PPO or HSA health account

[ODB]

Would like to hear anyones good/bad regarding HSA accounts. My wife has this option at her work and was considering it, and other that the obvious stuff with lower premium cost and the way it works with deductibles, I'm looking for the gotchas.

Out of pocket last year with the PPO was $500 and $300 of that was Synthroid.

What advice you have?

 

[Marbles]

It depends on the details. How large is the deductible? How much does her employer contribute to the HSA? How much do you expect to use?

On the low end of use high deductible plans with an HSA are a much better deal. On the catastrophic end high and low deductible plans will cost you about the same out of pocket. In the middle is where a low deductible plan might put you ahead.

The beauty of an HSA is you get to keep the money in it if you don't use it. You are just out the higher premium if you don't use enough of the low deductible plan.

In general, I always go with the HSA.

 

[browning2480]

It depends on the details. How large is the deductible? How much does her employer contribute to the HSA? How much do you expect to use?

On the low end of use high deductible plans with an HSA are a much better deal. On the catastrophic end high and low deductible plans will cost you about the same out of pocket. In the middle is where a low deductible plan might put you ahead.

The beauty of an HSA is you get to keep the money in it if you don't use it. You are just out the higher premium if you don't use enough of the low deductible plan.

In general, I always go with the HSA.

I will echo this. We switched last year as we hardly ever go to the doctor for anything. I contributed enough the cover the deductible and employer matches up to like $1,500. We will start investing this year inside it. Most expenses we had this year we just paid out of pocket anyway. I think it is the best option for someone who doesn’t need frequent Dr visits and provides another tax feee investment vehicle

To go along with the other no debt thread, Dave Ramsey would choose the HSA

 

[ODB]

It depends on the details. How large is the deductible? How much does her employer contribute to the HSA? How much do you expect to use?

On the low end of use high deductible plans with an HSA are a much better deal. On the catastrophic end high and low deductible plans will cost you about the same out of pocket. In the middle is where a low deductible plan might put you ahead.

The beauty of an HSA is you get to keep the money in it if you don't use it. You are just out the higher premium if you don't use enough of the low deductible plan.

In general, I always go with the HSA.

Ded. is 1700 versus 1000 for the ppo - employer kicks in $1000. Don't expect to use much, but then again you never do ;-)

 

[fwafwow]

I’ve been using a high deductible plan plus HSA for over 12 years. The first year I switched I thought I had a heart attack in Jan. Spent the night in the hospital and had a boat load of tests. I got the bill and it was $15k. I thought I had made a mistake and was going to be out of pocket the full ~$8k deductible. Then I got the adjusted bill after factoring in the insurance negotiated rates - $1300. I ended up still being ahead and I’ve never regretted my decision. I make the same choice every year.

 

[wind gypsy]

The thing with my employer was with the high deductible+HSA plan you have to pay 100% out of pocket until you hit deductible. PPO plan didn’t allow HSA but for dr visits and prescriptions you only pay a small copay vs 100% until deductible.

I fully expect to hit the $6k deductible this year (child birth) and with the reduced family premium costs, employer contributions to HSA, and tax benefit of HSA, it still pencilled out better than PPO.

 

[sbaker0029]

I've had a HSA plan for years. Myself and one other guy in the department of 5 have the HSA. He was thinking about switching last fall during open enrollment, we talked about the difference extensively and could not find a way that you would really come out ahead. Every way we looked at it the HSA edges out the PPO.

For me my employer kicks in half the deductible every year. That adds up when you're with a company for a while and don't ever use all of it.
Edit: when I left my previous employer I had over $5,000 in the hsa that I never contributed a dime to and walked with that account..

I take the difference in premium from ppo to hsa and contribute that to the hsa plus a little more. By doing that I essentially pay the PPO premium but also cover my health expenses tax free and that's the big advantage TAX FREE expenses when you use the HSA.

I know with my plan the cost of medicine and a few other things doesn't count towards the deductible in the PPO but ALL health care related expenses count in the HSA.
Both are basically identical after deductible is met for my plan, 80/20.

I'm a big advocate for the HSA

 

[Marbles]

Ded. is 1700 versus 1000 for the ppo - employer kicks in $1000. Don't expect to use much, but then again you never do ;-)

So, if the employer puts $1000 in the HSA, if you subtract that from the deductible you would end up less out of pocket maxing out the deductible on the high deductible plan than on the PPO.

Do you pay less in premiums for the high deductible plan?

Is there a large difference in max out of pocket?

My deductible is $5000 for individual, $10,000 for family. However, I have money in an HSA from prior years and additional contributions for last year reduced my taxes.

 

[missjordan]

HSA contributions are tax deductible too and like others have stated. Can take the money with you and roll it over year after year. Most plans also should have stock options so you can invest also.


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[Nick992]

HSA is almost always better.

It you have chronic issues and are at the doctor so the time, then PPO can make more financial sense.

 

[Andrew12gauge]

I think a high deductible plan will just about always beat a ppo in todays health insurance markets

Take whatever savings you get from the premium and put it into the health savings and watch how fast the money piles up in there.

Add in the fact that most high deductible plans have lower out of pocket max and it’s a win/win/win in my book. I wish my current employer offered one but my wife will put her and our kids on hers and I’ll take the cheap PPO since that’s all I can get


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[ODB]

So, if the employer puts $1000 in the HSA, if you subtract that from the deductible you would end up less out of pocket maxing out the deductible on the high deductible plan than on the PPO.

Do you pay less in premiums for the high deductible plan?

Is there a large difference in max out of pocket?

My deductible is $5000 for individual, $10,000 for family. However, I have money in an HSA from prior years and additional contributions for last year reduced my taxes.

max is indiv. 4500 / 9000 fam for the HSA, 4K/8K for PPO. We have a good safety fund so could cover even these maxes in a snap.

Her PPo premium is 5122/yr the HSA would be 2700/yr. + the drip into savings.

This is good info you guys are giving me. I did not know HSAs were so popular.

 

[Marbles]

max is indiv. 4500 / 9000 fam for the HSA, 4K/8K for PPO. We have a good safety fund so could cover even these maxes in a snap.

Her PPo premium is 5122/yr the HSA would be 2700/yr. + the drip into savings.

This is good info you guys are giving me. I did not know HSAs were so popular.

So, in a catastrophe (max family out of pocket) the high deductible plan will cost you $1400 less than the PPO. In a good year, the PPO will cost you $2400 more than the high deductible plan. It would be very hard to find a situation where the PPO is cheaper for you (it would take an event that straddled the plan year and put you maxing out two deductibles.

Now, if the $2700 is not accounting for the $1000 contribute to the HSA, then the high deductible plan is even more favorable.

Hands down, the HSA is the way to go. There is no gotcha. My theory is high deductible plans are so much cheaper because people who buy them are not heavy users of health care, which means the plan pays less and passes on those savings as lower premiums.

 

[ODB]

So, in a catastrophe (max family out of pocket) the high deductible plan will cost you $1400 less than the PPO. In a good year, the PPO will cost you $2400 more than the high deductible plan. It would be very hard to find a situation where the PPO is cheaper for you (it would take an event that straddled the plan year and put you maxing out two deductibles.

Now, if the $2700 is not accounting for the $1000 contribute to the HSA, then the high deductible plan is even more favorable.

Hands down, the HSA is the way to go. There is no gotcha. My theory is high deductible plans are so much cheaper because people who buy them are not heavy users of health care, which means the plan pays less and passes on those savings as lower premiums.

No - the 2700 does not acount for that - it's a separate contribution.

Thanks for the feedback.

And I like your signature. I wish more people read Hoffer.

 

[Bubblehide]

I have an Anthem Blue Cross HMO (UCLA Medical Group, considered the best in the area), and a different secondary Anthem Blue Cross medical insurance through my wife's employer. This past year I had 5 different surgeries. All on different body parts. All included being admitted to the hospital. Because I have the secondary insurance, my out of pocket has been zero, although I do have a small copay for prescription medications. So, in my case, I don't currently need an HSA, although I have it avaliable.

Some, may be better off purchasing their own disability insurance, as a medical issue or accident could put them off work for some time. For example, in my case, I have been off work for medical reasons from this past May 13th and continuing until April, unless I am capable of returning sooner. Either way, I will be returning with restrictions as I will continue to heal.

So, in short, between my job, the generous benifits, and the disability insurance I pay for, my income has not skipped a beat. Considering everything I have gone through, and the potential for significant negative finincial impact, I have been very fortunate.

 

[Carlin59]

Another benefit of the HSA is I can use my personal HSA funds to pay for overall family healthcare expenses. My contributions are limited to the single person amount since I’m the only covered by a high-deductible plan, but I’m allowed to use my HSA to pay for overall family expenses. Kids are on the wife’s PPO, and we use my HSA to pay all out of pocket costs for them. I do the math every year, and no reason to change strategy for the foreseeable future at this point.

 

[PorterNY]

HSA here for the last 16 years.. high deductible 12k family. Wife and 4 kids..
I max out the contribution every year, this year is $7700 I believe.
The amount comes off my taxes , and we have used the HSA money to pay for two sets of kids braces , dental appointments and other health expenses that are not covered by our normal health insurance over the years… has worked well for us.

 

[HoneyDew]

HSA is triple tax advantaged. Non-taxable contributions (lowers your annual tax bill), can grow tax free if invested, is non-taxable if used for qualified medical expenses. They can also be used for non-medical expenses once you turn 65. So I contribute the max ever year and never withdraw from it. I treat it as a medical 401k until I’m 65 (if really needed but I’d rather take the one time tax hit and pay out of pocket) and then it’s basically a ROTH IRA.

 

[timekiller13]

I’ll echo what others have said. The HSA is the way to go. I’ve been on one since I started working at my current job in 2016. Employer contributes $500/yr. I max out contributions.

I’m fortunate that my family is healthy and we only go to the doctor for regular check ups. But the HSA allows a nice cushion just in case we have a major medical expense.

Also the fact that the premium for an HSA is much cheaper every month. I pay $167.50 monthly for a family plan HSA. PPO is 393.80/month. So when you factor in that I’m paying over $2500/yr less for the HSA, plus the $500 contribution, it’s a no brainer.

 

[Yoder]

Our company just got bought out and we now have the pleasure of the HSA account. It sounds great. It's your money and you can invest it. You never lose it. Here's the problem with my plan. We have a $4k deductible with $10k out of pocket max. The RX coverage is complete and total garbage. My wife has two RX that aren't covered at all, do not apply to the deductible and cost right at $1k/month. Thank God I can invest all the money I put into my plan. Oh wait, I'm spending over $10k and the max you can put in is $7500. I'm so pissed. I'm so glad Obama fixed our health insurance. You know, before it was "fixed" I paid about $200/month for awesome insurance with ZERO deductible. Right now my premiums are $250/month for trash. I'm putting an additional $625 in my HSA account and that STILL doesn't cover my expenses. If any of you own a business and want to demotivate people, give them shit insurance.