Should I choose a high deductible health plan with HSA or stick with PPO?

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actx
Posts: 17
Joined: Fri Mar 23, 2018 2:30 pm

Should I choose a high deductible health plan with HSA or stick with PPO?

Post by actx » Sat Nov 10, 2018 11:58 am

Hello. For years I have had Aetna PPO thru my employer and have no complaints. Premiums are high but my out of pockets tend to be low but now there is a new, apparently attractive plan that they are pushing. Both are managed by Aetna so my doctors are supposed to stay the same (I looked them up and it seems to be the case) Here are the numbers:

PPO with HSA
Annual Premium = $5,448
Employer puts $1600 into HSA
Family deductible = $5,800
Max out of pocket = $13,300
Employer estimates my total cost will be $15,282

Traditional PPO (the one I have had for years)
Annual Premium = $16,500
no HSA
Family deductible = $1,500
Max out of pocket = $15,000
Employer estimates my total cost will be $23,264

About me - 4 kids that are generally healthy. One will have surgery this summer for cleft lip repair. I have multiple sclerosis and take medicine that costs before insurance approx $7500/month. My cost with the current insurance is about $80. Note that there are no deductible issues on the current plan with these meds. . .from January, I pay approx $40 each.

So.. can some of you weigh in here? One seems to be cheaper with very similar coverage but change concerns me.

Thanks!

JGoneRiding
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by JGoneRiding » Sat Nov 10, 2018 12:15 pm

You need to check on that super expensive drug. It may count as deductible and not copay so you may be paying the first 13k ish for it a year. But if you already hit your oop every year any way then it doesn't matter and the HSA is cheaper.

actx
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Joined: Fri Mar 23, 2018 2:30 pm

Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by actx » Sat Nov 10, 2018 12:40 pm

I have asked and the answer is not clear. They are saying it “should” be the same not it “will”.

Btw, we have never hit the max out of pocket.

Traveler
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by Traveler » Sat Nov 10, 2018 1:53 pm

With the large premium difference, I can't see how the PPO would ever be a good deal. The only exception would be if the PPO covers the monthly medicine in a much better way than the HSA does.

curiouspanda
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by curiouspanda » Sat Nov 10, 2018 2:59 pm

These are things I would consider:

Do you have enough cash to pay for the deductible and out of pocket max (OOPM) if you go with the HDHP with HSA?

Can you contribute the maximum allowed to the HSA?

What is your tax bracket?

Does the HDHP HSA plan have an embedded deductible? http://chirblog.org/embedded-deductible ... they-work/

In my experience, prescriptions did not count towards the deductible and OOPM on the traditional HMO plan but they did on the HDHP HSA plan. I'm not sure if this is true for all HDHP HSA plans -- you may have to read the Evidence of Coverage to find out.

I think the biggest benefit of the HDHP HSA is the tax break. But also if you have a lot of expenses, it can work in your favor because it gives you an actual maximum.

Good luck!

actx
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by actx » Sat Nov 10, 2018 4:48 pm

Traveler wrote:
Sat Nov 10, 2018 1:53 pm
With the large premium difference, I can't see how the PPO would ever be a good deal. The only exception would be if the PPO covers the monthly medicine in a much better way than the HSA does.
I checked the plan paperwork for the HD plan, nothing is paid for prescriptions until the family deductible is met (there is NO individual deductible and I pay 100% of everything until the family deductible is met ($5800).

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Watty
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by Watty » Sat Nov 10, 2018 4:52 pm

You should also check the formulary for both plans to make sure that the needed medicine is covered the same.

actx
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by actx » Sat Nov 10, 2018 4:57 pm

curiouspanda wrote:
Sat Nov 10, 2018 2:59 pm
These are things I would consider:

Do you have enough cash to pay for the deductible and out of pocket max (OOPM) if you go with the HDHP with HSA?

Can you contribute the maximum allowed to the HSA?

What is your tax bracket?

Does the HDHP HSA plan have an embedded deductible? http://chirblog.org/embedded-deductible ... they-work/

In my experience, prescriptions did not count towards the deductible and OOPM on the traditional HMO plan but they did on the HDHP HSA plan. I'm not sure if this is true for all HDHP HSA plans -- you may have to read the Evidence of Coverage to find out.

I think the biggest benefit of the HDHP HSA is the tax break. But also if you have a lot of expenses, it can work in your favor because it gives you an actual maximum.

Good luck!
Do I have enough cash to pay deductible and max OOPM - YES.
Can I contribute the max to the HSA - YES.
Tax bracket - the highest. . not sure with the changes but 35 or 38
No embedded deductible and no individual, family deductible only

So it looks like the first month I get an RX (which is $7500 or so) I'll pay up to the family deductible ($5800) then 10% of the balance for a max of $40 (that is what the plan says once you meet the family deductible). Then we will just pay co-insurance on office visits, etc. until I hit the max out of pocket (if I do).

One other thing, my youngest will have surgery. Last time it was around $6000 out of pocket (total was. . $70k or so) and I expect it to be similar this time around. How does that play into the High Deductible plan?

curiouspanda
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by curiouspanda » Sat Nov 10, 2018 6:22 pm

Your insurance should kick in for all covered services once you meet the deductible. What is the coinsurance for your child's surgery?

HDHP PPO premiums: $5,448
Prescription expenses: $5,800 (deductible met)
Prescription: $40 (following your assumption)
Child's surgery (assuming 10% coinsurance after deductible): $7,000 (10% of $70,000)
Total: $18,288

Less:
Employer contribution to HSA: $1,600
Tax benefit of contributing to the HSA max: $1,890 ($7,000 max less employer contribution x 35% tax rate)

Total Cost: $14,798

*******
Scenario if your health care expenses reach OOPM:

HDHP PPO premiums: $5,448
Health expenses: $13,300 (OOPM)
Total: $18,748

Less:
Employer contribution to HSA: $1,600
Tax benefit of contributing to the HSA max: $1,890 ($7,000 max less employer contribution x 35% tax rate)

Total Cost: $15,258

Looks like HDHP is way cheaper.
Last edited by curiouspanda on Sat Nov 10, 2018 6:26 pm, edited 1 time in total.

inbox788
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by inbox788 » Sat Nov 10, 2018 6:24 pm

actx wrote:
Sat Nov 10, 2018 11:58 am
PPO with HSA
Annual Premium = $5,448
Employer puts $1600 into HSA
Family deductible = $5,800
Max out of pocket = $13,300
Employer estimates my total cost will be $15,282

Traditional PPO (the one I have had for years)
Annual Premium = $16,500
no HSA
Family deductible = $1,500
Max out of pocket = $15,000
Employer estimates my total cost will be $23,264
There may be other differences, but if all you're looking at is cost, the $16,500-5,448 = $11,052 in premiums is HUGE, and even if you have to pay max out of pocket ($13,300), you'll only only be on the hook for the remaining $2248. AND if you haven't included the $1600 the employer puts in, all you might have left to pay is $648. What am I missing?

Is there ever a situation where the PPO is better off? Doesn't look like it to me. Even with some plans that have a slim chance PPO pays off, the odds are better with HSA. Some comparisons are close, but this one doesn't appear to be one of those.

StopIroningShirts
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by StopIroningShirts » Sat Nov 10, 2018 7:30 pm

I've read through this thread - Can you clarify what your actual heathcare spend was last year? Premiums plus funds paid out of pocket?

Your HSA offering is generous, a $1,600 employer contribution plus much lower premiums. The challenge is you're a high user of healthcare. We've been a high user of healthcare the past three years, hitting the full OPM in 2017.

I also play the "pay out of pocket and save HSA receipt game" and have grown the HSA account up to $62,000 over nine years

actx
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by actx » Sun Nov 11, 2018 1:31 pm

StopIroningShirts wrote:
Sat Nov 10, 2018 7:30 pm
I've read through this thread - Can you clarify what your actual heathcare spend was last year? Premiums plus funds paid out of pocket?

Your HSA offering is generous, a $1,600 employer contribution plus much lower premiums. The challenge is you're a high user of healthcare. We've been a high user of healthcare the past three years, hitting the full OPM in 2017.

I also play the "pay out of pocket and save HSA receipt game" and have grown the HSA account up to $62,000 over nine years
For 2017 my out of pocket costs for the family were $4,814.
For the first half of 2018 they were $4,484. Estimating that 2h of 2018 would be a bit less, say $3500 for a 2018 total of $7,984.

Can you explain the "pay of of pocket and save HSA receipts". I think it means don't touch the HSA account just cash flow expenses but be able to demonstrate what charges were?

StopIroningShirts
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Location: Texas
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Re: Should I choose a high deductible health plan with HSA or stick with PPO?

Post by StopIroningShirts » Sun Nov 11, 2018 2:05 pm

Here's specifically what I do:

I pay for all my expenses out of pocket (with a rewards credit card)
I come home and scan/save the receipt into Google Drive (remove risk of loosing it. Photo Apps will work too)
I also keep a Google Sheet to track name, service provider, and amount.

I just let the money keep accruing in my HSA and amounts over $2,000 are swept into an investment account.

The provider work uses has a simple withdraw process, I request a disbursement, upload my receipt, and they ACH the money into my account. I've done that a few times since my plan used to have really high fees and it was about the same either way.

The money goes in tax free, grows tax free, then can be distributed tax free for medical expenses or act like an IRA once you're at retirement age.

You can google Mad Fientist HSA, he was one of the early writers about this.

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