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HDHP vs Traditional Insurance Question

Posted: Sun Nov 16, 2014 12:13 pm
by zkmguy
I'm trying to decide between a HDHP and traditional insurance plan offered by my employer. The HDHP almost seams too good to be true. Can anyone see if I'm missing something:

Here are the differences between plans
Traditional vs HDHP
Deductible: $100 vs $1500
Co-insurance: 95% vs 80%
Copay: $20 to $75 vs N/A (co-insurance only)
Yearly OOP Max: $2000 vs $3000
Prescription: $10-50 copay vs 80% after deductible

Traditional will cost me $1200 / year

The HDHP will cost me $550 per year, but my employer will contribute $750 to an HSA and also I'll get about $600 in additional tax savings on my contributions, so I actually make $800 (assuming no medical expenses).

I ran some numbers, it looks like I come out ahead on the traditional plan if my medical costs are between $8k and $14k, and only by $250. Also, considering the savings from the HSA the absolute maximum out of pocket would be $2200 with the HDHP vs $3200 for the traditional.

The only case I can think of that it may be better if I had expensive prescriptions which were covered by a copay instead of only paying coinsurance over the deductible(this is not the case).

Am I missing anything or is the HDHP the clear winner?

Re: HDHP vs Traditional Insurance Question

Posted: Sun Nov 16, 2014 2:27 pm
by SomeGuy
Sounds convincing to me, but I'm not an expert in the area.

I do the HDHP/HSA where I work. The numbers are skewed in favor it even more. I quit using my HSA money to pay medical expenses. Now I just save the receipts and leave the money in the account growing tax free.

Re: HDHP vs Traditional Insurance Question

Posted: Sun Nov 16, 2014 9:41 pm
by kazper
Is that right that the hdhp Actually has a lower copay than the standard (80 vs 95)?

Regardless, the 650 from your employer and the difference in premiums make this an easy decision.

3000-600=2400 after employer contribution factored in. Deduct difference in premiums 2400-650=1750. If you applied the difference between premiums to your expenses, your total oops is 1750, that doesn't even factor in tax savings from using the hsa.

Re: HDHP vs Traditional Insurance Question

Posted: Sun Nov 16, 2014 11:12 pm
by rogermexico
Many employers (including yours and mine) are pushing the HDHPs with attractive rates and large HSA contributions. I decide based on comparison of most likely outcome but also worst case scenario. My calculations from this year show the most likely outcome (with average annual health care expense ) is that the HDHP will save me about 2500 and the worst case scenario is that I lose around $1250. So I again went with the HDHP.

Re: HDHP vs Traditional Insurance Question

Posted: Mon Nov 17, 2014 6:24 am
by zkmguy
Looks like it's the HDHP this year for me. I just can't believe the real total cost of the HDHP is so much less than the traditional plan. It almost feels like a way to get people to be comfortable switching over, phase out traditional plans, then pull the HSA contribution or jack up premiums. Or maybe I'm just a pessimist.

Re: HDHP vs Traditional Insurance Question

Posted: Mon Nov 17, 2014 6:21 pm
by kazper
zkmguy wrote:Looks like it's the HDHP this year for me. I just can't believe the real total cost of the HDHP is so much less than the traditional plan. It almost feels like a way to get people to be comfortable switching over, phase out traditional plans, then pull the HSA contribution or jack up premiums. Or maybe I'm just a pessimist.
You should consider yourself lucky. I would actually pay slightly higher premiums and a much higher max out of pocket if something really bad happened (6k vs 12k). I want to make the switch, but worry about the worst case scenarios that could cost quite a bit of money.