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PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 11:41 am
by Brantley
Hi folks,

I am looking for some advice for the upcoming enrollment period to choose my insurance plan. My spouse and I are ~30, both employed, and are thinking about having kids in the next few years. We recently purchased a home in the suburbs. When we do have kids, my wife expect to continue working. We are both under our own insurance plans through work. My wife has a HDHCP plan through her employer (PPO is not an option), and currently contributes to an HSA. Typically, I have had about $600-800 in medical bills, and my wife is closer to $1000. I see a dermatologist twice a year, and occasionally get the flu or injure myself. I do not have any prescriptions, and neither does my wife. I do not wear glasses, but my wife does.

Below are my options:
  • #1 – HDHCP with United Heathcare
    Annual Cost:
    Me: $636; Spouse: $948; Child: $516

    Annual Deductible:
    Single: $2,500
    Family: $5,000

    Coinsurance: 20% after deductible – no in/out of network

    Annual out-of-pocket maximum:
    Single: $5,000
    Family: $10,000

    Prescriptions: Pay at full cost until deductible is met
    Access to HSA and limited purpose FSA for dental/vision costs.
  • #2 – PPO with Blue Cross (lower tier)
    Annual Cost:
    Me: $1,248; Spouse: $1,884; Child: $1,008

    Annual Deductible:
    Single: $1,000 (in-network)
    Family: $2,000 (in-network)

    Coinsurance: 20% after deductible

    Annual out-of-pocket maximum:
    Single: $4,500
    Family: $9,000

    Prescriptions: Tiered co-pay structure
    Access to FSA (cannot use as wife has HSA)
  • #3 – PPO with Blue Cross (higher tier)
    Annual Cost:
    Me: $1,824; Spouse: $2,736; Child: $1,464

    Annual Deductible:
    Single: $600 (in-network)
    Family: $1,200 (in-network)

    Coinsurance: 10% after deductible; 50% out of network

    Annual out-of-pocket maximum:
    Single: $3,000
    Family: $6,000

    Prescriptions: Tiered co-pay structure
    Access to FSA (cannot use as wife has HSA)
Wife’s plan (2 options) – both through United Healthcare
  • Tier 1:
    Annual Cost:
    Me: $1,679; Spouse: 2,138 ;Child: 1,344; Family: 3,863

    Annual Deductible:
    Single: $1,500 (in-network)
    Family: $3,000 (in-network)

    Coinsurance: 15% after deductible (in-network); 50% out of network

    Annual out-of-pocket maximum:
    Single: $4,000
    Family: $8,000

    Prescriptions: Pay at full cost until deductible is met
    Access to HSA, employer contributes $500
  • Tier 2:
    Annual Cost:
    Me: $1,382; Spouse: 1,796;Child: 1,105; Family: 3,178

    Annual Deductible:
    Single: $1,500 (in-network)
    Family: $3,000 (in-network)

    Coinsurance: 25% after deductible (in-network); 50% out of network

    Annual out-of-pocket maximum:
    Single: $6,650
    Family: $13,300

    Prescriptions: Pay at full cost until deductible is met
    Access to HSA, employer contributes $500

Thoughts/questions
- I have switched between the lower and higher tier PPO in the past. Based on my math, looks like the breakeven point for the lower and higher tier is ~$3,200 which I have never been close to spending. Lower tier looks to be optimal between the two.
- Between the lower tier PPO and HDHCP, the breakeven looks to be ~$1,750 before PPO is cheaper.
- Before we have kids, it appears the HDHCP plan is most likely going to be the cheapest by about $600 based on my history.
- Leading up to and in the year that we do have kids, it appears to me that it will likely be cheaper if I switch over to the PPO lower tier plan, and have my wife and kid(s) under such plan. Based on what I have heard, medical costs for child birth and first few years of the kid’s life can be expensive.
- If I were to go with the HDHCP, would I expect any difference in the actual rate that is charged to me by the doctor/hospital? It’s my understanding that the insurance company has negotiated rates on different procedures, but does this factor in?
- Any other overall thoughts? I am very open to ideas here.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 3:52 pm
by willyd123
Brantley -

I manage the medical plans for a large employer for a living. We get your first question all the time.

The coverage (i.e., what is covered) and the rates charged for various procedures should be identical within each employer's plan (your and your wife's) regardless of whether you pick a HDHP or a PPO. So you shouldn't have to factor this question in as to whether you pick the HDHP or PPO.

However, there could very well be differences in what's covered and the negotiated rates between your and your wife's company plans. I see that both employers use UHC which would generally suggest the rates should be comparable but WHAT is covered could definitely differ. For example, we exclude some drugs (ED) from the plan we offer to our employees which is administered by UHC but other companies pay for this. The problem is that it would be difficult to know which of the two employers' plans would be better unless you had a specific procedure you needed done in which case you could ask the UHC service reps under each employers' plan.

My general advice given your and your wife's good health and age is to go for the HDHP and put as much as you can afford into your HSA, don't use the funds for medical expenses if you can avoid it (use other assets) and invest your HSA funds. In other words, treat it as a retirement plan. However, in the year you and your wife plan to have a baby, definitely switch over to the PPO plan and if you need to, dip into your HSA to pay for out of pocket expenses associated with your baby's birth.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 4:00 pm
by Brantley
willyd123 wrote:
Wed Oct 24, 2018 3:52 pm
Brantley -

I manage the medical plans for a large employer for a living. We get your first question all the time.

The coverage (i.e., what is covered) and the rates charged for various procedures should be identical within each employer's plan (your and your wife's) regardless of whether you pick a HDHP or a PPO. So you shouldn't have to factor this question in as to whether you pick the HDHP or PPO.

However, there could very well be differences in what's covered and the negotiated rates between your and your wife's company plans. I see that both employers use UHC which would generally suggest the rates should be comparable but WHAT is covered could definitely differ. For example, we exclude some drugs (ED) from the plan we offer to our employees which is administered by UHC but other companies pay for this. The problem is that it would be difficult to know which of the two employers' plans would be better unless you had a specific procedure you needed done in which case you could ask the UHC service reps under each employers' plan.

My general advice given your and your wife's good health and age is to go for the HDHP and put as much as you can afford into your HSA, don't use the funds for medical expenses if you can avoid it (use other assets) and invest your HSA funds. In other words, treat it as a retirement plan. However, in the year you and your wife plan to have a baby, definitely switch over to the PPO plan and if you need to, dip into your HSA to pay for out of pocket expenses associated with your baby's birth.
This is very helpful. Would you say I would plan to stay in the PPO indefinitely or cut back to the HDHCP at some point post baby?

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 4:06 pm
by dm200
I might also consider which parent's insurance will be used for your child(ren) when you have them. Over the years, the rules and employer practices have changed about this - so I would be prepared well ahead of time.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 4:28 pm
by Brantley
dm200 wrote:
Wed Oct 24, 2018 4:06 pm
I might also consider which parent's insurance will be used for your child(ren) when you have them. Over the years, the rules and employer practices have changed about this - so I would be prepared well ahead of time.
Based on the details of the plans - which plan would you consider?

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 4:41 pm
by dm200
Brantley wrote:
Wed Oct 24, 2018 4:28 pm
dm200 wrote:
Wed Oct 24, 2018 4:06 pm
I might also consider which parent's insurance will be used for your child(ren) when you have them. Over the years, the rules and employer practices have changed about this - so I would be prepared well ahead of time.
Based on the details of the plans - which plan would you consider?
No opinion on that.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:03 pm
by ShowMeTheER
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:05 pm
by Brantley
ShowMeTheER wrote:
Wed Oct 24, 2018 8:03 pm
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)
Are you inferring we should both be on one plan rather than each on our own?

All numbers shown above are annual costs.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:05 pm
by dm200
Ask your wife ...

;)

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:08 pm
by ShowMeTheER
Brantley wrote:
Wed Oct 24, 2018 8:05 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:03 pm
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)
Are you inferring we should both be on one plan rather than each on our own?

All numbers shown above are annual costs.
What's total premium to cover spouse + you in each of her plans?

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:12 pm
by doneat53
Since the delivery of the baby is both predictable and major expense I would plan everything in that context. Pick the plan that will make that expense the cheapest for you and covers the hospital you wish to have the baby at and after that is done switch back to HDHP given your young age and apparent health from the information you've given.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:16 pm
by Brantley
ShowMeTheER wrote:
Wed Oct 24, 2018 8:08 pm
Brantley wrote:
Wed Oct 24, 2018 8:05 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:03 pm
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)
Are you inferring we should both be on one plan rather than each on our own?

All numbers shown above are annual costs.
What's total premium to cover spouse + you in each of her plans?
All this info is in my post. I showed incremental cost for each available option.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:19 pm
by Brantley
doneat53 wrote:
Wed Oct 24, 2018 8:12 pm
Since the delivery of the baby is both predictable and major expense I would plan everything in that context. Pick the plan that will make that expense the cheapest for you and covers the hospital you wish to have the baby at and after that is done switch back to HDHP given your young age and apparent health from the information you've given.
Thanks - we probably will not start trying for a year or two, maybe three at the earliest.

I’m thinking HDHCP until the year we determine to start trying, then switch to PPO with her on my plan. After we have the kid, switch back to HDHCP.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 8:24 pm
by ShowMeTheER
Brantley wrote:
Wed Oct 24, 2018 8:16 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:08 pm
Brantley wrote:
Wed Oct 24, 2018 8:05 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:03 pm
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)
Are you inferring we should both be on one plan rather than each on our own?

All numbers shown above are annual costs.
What's total premium to cover spouse + you in each of her plans?
All this info is in my post. I showed incremental cost for each available option.
OK so if it only costs $69 or $83 annually to add a spouse to one of your wife's plan options, I'd definitely be doing that. Probably choose option #1 there for extra protection against the larger coinsurance/OOP Max if you would have large unexpected expense.

Do yourself a favor and Google embedded versus aggregate deductible (and OOP Max) and keep this in mind as you approach baby. With any luck, your employer will bump your HDHP option by a few hundred bucks and get you an embedded deductible HDHP option.

I advise people to focus on OOP Max during baby year as mom is going there. Often HDHP is still the best answer, but know your embedded vs aggregate so you don't get a surprise.

Re: PPO vs HDHCP and other considerations

Posted: Wed Oct 24, 2018 9:42 pm
by Brantley
ShowMeTheER wrote:
Wed Oct 24, 2018 8:24 pm
Brantley wrote:
Wed Oct 24, 2018 8:16 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:08 pm
Brantley wrote:
Wed Oct 24, 2018 8:05 pm
ShowMeTheER wrote:
Wed Oct 24, 2018 8:03 pm
Choose one the HDHPs and max out HSA at least for a year. It'll set you up well when baby shows up down the line. Hard to advise on which plan as you don't detail the premium cadence on her plan options ( weekly, monthly, etc ??)
Are you inferring we should both be on one plan rather than each on our own?

All numbers shown above are annual costs.
What's total premium to cover spouse + you in each of her plans?
All this info is in my post. I showed incremental cost for each available option.
OK so if it only costs $69 or $83 annually to add a spouse to one of your wife's plan options, I'd definitely be doing that. Probably choose option #1 there for extra protection against the larger coinsurance/OOP Max if you would have large unexpected expense.

Do yourself a favor and Google embedded versus aggregate deductible (and OOP Max) and keep this in mind as you approach baby. With any luck, your employer will bump your HDHP option by a few hundred bucks and get you an embedded deductible HDHP option.

I advise people to focus on OOP Max during baby year as mom is going there. Often HDHP is still the best answer, but know your embedded vs aggregate so you don't get a surprise.
Whoops I was wrong. I edited my post and didn’t realize it was per pay period.

She is paid every other week - I will edit the post for clarity.

Thanks for info on embedded vs aggregate - will research.