HDHP HMO and HSA or Gold HMO?

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def6732
Posts: 16
Joined: Sat Sep 01, 2018 9:07 am

HDHP HMO and HSA or Gold HMO?

Post by def6732 » Mon Dec 02, 2019 11:58 pm

Any thoughts on how we decide between the following health insurance options?
In our state there are no PPO plans for individuals, we can only get an HMO plan. Both of the plans below have the same provider network.
We are a family of three, mother and father are healthy and take no drugs, child was born with a birth defect with the risk of possible complications that would require hospitalisation and specialist care, but has not had any complications or emergency room visits in her 8 years and is healthy otherwise and takes no medication.
We are estimating that we will be in the 24% tax bracket 4.9% state
We could pay the $18000 out of pocket from investments if necessary, and would be investing the max $7100 in a boglehead three fund 70/30 assets allocation which we would plan to leave to grow tax free if we went the HSA route.

Option 1 - Gold HMO
In network deductible - $2500 individual, $5000 family
Coinsurance - 30%
Out of pocket - $6000 individual, $12000 family
Primary Care $15/ Specialist care $75, Urgent care $15, Emergency room 30%, Outpatient and Inpatient 30%, $25 lab, $100 xray, Generics $25, Brand name drugs $75
Premium $1087.78/month
Estimated cost for required medical visits/tests if we all remain healthy $1050/year

Option 2 - Silver HDHP
In network deductible - $3000 individual, $6000 family
Coinsurance - 20%
Out of pocket - $6000 individual, $12000 family
20% coinsurance for all visits/drugs
Premium $1038.71/month
Estimated cost for required medical visits/test if we all remain healthy $2500

Our health insurance broker is suggesting we go with the Gold HMO plan, but we would like a boglehead perspective on the tax advantages and long term benefits of tax free investment growth in the HSA.

Thank you.

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grabiner
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Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: HDHP HMO and HSA or Gold HMO?

Post by grabiner » Tue Dec 03, 2019 11:59 pm

def6732 wrote:
Mon Dec 02, 2019 11:58 pm
We are estimating that we will be in the 24% tax bracket 4.9% state
We could pay the $18000 out of pocket from investments if necessary, and would be investing the max $7100 in a boglehead three fund 70/30 assets allocation which we would plan to leave to grow tax free if we went the HSA route.
That is a $2052 tax savings (compared to investing the same amount out-of-pocket in a 401(k) or Roth IRA; it is even better if you are maxing out retirement accounts).
Option 1 - Gold HMO
Premium $1087.78/month
Estimated cost for required medical visits/tests if we all remain healthy $1050/year
Total: $14,053.
Option 2 - Silver HDHP
Premium $1038.71/month
Estimated cost for required medical visits/test if we all remain healthy $2500
Total: $15,085.

So the HDHP comes out ahead with your expected $1500 difference. It comes out ahead unless the extra medical expenses are $2500 more, which doesn't seem that likely in your situation; if your expenses are very high, you'll probably hit the deductible with the HDHP, so it won't cost that much more.
Wiki David Grabiner

Topic Author
def6732
Posts: 16
Joined: Sat Sep 01, 2018 9:07 am

Re: HDHP HMO and HSA or Gold HMO?

Post by def6732 » Wed Dec 04, 2019 7:42 pm

Thank you for your comments. We're going with the HDHP.

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