Need Advice for Health Insurance Choice!

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Topic Author
wangy26
Posts: 18
Joined: Fri Nov 09, 2018 8:21 am

Need Advice for Health Insurance Choice!

Post by wangy26 » Wed Nov 06, 2019 9:02 pm

I need some advice for choosing a suitable health insurance for my daughter. She is in her mid-20s and healthy. She works for a high-tech company in SF. She is considering the following two insurance plans (among others):
1. Kaiser HMO
No monthly premium cost for the employee. $10 copay for the office visit, outpatient surgery, generic drug prescription, etc. No deductible. Out of pocket max is $1500 (individual).
2. Cigna HDHP
No monthly premium cost for the employee. Company contributes $100/month to HSA. Max yearly contribution (individual) to HSA is $3550 (including company contribution of $1200). Deductible is $2600 (individual) and out of pocket max is $3425. She is in the 24% federal tax bracket. Assuming she will contribute the max to her HSA account and invest it properly there is also some tax benefit for this option.

From financial perspective which health insurance plan makes more sense for her situation? Your advice would be greatly appreciated! The deadline to make the selection is Nov. 8.

Sourc3
Posts: 108
Joined: Wed Aug 05, 2015 4:45 pm

Re: Need Advice for Health Insurance Choice!

Post by Sourc3 » Wed Nov 06, 2019 9:57 pm

Kaiser has a great system. I think she will be set from a health care perspective either way.

If she is already takin advantage of all tax advantaged accounts and it is down to the HSA I would pick the second option otherwise, for a healthy must twenties person the first option is more than sufficient.

texasdiver
Posts: 3144
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Need Advice for Health Insurance Choice!

Post by texasdiver » Wed Nov 06, 2019 10:22 pm

I'm with Kaiser after about 25 years of various random PPO providers through various employers over the years. My wife also works for Kaiser so I hear a lot of the good, bad, and ugly.

First of all, a young, healthy person who takes personal initiative to stay fit and healthy really isn't going to make much use of any healthcare. Her annual preventative care visit is going to be free no matter which plan she is on, as are any preventative prescriptions including birth control.

Kaiser is great for health maintenance of people with chronic conditions like diabetes where you need frequent care for conditions that aren't particularly complicated. The system is super user-friendly if you are a frequent flyer and need lots of care. But, their entire system is based on using the primary care physician as the gatekeeper to the more expensive specialists and they use fairly strict evidence-based criteria for determining when to escalate care up to specialists. So you can't just walk in with a sore knee and ask for an MRI, or walk in with a rash and ask to see a dermatologist. Where Kaiser is perhaps slower is when you have really complicated rare conditions that might need opinions of several different specialists to sort out. You can't just run off to the Mayo Clinic to find your own world-class specialist. You gotta work through the Kaiser system.

For your daughter (and I have one just 2 years younger who will hopefully soon be in the same spot) I'd advise the Cigna HDHP plan if she doesn't have any medical issues the horizon that would go beyond normal preventative care (annual physical, and preventative prescriptions like birth control). Under the ACA the preventative care stuff is going to be no-cost anyway so she'll only be paying anything out of pocket if she comes in for a broken leg or gets pregnant or whatever. Max out the HSA, invest it in an index fund if that option is available and just watch the account balance over the first couple of years. If she uses less than about $1500 of care per year then she comes out way ahead. If she is hitting the $2600 deductible then she is probably better off with Kaiser. Basically she can just watch the HSA balance and if it is growing by $2,000 or more per year than she is winning.

If she plans for life changes like marriage, kids, etc. then time to reconsider. She can do that every year.

Topic Author
wangy26
Posts: 18
Joined: Fri Nov 09, 2018 8:21 am

Re: Need Advice for Health Insurance Choice!

Post by wangy26 » Thu Nov 07, 2019 6:32 pm

Thank you all very much for the advice. HDHP seems like a better option for her situation.

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