UALflyer wrote: ↑Mon Jun 24, 2019 1:38 pm

grabiner wrote: ↑Sun Jun 23, 2019 7:56 pm

For any of the plans with a high-deductible option, the high-deductible plan is almost certainly going to come out ahead.

You post this a lot even though the answer is actually significantly more nuanced than that and depends on the structure of each plan, your actual healthcare expense categories, etc... In short, there are a ton of non HDHP plans out there that for a lot of people end up being cheaper than their HDHP counterparts (the opposite is also true).

I previously went through your arguments and your math and pointed out how your conclusion that "the high-deductible plan is almost certainly going to come out ahead" is frequently wrong:

viewtopic.php?t=232140
There's nothing wrong with HDHP's and many can certainly save their customers money, but you shouldn't be overstating their financial benefits.

I rechecked your post there, and I still don't see where the math works this way. (The non-math argument against an HDHP, that it gives an incentive to forgo needed care, is important for many people.)

The comparison to make is the following:

HDHP with a maxed-out HSA, $X in medical costs, $Z in dental/vision costs, and $Z in a limited-expense flexible spending account. The plan contributes $A to your HSA, and you contribute $B-A.

Conventional plan with $Y in medical costs, $Z in dental/vision costs, and $Y+Z in a conventional flexible spending account (or the max allowed if Y+Z is higher), and any cost difference as an additional contribution to the Roth TSP.

Let your tax rate be T. Then the cost of the HDHP is 1-T times the premium, minus A, minus T times B, plus X, plus 1-T times Z. The cost of the conventional plan is 1-T times the premium, plus 1-T times Y, plus 1-T times Z. The terms of 1-T times Z cancel out (unless the conventional plan causes you to go over the FSA limit, so allowing them to cancel slightly favors the conventional plan).

So you can now work it out. For GEHA family coverage, for example, the HDHP costs $5.29 more per month, a total of $63. You get $1800 contributed to your HSA, and save $5200*T on your HSA contribution. Therefore, you come out ahead with the HDHP if

1737+5200*T > X-(1-T)*Y.

In a 22% tax bracket, 5200*T is $1144, so this formula becomes

2881 > X-.78Y.

The worst case here is X=3000, which is the full HDHP deductible, as the HDHP provides better coverage than the standard plan once you have met the deductible. So, for the conventional plan to be better, you must hit the HDHP deductible and have expenses of less than $153 with the conventional plan. This is essentially impossible.

In a 12% tax bracket, $5200*T is $624, so the formula becomes

2361 > X-.88Y.

Thus the conventional plan comes out ahead if you are in the 12% tax bracket, pay no state tax, you hit the $3000 deductible with the HDHP and have expenses less than $613 with the conventional plan. This is just barely possible, but you can't plan for expenses this precisely, and the difference will be very small; change the HDHP costs to $2000 or $3500 (representing $13,000 in total costs) and the HDHP comes out well ahead.