Yet Another Post About Health Insurance

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Mr. Meow
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Joined: Thu Jun 20, 2013 4:38 pm

Yet Another Post About Health Insurance

Post by Mr. Meow »

We get health insurance through my wife's employer, who will be offering two plans for 2015, both of which are HDHP/HSA.

HDHP Regular
Annual Premium: 171
Deductible: 5500
Employer Contribution to HSA: 1000
Coinsurance: Pays 80% after deductible
Out of Pocket Max: 11,900

HDHP Plus
Annual Premium: 1076
Deductible: 3000
Employer Contribution to HSA: 1400
Coinsurance: Pays 80% after deductible
Out of Pocket Max: 7500

Which one would you choose? I tried to graph the difference, with total medical costs on the X-axis and our costs (including premiums) on the Y-axis. Based on this, it looks like the HDHP Plus plan will work out better unless our medical costs are low next year (the break-even point is at about $3600 in medical expenses). Am I thinking about this correctly? I have not taken taxes into account; we should be in the 25% bracket (though toward the low end).

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Lastly, my wife and I are healthy, but we have an infant so I am assuming there will be some sick visits for him. Also, I expect there is a good chance we will try to begin conceiving another child sometime in spring or summer 2015, so that would involve prenatal care during 2015, but probably not a delivery until the following year.

Thanks in advance for your feedback.
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nisiprius
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Re: Yet Another Post About Health Insurance

Post by nisiprius »

Insurance is state-regulated so the rules aren't uniform nationwide, but:

Aren't they required to disclose their medical loss ratio (the percentage of premiums that are paid out in claims?)

If so, the medical loss ratios for the two plans would be a very relevant piece of information. It wouldn't help you compare the true insurance aspects (tail risk, catastrophic risk) but it would be a pretty good guide to how good they are as prepaid plans for covering relatively small, relatively predictable expenses.
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interplanetjanet
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Re: Yet Another Post About Health Insurance

Post by interplanetjanet »

Mr. Meow wrote:We get health insurance through my wife's employer, who will be offering two plans for 2015, both of which are HDHP/HSA.
Then the premiums are most likely paid for using pretax dollars, so the Plus plan may come ahead in an even greater region - you should probably correct for this by multiplying your premiums by (1-marginal tax rate) first.

I would probably pick the Plus plan; even when it doesn't come out ahead it's not really that far behind.
Bfwolf
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Re: Yet Another Post About Health Insurance

Post by Bfwolf »

I think you've got the general gist right. Your tax bracket would impact things somewhat: the premiums are tax deductible (in favor of the HDHP plus). And then there's the opportunity cost of how much you can invest in the HSA on top of your company contribution (in favor of the HDHP). But overall, yes, if your costs are low, the HDHP will be better, and if your costs are high, the Plus plan will be better.
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