is it still worth it?

[DMFA]

Rotish wrote:

sure, if you don’t have anything but preventative visits it’s a no brainer. But I imagine most years meeting our deductible. for instance, this past year we would have met our deductible with a single ER visit for one of our kids. The year before, that same kid needed 2-3k worth of a super expensive cream (covered by insurance) to get rid of a nasty rash.

If we’re meeting the deductible most years (or every year), is it still worth it?

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I beg your pardon, but I don't know what else to say other than to see my math above.

[Rotish]

Touché.

[spiritrider]

As pointed out by DMFA this is basically math exercise and gaming out out-of-pocket scenarios.

Premium difference + employer contribution + federal/state income and FICA tax savings vs. probable out-of-pocket costs.

Also, when you are paying more of the bill you tend to be a much better medical consumer. I'm not saying you shouldn't do everything possible for your spouse and kids, but maybe that expensive cream was not really any better than a generic version costing much less. Did you ask or just say "who cares the insurance company is paying it."

When I went on an atrocious Obamacare HDHP plan, I learned just how much of my out-of-pocket costs (especially prescriptions) were controllable to some degree. For instance, you never know what discounts for early payments you can get from providers. I usually got 10% - 20% just by asking.

 

 

 

 

 

[pulmdoc]

A 3k deductible and 10k OOP max is really good for a HDHP. Do double check and make sure it truly qualifies for an HSA; one of the avoidable kerfluffles with ACA exchange plans was that many had high deductibles but weren't HSA-eligible because they covered something other than preventive services. If it does, it becomes a math exercise factoring in the tax advantages. As long as you are able to cover the OOP max and do not have known chronic illness that will ring up bills in a hurry, the HDHP is likely the way to go.