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How much is an HSA worth when choosing Health Insurance plan?

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  • How much is an HSA worth when choosing Health Insurance plan?

    I'm choosing between two options for health insurance that will cover my spouse and myself.

    Option 1 is a CDHP that allows an HSA, and Option 2 is a traditional plan that does not. Option 1 as expected has higher deductibles than Option 2 (Medical deductible $1,400 vs $250 per person, $2,800 vs $750 per family; Medical out of pocket limit $6,850 vs $2,000 per person, $8,400 vs $4,000 per family). They are otherwise pretty much the same in % coverages for most purposes.

    However, the premiums for these plans are quite similar, Option 1 (HSA eligible) is only $40 cheaper per month than Option 2. We don't really use much in the way of health care currently so I'm still considering the HSA eligible plan, but I had imagined the premiums would be more discrepant, and am wondering if perhaps the lower deductible plan is a better deal. No kids currently but anticipate they are on the horizon in the next 1-5 years.

    Does one of these options stick out as a clear winner?

  • #2
    If you want to see which one is the clear financial winner you can make a spread sheet and run different scenarios between the plans such as having no medical expenses, some medical expenses, and reaching your OOP limits. Don't forget to take into account any tax savings of having the HSA. As a rule of thumb, I generally support the HSA plan in those who do not consume much medical care but the numbers can certainly change that.

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    • #3
      The premium will save $480 and the hsa tax savings will save roughly $2800 in that year alone, so if you can manage under that much in healthcare, the hdhp is still the best choice. Most preventative stuff is covered anyways.

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      • #4
        Keep in mind that the HSA not only creates positive cash flow in the year you make a contribution but in all future years.  Your marginal investment otherwise is presumably a taxable account.  $7,000 x (int/div %) x tax rate = savings this year.  Next year your savings is $7000xgrowth x (int/div%) x tax rate.  And so on.  And of course the savings on the withdrawal.

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        • #5
          Having a baby can get you to your deductible quick. It likely will not get you to the OOP max.  You can investigate what these costs would be.  You can always change it back the year you want to have kids.

          It is nice to have the HSA as early as possible for that tax free growth.

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