Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

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coolfunk
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Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by coolfunk » Wed Dec 06, 2017 11:06 am

We are a family of two undergoing In vitro fertilization for which we used our HSA account that still may have $8000 left in it for our next cycle due in Jan 2018. My husband recently changed jobs and we have an option to go for either HSA or HRA. Given that we may get pregnant next year around Feb, what type of insurance makes more sense for us financially? Any help/advice appreciated.

HRA
Company contribution: $500/employee; $1000 Employee + Spouse or children; $1500/family
Deductible for medical and prescription drug expenses: $1,000/employee; $2,000/employee + spouse or children; $3,000/family
Annual out-of-pocket maximum (including deductible, coinsurance, and copays): $2,000/person; $4,000/employee + spouse or children; $6,000/family

HSA
Company contribution: $500/employee; $1000 Employee + Spouse or children; $1500/family
Deductible for medical and prescription drug expenses: $1,500/employee; $3,000/employee + spouse or children; $4,500/family
Annual out-of-pocket maximum (including deductible, coinsurance, and copays): $3,000/person; $6,000/employee + spouse or children ($3,000/person max); $9,000/family ($4,500/person max)

Many Thx!

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grabiner
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Re: Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by grabiner » Wed Dec 06, 2017 10:09 pm

Welcome to the forum!

The benefit of the HSA is that you can contribute $5900 more to it, and that gives you a tax savings which depends on your tax bracket. If you are in a 25% bracket with no state tax (or you live in AL, CA, or NJ, which don't recognize HSAs), that's a tax savings of $1488. (It's a little less if you switch from a two-person plan to a family plan when the baby is born; most likely, the employer contribution will be prorated monthly.)

So, are you likely to pay $1488 more under the HSA? With a likely baby, you'll probably go through the two-person deductible, and then need to switch to the family plan. The baby might or might not use up most of the increased deductible. The HSA plan will cost less than $1000 extra if you are at the two-person deductible, since the HRA plan will cost $2000 plus any co-payments after you reached the deductible. The out-of-pocket maximum, which it is less likely you will reach, is $2000 higher under the HSA plan.

So the HSA looks slightly better in the 25% bracket, and would be significantly better if you pay state taxes as well. If you are in the 15% tax bracket and don't pay high state taxes, the tax savings isn't enough for this year to make up for the difference in expenses.

One other consideration: does your employer allow you to open an FSA if you use the HRA plan? (You can't use an FSA and contribute to an HSA.) If so, reduce the tax savings on the HSA plan by the tax savings on the FSA; a $2500 FSA saves you $625 in taxes, and you will use it up.
David Grabiner

aristotelian
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Re: Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by aristotelian » Wed Dec 06, 2017 10:17 pm

grabiner wrote:
Wed Dec 06, 2017 10:09 pm
Welcome to the forum!

The benefit of the HSA is that you can contribute $5900 more to it, and that gives you a tax savings which depends on your tax bracket. If you are in a 25% bracket with no state tax (or you live in AL, CA, or NJ, which don't recognize HSAs), that's a tax savings of $1488. (It's a little less if you switch from a two-person plan to a family plan when the baby is born; most likely, the employer contribution will be prorated monthly.)
I believe that should be $6900 pre-tax for the HSA (or $5400 in addition to the employer contribution). I get $1350 for the tax savings since the employer is making the same contribution to the HRA.

I am thinking the HRA would be better with the lower deductible and lower out of pocket max, especially if the pregnancy is successful.

What are the premiums for the two plans? So far the HRA is ahead.

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grabiner
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Re: Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by grabiner » Wed Dec 06, 2017 10:19 pm

aristotelian wrote:
Wed Dec 06, 2017 10:17 pm
grabiner wrote:
Wed Dec 06, 2017 10:09 pm
Welcome to the forum!

The benefit of the HSA is that you can contribute $5900 more to it, and that gives you a tax savings which depends on your tax bracket. If you are in a 25% bracket with no state tax (or you live in AL, CA, or NJ, which don't recognize HSAs), that's a tax savings of $1488. (It's a little less if you switch from a two-person plan to a family plan when the baby is born; most likely, the employer contribution will be prorated monthly.)
I believe that should be $6900 pre-tax for the HSA (or $5400 in addition to the employer contribution). I get $1350 for the tax savings since the employer is making the same contribution to the HRA.


I had $5900 assuming only $1000 from the employer, with the baby causing a switch to a family plan very late in the year (and not at all if born during the last pay period). The $1000 from the employer in either the HSA or HRA is of the same value.
David Grabiner

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Re: Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by aristotelian » Wed Dec 06, 2017 10:28 pm

grabiner wrote:
Wed Dec 06, 2017 10:19 pm
aristotelian wrote:
Wed Dec 06, 2017 10:17 pm

I believe that should be $6900 pre-tax for the HSA (or $5400 in addition to the employer contribution). I get $1350 for the tax savings since the employer is making the same contribution to the HRA.


I had $5900 assuming only $1000 from the employer, with the baby causing a switch to a family plan very late in the year (and not at all if born during the last pay period). The $1000 from the employer in either the HSA or HRA is of the same value.
I see, thanks for clarifying.

coolfunk
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Re: Planning a baby through IVF around Feb 2018: which insurance plan to go for HSA or HRA?

Post by coolfunk » Mon Dec 11, 2017 4:09 pm

Thanks, this has been very helpful. I live in the state of WA - so no state tax benefit with HSA. I think I’m going to go with HRA with FSA for now.

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