Health Insurance Options

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Topic Author
mnsportsgeek
Posts: 123
Joined: Mon Jan 19, 2015 1:39 pm

Health Insurance Options

Post by mnsportsgeek » Sun Feb 10, 2019 12:20 pm

Hey Everyone,

I transferred jobs this year and during open enrollment this year I noticed another option for health insurance that has never been available to me.

It appears to be an HMO type plan, and I had previously been in an HDHP plan with an HSA. Here are the highlights of the plans

HMO:
$3000/yr premium
$500 deductible
$13,200 out of pocket maximum
$20 co-pay for most services
$250 for inpatient services

High Deductible with HSA:
$1300/yr premium
$4000 deductible
Out of Pocket Maximum: $6000
Coverage is 80% after deductible
Preventative care covered 100%.
Company contributes $1000 to my HSA on my behalf.

I've really never had an HMO so I don't fully understand how they work. Is it really as simple as paying $20 every time you go to the office and that's all I pay? Everything else is covered? If I go to the doctor for back pain and they say they want to take x-rays. All that is $20 or it's $20 for the office visit and they you pay more for the x-rays?

My wife is currently paying about $2000 a year for counseling with a psychologist, so if I can get that down to $250 that would seem like it would be a win for the HMO column. That and the worry free $20 payment. Seems like we might use our insurance more frequently without the worry that every visit to the doctor is $200.

The downside to the HMO seems like I'll never hit the out of pocket maximum, and the out of pocket max of $6000 for the high deductible plan seems like a big security blanket. Also, losing out on the HSA going forward is a big bummer. I've currently got about $20 grand in our HSA and have enjoyed growing that fund over the years.

I guess I've just never had options before and would be interested in hearing what folks would choose given the options above and why? I had previously been contributing $350 a month to an HSA. So the increase in premiums doesn't phase me. I'd just pay $140 a month more in premiums and save the rest for co-pays.

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willthrill81
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Location: USA

Re: Health Insurance Options

Post by willthrill81 » Sun Feb 10, 2019 12:42 pm

I doubt that the HMO plan would cover a psychologist. Psychiatric care probably would be covered, but that's not the same thing. But even if they did cover a psychologist, the $1,700 savings in premiums plus the $1,000 you get deposited from your employer are more than the $2,000 she's spending.

If you don't need other frequent and/or expensive healthcare, the HSA option may be preferable because it gives you access to what is probably the best tax-advantaged account out there: the HSA. You pay no taxes on contributions, the balance can be invested and grows tax-free, and withdrawals for qualified medical expenses are tax-free as well (i.e. triple-tax-advantaged). Arguably, if you have an HSA, it should be funded before anything else, except for maxing out a 401k match, if available.

The lower out-of-pocket max of the HDHP is very attractive.

I would suggest that you put both options into a spreadsheet and see what comes out ahead.

Our family of three is very healthy and has done very well with our HDHP and HSA.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Topic Author
mnsportsgeek
Posts: 123
Joined: Mon Jan 19, 2015 1:39 pm

Re: Health Insurance Options

Post by mnsportsgeek » Sun Feb 10, 2019 12:54 pm

willthrill81 wrote:
Sun Feb 10, 2019 12:42 pm
I doubt that the HMO plan would cover a psychologist. Psychiatric care probably would be covered, but that's not the same thing. But even if they did cover a psychologist, the $1,700 savings in premiums plus the $1,000 you get deposited from your employer are more than the $2,000 she's spending.

If you don't need other frequent and/or expensive healthcare, the HSA option may be preferable because it gives you access to what is probably the best tax-advantaged account out there: the HSA. You pay no taxes on contributions, the balance can be invested and grows tax-free, and withdrawals for qualified medical expenses are tax-free as well (i.e. triple-tax-advantaged). Arguably, if you have an HSA, it should be funded before anything else, except for maxing out a 401k match, if available.

The lower out-of-pocket max of the HDHP is very attractive.

I would suggest that you put both options into a spreadsheet and see what comes out ahead.

Our family of three is very healthy and has done very well with our HDHP and HSA.
Great point. I guess outside of the monthly psychology appointments we really don't use our HSA much at all. We're both very healthy physically, and I agree that the $6,000 out of pocket max is a big benefit that I wouldn't want to give up in case worst case scenario occurs.

Pending a chronic illness, injury, or surgery, I'll probably spend a couple hundred bucks each year (in addition to the counseling) for the foreseeable future. So it sounds like in order to make the HMO worth it for us we'd have to be planning on ~$3000 of expenses each year. Maybe more when you take into account that our medical expenses are tax free.

Sounds like I'll stick with the high deductible plan for now. Thank you!

02nz
Posts: 1390
Joined: Wed Feb 21, 2018 3:17 pm

Re: Health Insurance Options

Post by 02nz » Sun Feb 10, 2019 1:16 pm

The HDHP certainly looks better, as long as their network is suitable. As willthrill81 noted, the HSA is a fantastic way to invest. The qualified medical expenses even include Medicare premiums and LTC insurance. I plan to always max my HSA, and not reimburse myself for expenses for now so the account can grow. I think of the HSA as a secondary emergency fund - I can reimburse myself any time if needed (no time limit on reimbursements; just save the receipts, I'd recommend digitally). And when I get to Medicare age I can pay for premiums from the HSA and still have plenty left for larger medical expenses.

DarkHelmetII
Posts: 216
Joined: Mon Jul 24, 2017 12:25 pm

Re: Health Insurance Options

Post by DarkHelmetII » Sun Feb 10, 2019 1:32 pm

To me, without even getting out the spreadsheet or calculator, HDHP / HSA seems pretty much a no-brainer:

1) Lower premiums, $1000 firm contribution to HSA, and tax break on your residual HSA contributions make up for a good chunk of the difference in deductibles / Max out of pocket
2) In general, HMO much more restrictive network and you have to coordinate care through primary physician


I would only give HMO serious thought if a) HDHP / HSA network is particularly weak and / or b) you have predictable, on-going healthcare needs for which you know HMO will cover and results in a lower financial cost to you.

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