HDHP X2 just to get the HSA contribution?

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fulltilt
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HDHP X2 just to get the HSA contribution?

Post by fulltilt »

Currently, my wife and I have health insurance through her work. It is a comprehensive plan which covers our entire family (zero kids at the moment, but we are planning for kids in the very near future). The premium is fully paid by her employer. The cost sharing amounts are:
$25 copay per office visit.
$1200 Deductible
$2700 Deductible Coinsurance Max.

They offer a HDHP Plan with an HSA contribution as follows:
$1,592.88 HSA contribution per year through her employer.
$3000 deductible
$3000 coinsurance max
$6000 out of pocket max

The premium is fully paid by her employer.

Here is where it gets interesting.

I have a HDHP plan available through my employer.
The cost sharing amounts are $5k/$5k/$10k, my employer contributes $3500 the HSA, plus i have option of an additional $1500 HSA contribution if i satisfy some other criteria (trivial things like logging into a website to track my blood pressure once a year). The premium is $140 a month.

Could we change her plan from the comprehensive plan to the HDHP at her work, and have me pay the $140 a month for a second HDHP plan just to get the HSA contributions?

I am just wondering if this would work in theory, or whether i am missing something.
Walk a single path, becoming neither cocky with victory nor broken with defeat, without forgetting caution when all is quiet or becoming frightened when danger threatens. -- Jigoro Kano
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FNK
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Re: HDHP X2 just to get the HSA contribution?

Post by FNK »

Sounds like a good plan, especially if your health is OK. Just be prepared to cover the out of pocket costs on both plans should disaster strike. Also, look over the fine print.
mnvalue
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Re: HDHP X2 just to get the HSA contribution?

Post by mnvalue »

Basically, you're considering paying $140 * 12 - $1,500 = $180/year^ to be able to contribute 2 * $3,250 - $1,500 = $5,000 to the HSAs instead of a taxable account. Obviously, for you to be considering this, you're maxing out all available 401k and deductible IRA contributions that you have access to, right? (Those wouldn't require you to pay anything to get the deduction, so they're better.) If so, then you need to consider how much the tax savings on $5,000 are versus the deductibles. I'm guessing one year of high expenses would undo all of the savings and then some.

^ This isn't quite accurate, as the premiums would be after-tax money, right? So the costs are actually a bit higher.
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FNK
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Re: HDHP X2 just to get the HSA contribution?

Post by FNK »

My understanding is that he's paying $180 pre-tax so the employers contribute $1592+$5000 tax-free, i.e. free money.
gerrym51
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Re: HDHP X2 just to get the HSA contribution?

Post by gerrym51 »

I am not an expert but what if insurers want co-ordination of benefits in payouts. if you have 2 insurances and you have big medical bills what if you must exhaust both insurances deductibles before they will actually pay out?
mnvalue
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Re: HDHP X2 just to get the HSA contribution?

Post by mnvalue »

Ah, right. I missed the $3,500 employer contribution. So the OP comes out $3,320 ahead per year, less the difference in deductibles if/when big expenses hit.
gerrym51 wrote:I am not an expert but what if insurers want co-ordination of benefits in payouts. if you have 2 insurances and you have big medical bills what if you must exhaust both insurances deductibles before they will actually pay out?
Nobody would have two policies would they? It'd be two single policies, right?
gerrym51
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Re: HDHP X2 just to get the HSA contribution?

Post by gerrym51 »

mnvalue wrote:Ah, right. I missed the $3,500 employer contribution. So the OP comes out $3,320 ahead per year, less the difference in deductibles if/when big expenses hit.
gerrym51 wrote:I am not an expert but what if insurers want co-ordination of benefits in payouts. if you have 2 insurances and you have big medical bills what if you must exhaust both insurances deductibles before they will actually pay out?
Nobody would have two policies would they? It'd be two single policies, right?

he said second plan-?-would they both be covered on each others plans-or his he talking about each buying their own plan.

insurances do have rules about COB. one is primary one is secondary-if they are both covered under each others plans hers she is primary he is secondary. on his he is primary she is secondary.

insurance coordination of benefits sometimes boggles(pun intended) the mind. :mrgreen:
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fulltilt
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Re: HDHP X2 just to get the HSA contribution?

Post by fulltilt »

gerrym51 wrote: ...
he said second plan-?-would they both be covered on each others plans-or his he talking about each buying their own plan.

insurances do have rules about COB. one is primary one is secondary-if they are both covered under each others plans hers she is primary he is secondary. on his he is primary she is secondary.

insurance coordination of benefits sometimes boggles(pun intended) the mind. :mrgreen:
We would all be double covered. I would have a family plan covering everyone, and she would have a family plan covering everyone. Her plan would be primary, and mine would be secondary because her cost sharing amounts are much better. So, i would be essentially buying HSA money with my insurance premium.

At one time, i had my own single plan and was covered by her plan as well so i was double covered. Everything seemed to work properly as far as i could tell. It was just a waste of money for the single plan.

I asked my employer if they would be a mench and just give me the HSA contribution at the single rate if my wife had a HDHP, but they declined. :twisted: If i want the HSA money, i have to enroll in a plan at my employer.
Walk a single path, becoming neither cocky with victory nor broken with defeat, without forgetting caution when all is quiet or becoming frightened when danger threatens. -- Jigoro Kano
gerrym51
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Re: HDHP X2 just to get the HSA contribution?

Post by gerrym51 »

if you have your own plan can you make yours secondary for you? is that possible. when you had your own single plan was yours primary for you.
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fulltilt
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Re: HDHP X2 just to get the HSA contribution?

Post by fulltilt »

gerrym51 wrote:if you have your own plan can you make yours secondary for you? is that possible. when you had your own single plan was yours primary for you.
Essentially, yes (At least with comprehensive plans). When you go to the doctor, you give them both insurance cards and tell them which one you want to submit as primary. In that past, my individual plan was secondary, and my wife's plan was primary.
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archbish99
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Re: HDHP X2 just to get the HSA contribution?

Post by archbish99 »

gerrym51 wrote:if you have your own plan can you make yours secondary for you? is that possible. when you had your own single plan was yours primary for you.
From what I've read, the person who is the primary insured (i.e. the employee for whichever plan) gets that plan used as primary for them, and the spouse's becomes secondary. However, I think where the plans have differing levels of coverage, there may be another rule there. Either way, rest assured, it's not left to your discretion on a per-bill basis.

The other issue you'll have is that, if you get the additional contribution from your employer, the total between the two may exceed the maximum HSA contribution slightly. You'll probably have to ask one of the HSA custodians to do a return of excess contributions and count it as taxable income; if they don't see the excess contribution, they may or may not give you hassle about that. If the additional amount comes in chunks for each activity you complete, you might just save hassle and not complete one of the activities.
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FNK
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Re: HDHP X2 just to get the HSA contribution?

Post by FNK »

fulltilt wrote:We would all be double covered. I would have a family plan covering everyone, and she would have a family plan covering everyone.
The IRS appears to be OK with that (http://www.irs.gov/pub/irs-pdf/p969.pdf - Other health coverage. You (and your spouse, if you
have family coverage) generally cannot have any other
health coverage that is not an HDHP.) But make sure both HR departments are OK too.
SimonJester
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Re: HDHP X2 just to get the HSA contribution?

Post by SimonJester »

My employer spells this out, they state your spouse must use their employers plan as primary and you can submit any left overs to its plan. They also state if you spouse is offered insurance at all your spouse MUST go on their employers plan or you face termination of employment. Nice huh...

New for this year the wife's plan required everyone to submit urine and blood samples back in March or face a double monthly premium. The wife didnt make it to the screening and now faces double premium. :oops:
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Topic Author
fulltilt
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Re: HDHP X2 just to get the HSA contribution?

Post by fulltilt »

archbish99 wrote:
gerrym51 wrote:if you have your own plan can you make yours secondary for you? is that possible. when you had your own single plan was yours primary for you.
From what I've read, the person who is the primary insured (i.e. the employee for whichever plan) gets that plan used as primary for them, and the spouse's becomes secondary. However, I think where the plans have differing levels of coverage, there may be another rule there. Either way, rest assured, it's not left to your discretion on a per-bill basis.
This appears to be accurate. In the Summary Plan Descriptions, they spell this out under Coordination of Benefits.

It appears that for me to get the HSA contribution, my plan would be primary for me.

Looks like there is no free lunch on this one. I could get the match, but it certainly wouldn't be risk free.
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YttriumNitrate
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Re: HDHP X2 just to get the HSA contribution?

Post by YttriumNitrate »

fulltilt wrote:Currently, my wife and I have health insurance through her work. It is a comprehensive plan which covers our entire family (zero kids at the moment, but we are planning for kids in the very near future).
Sounds like you've got some larger medical bills on the horizon and it might not be an optimal time to switch to a high deductible plan.
Topic Author
fulltilt
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Re: HDHP X2 just to get the HSA contribution?

Post by fulltilt »

YttriumNitrate wrote:
fulltilt wrote:Currently, my wife and I have health insurance through her work. It is a comprehensive plan which covers our entire family (zero kids at the moment, but we are planning for kids in the very near future).
Sounds like you've got some larger medical bills on the horizon and it might not be an optimal time to switch to a high deductible plan.
If we do have kids, and they are double covered, then the primary insurer would be my plan (the worse of the two) because my birthday falls before my wife's birthday in the calendar year (both SPDs agree on that). That basically kills the idea entirely.
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archbish99
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Re: HDHP X2 just to get the HSA contribution?

Post by archbish99 »

fulltilt wrote:If we do have kids, and they are double covered, then the primary insurer would be my plan (the worse of the two) because my birthday falls before my wife's birthday in the calendar year (both SPDs agree on that). That basically kills the idea entirely.
Why? Looks like COB can vary by plan and by state, but if your plans are something like this:
  • Primary: Deductible of $5000, 20% coinsurance thereafter
  • Secondary: Deductible of $3000, 10% coinsurance thereafter
Then wouldn't your ranges of payments would be:
  • $0-$3000: Deductible for both, you pay 100%
  • $3000-$5000: Deductible for primary, secondary pays 90%, you pay 10%
  • $5000+: Primary pays 80%, secondary pays 18% (90% of 20%), you pay 2%
(Until at some point you hit the out-of-pocket max for one of the plans, obviously.)

Or is it worse than that?

ETA: Looks like it's not the same as Medicare + Supplement. The secondary plan pays the difference between what the first plan paid and what they would have paid. So ranges are:
  • $0-$3000: Deductible for both, you pay 100%
  • $3000-$5000: Deductible for primary, secondary pays 90%, you pay 10%
  • $5000+: Primary pays 80%, secondary pays 10%, you pay 10%
Still, you're never any worse off than you would be with either plan alone, regardless of order, and it looks like it's actually better to have the worse plan be primary, because otherwise the secondary will never pay anything.
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fulltilt
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Re: HDHP X2 just to get the HSA contribution?

Post by fulltilt »

archbish99 wrote: ...
Still, you're never any worse off than you would be with either plan alone, regardless of order, and it looks like it's actually better to have the worse plan be primary, because otherwise the secondary will never pay anything.
I am not sure i follow your logic. If my wife's plan were primary for all parties involved, then our out of pocket maximum would $6000. That is the best case. The second best case would be if she and any kids were on her plan. Their out of pocket max would be $6k. Lets say that my out of pocket max on the other plan is $5k. That would be an out of pocket max of $11k. (I say that my max would be $5k rather than $10k because i think there is a limit if one person under a family plan uses a lot of services, there is some kind of cap). The worst case is if she was on her plan for $6k out of pocket max, and $10k for me and any kids for $16k out of pocket max.

This is not considering any premiums or HSA funds...

Does that seem right?
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tadamsmar
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Re: HDHP X2 just to get the HSA contribution?

Post by tadamsmar »

I don't think you and your employer could put a total of $5000 in your HSA.

The wife gets a $1,592.88

Total = 6592.88 which is greater than the 6450 family maximum.

Not sure about he rules for this kind of double coverage arrangement.
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archbish99
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Re: HDHP X2 just to get the HSA contribution?

Post by archbish99 »

fulltilt wrote:I am not sure i follow your logic. If my wife's plan were primary for all parties involved, then our out of pocket maximum would $6000. That is the best case. The second best case would be if she and any kids were on her plan. Their out of pocket max would be $6k. Lets say that my out of pocket max on the other plan is $5k. That would be an out of pocket max of $11k. (I say that my max would be $5k rather than $10k because i think there is a limit if one person under a family plan uses a lot of services, there is some kind of cap). The worst case is if she was on her plan for $6k out of pocket max, and $10k for me and any kids for $16k out of pocket max.

This is not considering any premiums or HSA funds...

Does that seem right?
You're certainly correct if you split up coverage and each only covered yourselves. I don't think it works that way if you're all covered under both plans, but again, I don't claim to be an expert on COB, and I think the exact mechanics vary by state anyway. Her plan is $3k deductible, $3k max coinsurance. Your plan is $5k deductible, $5k max coinsurance. If you go with either plan by itself, your maximum cost is obvious -- $6k for hers, $10k for yours. But I think with the two together, your maximum cost is still $6k -- the only difference is which plan pays how much at any given time.

If you have both together, then once you're past the $3k deductible, her plan should be paying something regardless of whether it's primary or secondary. If you hit the out-of-pocket max on her plan, it should pay everything from that point on, whether it's primary or secondary. So for example, after you've gotten past her plan's OOP max:
  • If she incurs an expense, her plan is primary and pays 100%
  • If you (or future kids) incur an expense, your plan is primary and pays a portion if you're past your deductible. Her plan, as secondary, pays the balance at 100%.
Now, that said, you might get more authoritative answers by starting a new thread specifically about COB between two HDHPs with different limits, and call that out in the thread title. If I'm wrong, hopefully someone can help us both understand better.

If I'm right, then the evaluation is simple -- the cost of the (unnecessary) second plan at $1680 versus the $3500-$5000 your employer would contribute. And the hassle of extra paperwork dealing with secondary insurance, of course. (And the hassle of sorting out the over-contribution that would result if you got the full amount, as has already been mentioned.)
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