HDHP/HSA - In What Situations Do You Lose Money?

I've been messing around with my companies benefit calculator, and although I've messed around with various scenarios (none of which I expect to happen), I can only ever get the difference in cost between the PPO and HDHP to be about $2000. I think this is because after the deductible, they become about the same price.

Are there situations where a free HDHP+$1200 contribution HSA might cost more over the course of a year than a $1785 per year PPO?

The PPO is better if you are sick, need a procedure, or have on-going medical issues.

HSA is out of pocket. The insurance part of the HSA route pays almost nothing until your deductible is met. If you are healthy, the HSA is not a bad way to go.

If you stay healthy, that $1,200 a year you put in the HSA is yours to use in the future. While the PPO insurance payment is a sunk cost.

I did the comparison for my plan choices and the HDHP was better in all cases compared to the top PPO.

It helps that the company kicks in approx half the deductible towards the HSA. There is also a safety factor built in, my max out-of-pocket of $5000 (after which they pay 100%).

So even if I reach the max OOP the HDHP is still cheaper than the PPO when I figure in premiums, copays, and other costs.

Each plan is different so you need to do the math based on the details like, max OOP, do RX count towards deductible, are all DRs you see in network, etc.

Double check your math and then trust what the numbers tell you.

jstand wrote: I did the comparison for my plan choices and the HDHP was better in all cases compared to the top PPO. It helps that the company kicks in approx half the deductible towards the HSA. There is also a safety factor built in, my max out-of-pocket of $5000 (after which they pay 100%). So even if I reach the max OOP the HDHP is still cheaper than the PPO when I figure in premiums, copays, and other costs. Each plan is different so you need to do the math based on the details like, max OOP, do RX count towards deductible, are all DRs you see in network, etc. Double check your math and then trust what the numbers tell you.

+1 what this guy said. I don't have the choice anymore but in the past there was always a window where a normal plan came out ahead. Otherwise if you spend little or you spend a lot...the HDHP+HSA won.

+2. If you are reasonably healthy then I like the HSA. I treat it like a tax free savings account for medical stuff. Personally, I max-out the contribution at about $3200/year. The money can also be spent on dental work, glasses, etc.

I had the choice and went HSA.

It totally varies by company, you need to run the numbers. Put together a spreadsheet and run multiple scenarios through it, one for little-to-no-medical expenses, one for some medium case (perhaps take the expenses from last year), and one for a major medical expense costing as much as a new M3.

At my employer, for the plan I'm looking at (employee+spouse+kids), the HSA wins hands-down in all three of those scenarios. That's likely because my employer is adjusting how much they subsidize the various plans to encourage people to get the HSA, though.

Make sure the HSA is the kind where the money stays in your account from year to year. There's a kind where any HSA contribution you make but don't use in a given calendar year just disappears. At least there used to be.

Duke wrote: Make sure the HSA is the kind where the money stays in your account from year to year. There's a kind where any HSA contribution you make but don't use in a given calendar year just disappears. At least there used to be.

What you are referring to is a "Flexible Spending Account" or FSA. Those are "use-or-lose". The advantage of those is you get the money up-front so if you know you have a big bill coming in the beginning of the year, you can use the FSA money and pay it back over the rest of the year. Those are very popular for families with kids since you are pretty much guaranteed to spend it.

An HSA is simply a savings account. You put money into it each pay check and it builds over time. It is a permanent account (NOT use-or-lose) and stays with you forever even if you change plans or change jobs.

jstand wrote: Double check your math and then trust what the numbers tell you.

I guess this is the tough part. We're so used to this idea that paying $125 a paycheck and paying $20 for a doctors visit is cheaper than paying $125 for the doctors visit once every 6 months. I need to trust the numbers and it seems like no matter what happens, we're saving anywhere between $2000 to $5000 or more.

Also, pay attention to how your doctors office codes your visits.

If its coded as a "Preventative" visit, like an annual physical, it is typically covered 100% along with any associated testing and will be paid in full by the insurance.

But if the same appointment and testing is coded as a "Sick" visit, then it wouldn't be covered and you will have to pay for it.

Personally I think plans should make 4 doctors visits a year free.

I hate that I can't mention any pain or discomfort during a "Preventative Visit" or else it becomes diagnostic. Preventative should be just that, prevent me from getting more sick or ignoring something because I don't think its a big deal.