Help with Health Insurance for 2019 [PPO vs. HSA]

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ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Fri Oct 19, 2018 5:21 pm

All,

I just received my Open Enrollment Health Insurance options for 2019 and need help deciding which to choose. See facts below:

HSA (In-Network)
Annual Premium: $1,185
Deductible: $2,700
Coinsurance: Employee pays 25% after deductible met
OOP Max: $6,650
Employer Contribution: $750 (paid in conjunction with each paycheck)

HSA - Optum Bank, employer covers all monthly fees, $2,000 cash minimum, Vanguard options available (Total US Stock Admiral, 500 Index, Total US Bond Market Admiral)
-I would contribute the max of $2,750 as quickly as I can as early as I can in 2019 if I choose this option (probably over 4 - 5 paychecks)

PPO (In-Network)
Annual Premium: $1,796
Deductible: $750
Co-Pays: $25-$45 (Office Visits, Specialist Visits, etc)
OOP Max: $5,000

Other relevant information:
Tax: 22% Federal, 4.95% State
Status: Single
Age: 25

Thank you for the assistance!
Last edited by ForeverInvestorILL on Sat Oct 20, 2018 4:47 pm, edited 1 time in total.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sat Oct 20, 2018 9:04 am

Saturday morning bump!

ShowMeTheER
Posts: 392
Joined: Mon May 24, 2010 9:12 am

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ShowMeTheER » Sat Oct 20, 2018 2:52 pm

How much health care do you typically use? Given that you didn't mention anything about it initially, my assumption is that you're a light user and HSA is right for you.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sat Oct 20, 2018 4:45 pm

ShowMeTheER wrote:
Sat Oct 20, 2018 2:52 pm
How much health care do you typically use? Given that you didn't mention anything about it initially, my assumption is that you're a light user and HSA is right for you.
ShowMe - Thanks for your reply. I haven't used much lately (knock on wood), maybe a visit or two per year. I used to go to physical therapy for help with my scoliosis (~3 years ago). And I used to take prescription drugs for my allergies but haven't in the last maybe 4-5 years.

sawhorse
Posts: 3109
Joined: Sun Mar 01, 2015 7:05 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by sawhorse » Sat Oct 20, 2018 5:30 pm

Do they have the same networks and coverage?

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sat Oct 20, 2018 6:09 pm

sawhorse wrote:
Sat Oct 20, 2018 5:30 pm
Do they have the same networks and coverage?
Sawhorse - I believe so, both are administered by UnitedHealthcare.

ShowMeTheER
Posts: 392
Joined: Mon May 24, 2010 9:12 am

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ShowMeTheER » Sat Oct 20, 2018 8:41 pm

ForeverInvestorILL wrote:
Sat Oct 20, 2018 4:45 pm
ShowMeTheER wrote:
Sat Oct 20, 2018 2:52 pm
How much health care do you typically use? Given that you didn't mention anything about it initially, my assumption is that you're a light user and HSA is right for you.
ShowMe - Thanks for your reply. I haven't used much lately (knock on wood), maybe a visit or two per year. I used to go to physical therapy for help with my scoliosis (~3 years ago). And I used to take prescription drugs for my allergies but haven't in the last maybe 4-5 years.
Definitely HSA. Very very unlikely that you won't do better there than PPO.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sat Oct 20, 2018 9:32 pm

ShowMeTheER wrote:
Sat Oct 20, 2018 8:41 pm
ForeverInvestorILL wrote:
Sat Oct 20, 2018 4:45 pm
ShowMeTheER wrote:
Sat Oct 20, 2018 2:52 pm
How much health care do you typically use? Given that you didn't mention anything about it initially, my assumption is that you're a light user and HSA is right for you.
ShowMe - Thanks for your reply. I haven't used much lately (knock on wood), maybe a visit or two per year. I used to go to physical therapy for help with my scoliosis (~3 years ago). And I used to take prescription drugs for my allergies but haven't in the last maybe 4-5 years.
Definitely HSA. Very very unlikely that you won't do better there than PPO.
Is there a quick and easy calculation to figure out my break even $ amount? Essentially, my thought is that if I choose the HSA option, I am saving $622 in premiums, $750 in employer match, and $963 in taxes on my HSA contributions (22% Federal + 4.95% State + 7.65% through payroll deductions) for a total of $2,335. That total is more than the difference in deductibles and and more than the difference in the OOP Maxs. Is that the right way to think about it?

ShowMeTheER
Posts: 392
Joined: Mon May 24, 2010 9:12 am

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ShowMeTheER » Sun Oct 21, 2018 9:33 am

You got it, generally. For a major health issue/spend, you'll win in the HSA.

The fact that you have co-pays in PPO is a bit of a variable as your particular usage pattern could cut into your advantage if you use a specific mix (brand drugs are usually another culprit). On the whole though, I look at it as you are with a couple grand head start.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sun Oct 21, 2018 10:29 am

ShowMeTheER wrote:
Sun Oct 21, 2018 9:33 am
You got it, generally. For a major health issue/spend, you'll win in the HSA.

The fact that you have co-pays in PPO is a bit of a variable as your particular usage pattern could cut into your advantage if you use a specific mix (brand drugs are usually another culprit). On the whole though, I look at it as you are with a couple grand head start.
Good to know, appreciate your insight.

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grabiner
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Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by grabiner » Sun Oct 21, 2018 11:30 am

ForeverInvestorILL wrote:
Fri Oct 19, 2018 5:21 pm
All,

I just received my Open Enrollment Health Insurance options for 2019 and need help deciding which to choose. See facts below:

HSA (In-Network)
Annual Premium: $1,185
Deductible: $2,700
Coinsurance: Employee pays 25% after deductible met
OOP Max: $6,650
Employer Contribution: $750 (paid in conjunction with each paycheck)

HSA - Optum Bank, employer covers all monthly fees, $2,000 cash minimum, Vanguard options available (Total US Stock Admiral, 500 Index, Total US Bond Market Admiral)
-I would contribute the max of $2,750 as quickly as I can as early as I can in 2019 if I choose this option (probably over 4 - 5 paychecks)

PPO (In-Network)
Annual Premium: $1,796
Deductible: $750
Co-Pays: $25-$45 (Office Visits, Specialist Visits, etc)
OOP Max: $5,000

Other relevant information:
Tax: 22% Federal, 4.95% State
Status: Single
Age: 25
Assuming you pay for the insurance by payroll deduction (no income tax, but I ignore the SS tax savings because you lose a similar amount in SS benefits), the day-one cost of the traditional plan is $1796, less $484 tax savings, for a total of $1312. This is what you will pay if you never see the doctor.

The day-one cost of the HDHP is $1185, less $319 tax savings on the premium, less $750 contributed to the HSA, less $741 tax savings on the $2750 you contribute to the HSA (compared to, say, a Roth IRA, which also grows tax-free), for a net of $-625.

So, will you pay $1937 more in medical costs with the HDHP? With a $2700 deductible, this seems unlikely; if you have $2700 in HDHP medical costs, you will probably have lots of office visits, or else expensive prescriptions or other procedures which use up the $750 deductible. This makes the HDHP look better.
Wiki David Grabiner

deltaneutral83
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Joined: Tue Mar 07, 2017 4:25 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by deltaneutral83 » Sun Oct 21, 2018 12:39 pm

grabiner wrote:
Sun Oct 21, 2018 11:30 am


So, will you pay $1937 more in medical costs with the HDHP? With a $2700 deductible, this seems unlikely; if you have $2700 in HDHP medical costs, you will probably have lots of office visits, or else expensive prescriptions or other procedures which use up the $750 deductible. This makes the HDHP look better.
Or one trip to the emergency room. That being said, over a 5 year span, this (HDHP) will work out given OP's age and situation. Any one year can go either way if OP needs ER/admission into hospital.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sun Oct 21, 2018 1:01 pm

grabiner wrote:
Sun Oct 21, 2018 11:30 am
ForeverInvestorILL wrote:
Fri Oct 19, 2018 5:21 pm
All,

I just received my Open Enrollment Health Insurance options for 2019 and need help deciding which to choose. See facts below:

HSA (In-Network)
Annual Premium: $1,185
Deductible: $2,700
Coinsurance: Employee pays 25% after deductible met
OOP Max: $6,650
Employer Contribution: $750 (paid in conjunction with each paycheck)

HSA - Optum Bank, employer covers all monthly fees, $2,000 cash minimum, Vanguard options available (Total US Stock Admiral, 500 Index, Total US Bond Market Admiral)
-I would contribute the max of $2,750 as quickly as I can as early as I can in 2019 if I choose this option (probably over 4 - 5 paychecks)

PPO (In-Network)
Annual Premium: $1,796
Deductible: $750
Co-Pays: $25-$45 (Office Visits, Specialist Visits, etc)
OOP Max: $5,000

Other relevant information:
Tax: 22% Federal, 4.95% State
Status: Single
Age: 25
Assuming you pay for the insurance by payroll deduction (no income tax, but I ignore the SS tax savings because you lose a similar amount in SS benefits), the day-one cost of the traditional plan is $1796, less $484 tax savings, for a total of $1312. This is what you will pay if you never see the doctor.

The day-one cost of the HDHP is $1185, less $319 tax savings on the premium, less $750 contributed to the HSA, less $741 tax savings on the $2750 you contribute to the HSA (compared to, say, a Roth IRA, which also grows tax-free), for a net of $-625.

So, will you pay $1937 more in medical costs with the HDHP? With a $2700 deductible, this seems unlikely; if you have $2700 in HDHP medical costs, you will probably have lots of office visits, or else expensive prescriptions or other procedures which use up the $750 deductible. This makes the HDHP look better.
Grabiner - Thanks a ton for spelling this out for me, very very helpful. To be totally honest, I have no idea how much a regular or specialist office visit would even cost out of pocket (w/ HSA) or any prescription drugs.

If I were to select the HSA option, I am leaning towards keeping the deductible in cash ($2,700) and investing the rest in VTSAX.

Dottie57
Posts: 4668
Joined: Thu May 19, 2016 5:43 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by Dottie57 » Sun Oct 21, 2018 1:23 pm

FYI

HSA and PPO refer to different areas of health care.

PPO refers to Preferred Provider network. Providers not in network (contracts with the health plan) Going to a provider outside the network will cause you to spend more on healthcare.

HSA/HDHP is a way of lowering premiums by having the individual take on more risk in healthcare spending. Higher deductibles and out of pocket costs, but ability to save for future costs in a Health Savings account. Lower premiums, higher deductibles, higher out of pocket and saving for future needs. This type of plan can also use a PPO network.

So you need to consider the risk of paying for health care And where you want to receive care.

ForeverInvestorILL
Posts: 107
Joined: Mon Feb 29, 2016 11:48 pm

Re: Help with Health Insurance for 2019 [PPO vs. HSA]

Post by ForeverInvestorILL » Sun Oct 21, 2018 2:06 pm

Dottie57 wrote:
Sun Oct 21, 2018 1:23 pm
FYI

HSA and PPO refer to different areas of health care.

PPO refers to Preferred Provider network. Providers not in network (contracts with the health plan) Going to a provider outside the network will cause you to spend more on healthcare.

HSA/HDHP is a way of lowering premiums by having the individual take on more risk in healthcare spending. Higher deductibles and out of pocket costs, but ability to save for future costs in a Health Savings account. Lower premiums, higher deductibles, higher out of pocket and saving for future needs. This type of plan can also use a PPO network.

So you need to consider the risk of paying for health care And where you want to receive care.
Thanks Dottie. I probably should have mentioned this but on my benefits page, there are 2 columns for both the "In Network" and "Out of Network" cost breakdowns for each plan (PPO & HSA). I only outlined the "In Network" section in my initial post. Basically, all of the "Out of Network" deductibles and OOP Maxs would be doubled from above. Example: For the HSA, the "Out of Network" deductible is $5,400 and OOP Max is $13,300. I will do my homework and know what will be considered "In Network".

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