Does HSA make sense for me?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
xrw1
Posts: 71
Joined: Wed Aug 22, 2012 5:24 pm

Does HSA make sense for me?

Post by xrw1 » Fri Oct 31, 2014 8:35 am

Hi everyone,

My company just started to offer HSA eligible health plan. I have an option between the HSA and an HMO plan. I tried to get a better understanding of the HSA but I am kind of lost if it makes sense for me to move to an HSA plan vs my HMO. Could you guys help me make sense of this. Thank you in advance.

HMO
Deductible: $ 500
Max out of pocket: $ 5350
Price I Pay per year: $951.63

HSA Plan
Deductible: $1500
Max out of pocket: $6350
Company does not contribute any money into my HSA
Price I pay per year: $280.07

Both plans have 100% same coverage after deductible is reached

In the past few years i have only gone to get my annual check up which is free for both plans and I have made on average 2 office visits.
Last edited by xrw1 on Fri Oct 31, 2014 8:57 am, edited 2 times in total.

niceguy7376
Posts: 2168
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Does HSA make sense for me?

Post by niceguy7376 » Fri Oct 31, 2014 8:36 am

List the premiums you would be paying for both plans as well.

User avatar
Chan_va
Posts: 772
Joined: Wed Dec 05, 2012 7:15 pm

Re: Does HSA make sense for me?

Post by Chan_va » Fri Oct 31, 2014 8:37 am

What are your premium's for the 2 plans? In general HSA's are great for people with low heathcare system usage.

asif408
Posts: 1504
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Does HSA make sense for me?

Post by asif408 » Fri Oct 31, 2014 8:37 am

What is the difference in premiums between the plans? In addition to the deductibles and OOP max you listed, you'll have to consider premium costs, tax savings to HSA, and total coverage (e.g., does one plan cover more).

xrw1
Posts: 71
Joined: Wed Aug 22, 2012 5:24 pm

Re: Does HSA make sense for me?

Post by xrw1 » Fri Oct 31, 2014 8:56 am

I have updated the first post.

As for the premium, I assume you guys mean how much will I pay for the plan per year.

an_asker
Posts: 2205
Joined: Thu Jun 27, 2013 2:15 pm

Re: Does HSA make sense for me?

Post by an_asker » Fri Oct 31, 2014 9:20 am

xrw1 wrote:Hi everyone,

My company just started to offer HSA eligible health plan. I have an option between the HSA and an HMO plan. I tried to get a better understanding of the HSA but I am kind of lost if it makes sense for me to move to an HSA plan vs my HMO. Could you guys help me make sense of this. Thank you in advance.

HMO
Deductible: $ 500
Max out of pocket: $ 5350
Price I Pay per year: $951.63

HSA Plan
Deductible: $1500
Max out of pocket: $6350
Company does not contribute any money into my HSA
Price I pay per year: $280.07

Both plans have 100% same coverage after deductible is reached

In the past few years i have only gone to get my annual check up which is free for both plans and I have made on average 2 office visits.
In your situation, I think you might be better off with the HMO for the following reasons:

- a $20 or $25 co-pay for an HMO doctor visit will be a $100 office visit with an HDHP
- a $250 co-pay for a night in the hospital might be a $1000 payment with the HDHP
- as you can see, with just a couple of those, your $750 advantage with the HDHP is whittled away.

That said, insurance is just that, insurance. If you are willing to bet on yourself, you could go the HDHP/HSA route.

PS: I am assuming that you are a single individual.

xrw1
Posts: 71
Joined: Wed Aug 22, 2012 5:24 pm

Re: Does HSA make sense for me?

Post by xrw1 » Fri Oct 31, 2014 9:39 am

Yes I am a single individual.

My Co-pay for office visits are 20 dollars for regular stuff and 35 dollars for specialist

Emergency Room is $150.


I have been with the HMO for a while and luckily I havn't had to use it besides the normal office visits. I just keep hearing good things about the HSA and I couldn't really make sense if any one was really better.

an_asker
Posts: 2205
Joined: Thu Jun 27, 2013 2:15 pm

Re: Does HSA make sense for me?

Post by an_asker » Fri Oct 31, 2014 10:07 am

xrw1 wrote:Yes I am a single individual.

My Co-pay for office visits are 20 dollars for regular stuff and 35 dollars for specialist

Emergency Room is $150.


I have been with the HMO for a while and luckily I havn't had to use it besides the normal office visits. I just keep hearing good things about the HSA and I couldn't really make sense if any one was really better.
HSA is good when there is a decent separation between HDHP and HMO. In your case, that separation appears to be limited. The premium savings are about the same as the difference in the deductible, which is why if you have a few office visits, you could easily exceed the difference. We have HDHP and we've spent the following (these are approximate numbers just to give you an idea):

- primary doctor office visit $100 (and she tries to convert what should be a free annual physical into an office visit by just asking a couple of leading questions)
- podiatrist (specialist) $250
- orthopaedist (specialist, plus Xrays) $300

But on the flip side, our premium differential is much more than yours. It was even better for us a couple of years back when IIRC the max out of pocket was $6000 or something like that.

kazper
Posts: 623
Joined: Fri Aug 01, 2014 7:45 pm

Re: Does HSA make sense for me?

Post by kazper » Fri Oct 31, 2014 5:46 pm

It doesn't always make sense to go with an hsa. In my case the premiums were about equal, deductible was over three times as much for the hdhp and the out of pocket max was over 10k compared to 5k for my HMO.

I wanted to make it work, but with a wife and little one the expenses would have been too great.

jane1
Posts: 735
Joined: Mon Dec 26, 2011 2:00 am

Re: Does HSA make sense for me?

Post by jane1 » Fri Oct 31, 2014 8:10 pm

Given the number of questions on Bogleheads asking for Health Insurance comparisons part of 2015 Annual Enrollment, I have come up with an Excel model comparing health insurance options like PPO, HDHP (with HSA).
Download from here (Bogleheads does not allow attachments)
http://www.filedropper.com/comparehealt ... onsmodel_1

Use the "Input & Data" tab to input your premiums, deductible, OOP, tax rates, your HSA contribution, etc and then go to the "Results" tab to see the lowest cost option for different spend scenarios. This is a high-level financial comparison only and ignores the providers in each network or other differences in the insurance plans.

Are you familiar with HSAs? Unlike FSA, the HSA funds are available in future years.
Do you max out on your 401k? If so, HSA option offers decent tax savings if you are in a high tax bracket.
Read the IRS or Wiki page on it to decide if you want to go the HSA route. Lot of people of this forum (incl me) like HSAs.
http://www.bogleheads.org/wiki/Health_savings_account

User avatar
grabiner
Advisory Board
Posts: 23138
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Does HSA make sense for me?

Post by grabiner » Fri Oct 31, 2014 9:17 pm

xrw1 wrote:HMO
Deductible: $ 500
Max out of pocket: $ 5350
Price I Pay per year: $951.63

HSA Plan
Deductible: $1500
Max out of pocket: $6350
Company does not contribute any money into my HSA
Price I pay per year: $280.07
What is your tax bracket? You can contribute $3350 to the HSA and benefit from the tax savings; this is another $813 savings in the 25% bracket (That is, it costs you $2537 to contribute $3350 to the HSA to grow tax-free, and $3350 if you instead contribute the same $3350 to your Roth IRA to grow tax-free.) Adding that to the $771 premium difference, your day-one cost with the HDHP is $1584 less, so you come out ahead even if you use the whole HDHP deductible. If you pay your premiums by payroll deduction, the after-tax premium difference is $574, so the day-one difference is $1391, but that's still essentially guaranteed to come out ahead.
Wiki David Grabiner

xrw1
Posts: 71
Joined: Wed Aug 22, 2012 5:24 pm

Re: Does HSA make sense for me?

Post by xrw1 » Sat Nov 01, 2014 1:39 pm

My tax bracket is 25%

For people that have done both HMO style and HDHP with HSA, did you guys find it a hassle going through the HSA to pay for services?

The insurance company is blue cross blue shield if that matters.

I do like the saving aspect of the HDHP, but I am a little hesitant about it because it looks too good to be true.

xrw1
Posts: 71
Joined: Wed Aug 22, 2012 5:24 pm

Re: Does HSA make sense for me?

Post by xrw1 » Sun Nov 02, 2014 7:16 am

Is there any downsides to the HDHP with HSA?

It appears that there are some tax savings if I do max out my HSA, but is it large enough to move away from the HMO? Like some of the posters stated, there isn't a huge dollar amount difference between my HDHP and HMO.

User avatar
magellan
Posts: 3469
Joined: Fri Mar 09, 2007 4:12 pm

Re: Does HSA make sense for me?

Post by magellan » Sun Nov 02, 2014 6:51 pm

xrw1 wrote:For people that have done both HMO style and HDHP with HSA, did you guys find it a hassle going through the HSA to pay for services?
Many HSAs work like checking accounts. Some come with debit cards and checks and even online billpay services. You don't send in paperwork for reimbursements, you reimburse yourself or pay for services by writing checks or using the debit card. You do have to keep records so you can prove each disbursement was legitimate if the IRS audits you.

I let the funds in my HSA accumulate and treat it like another tax deferred retirement account. I'm sure I'll have enough medical expenses later in life to spend it down and in the meantime the funds get to grow tax free.
The insurance company is blue cross blue shield if that matters.
Is the HMO also BCBS and is the provider network the same for the two plans? The reason I ask is that it's possible for two plans from the same company to have different provider networks and this single difference can account for premium differences of as much as 25-30%.

In other words, when comparing plans, be sure to compare the provider networks that the plans offer (and also the drug formularies). Consumers have gotten good about comparing deductibles and coverage levels and so now some insurers cut corners on provider networks to cut costs with their cheapest plans.

A low cost plan with a very restricted provider network may offer significantly lower reimbursements to providers. This causes only the most motivated providers to accept the plan, while more sought-after providers will reject the lousy reimbursement rates and only accept the better insurance plans.

Post Reply