PPO or HSA health account

[Theringworm]

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.

This is exactly the way one gets the most out of their HSA. If you can afford to do it this way, maxing it out annually, invest it, and not touch it until after 65, and pay out of pocket for annual health care expenses.

 

[Theringworm]

Not to get off topic a little, but talking insurance premiums. I have one of the BCBS’s HSA high deductible PPO plans. I am 46, wife and 4 kids. My monthly premiums are ~$2700/month. Not annually, per month. I have $3k/9k individual/family max deductibles. Sure,….. when I have met my deductibles we don’t pay a dime more for anything (meds, visits, procedures) in network or out of network it doesn’t matter. That’s wonderful. However it’s painful at the same time how much this crap costs. I am out of pocket a little over $40k annually after monthly premiums have been paid and max family deductible met. Before Obamacare it was $1,300 a month for premiums.

HMOs are cheaper but their plans are garbage and they direct who you can see.

Sounds like these low monthly premium PPO plans basically are providing you an insurance coverage that has little value or benefit. There is no in between sadly.

Low monthly premium = crap insurance
Excellent insurance = you get sodomized by the exorbitant costs. “Do you want lube with that”?

 

[dirtytough]

I do the HDHP with HSA. We max it out every year. My employer only contributes like $1k a year to it. We have had a few accidents like shoulder surgery, patella tendon tear, etc. We pay out of pocket for the deductible and keep investing the HSA.

You can also pay out of pocket for stuff, and reimburse yourself any year you want for it. We kept the big receipts from the knee and shoulder surgery. If we ever get tight on money we can pull money out of the HSA that year tax free up to the amount of the receipts we kept. We aren't planning to but you never know.

If you are eligible to contribute to a 401K and HSA its good to max them both out every year. If you can't and can only contribute say $10k, I think it's best to contribute to the 401K up to the company match, then contribute the rest to the HSA.

 

[doc holiday13]

I've been on HSA for the last 8 years... Worth every penny.

IF you do the math with an HSA you'll find that its very beneficial especially if you max out your HSA account contributions.
At the end of the year HSA premium plus maxing out the yearly savings account contributions, you're at the same cost as a PPO or HMO.

Whats the benefit?.. You get to keep your savings account indefinitely AND you can invest it to grow your money. So if you max out your HSA account every year and only use a few hundred dollars, just move the non used money into an HSA investment account. So when you're 65/70 years old and on retirement, you've effectively gotten yourself a health insurance supplement of potential hundreds of thousands of dollars.

The HSA savings contributions lower your taxable income

Did I mention that generally HSA's give you a Debit card for your medical expenses? So whomever the account manager is (Wex, VOYA, etc) they will send you tax documents which are great if you itemize

FWIW... I moved $6k into a fee free(till the account hits $25k) Fidelity managed account in December. Account is up $190. Once the account is near $25K, I'll transfer it to a self managed account and buy similar funds as my fidelity managed account

There are very limited cases when an HSA does make sense

These guys explain it well

 

[HuntHarder]

Hsa is where it's at if you don't have health issues or visit doctor much. I have been able to save over 5k a year of tax free money and also invest it. Up until last 2 years, the investment was getting me an extra 5-9%. My employer contributes 1500$ and I put in 5k. Gotta watch it if you hit the Dr. Much tho. Between kids and my knee surgery, I have hit my max OOP in 2022 and already in 2023 if 7k$. After I hit this, everything is 100% covered for rest if year. If i were to keep hitting my max OOP, the PPO option would be better.

 

[BeaverHunter]

Hsa is where it's at if you don't have health issues or visit doctor much. I have been able to save over 5k a month of tax free money and also invest it. Up until last 2 years, the investment was getting me an extra 5-9%. My employer contributes 1500$ and I put in 5k. Gotta watch it if you hit the Dr. Much tho. Between kids and my knee surgery, I have hit my max OOP in 2022 and already in 2023 if 7k$. After I hit this, everything is 100% covered for rest if year. If i were to keep hitting my max OOP, the PPO option would be better.

You’re able to put $5000 a month into your HSA tax free? The yearly limit for 2023 is $3850 per individual and $7750 per family. ??

 

[Dos Perros]

Last year both my wife and I had HSA options, and therefore high deductible plans. We paid something like $9k in health care costs (not including premiums) for our family in 2022. Those are costs that went against our HSA's, so could include most anything like dentist or eye doc or glasses. We had some non-recurring costs for some therapy that drove it so high.

My wife switched jobs and their plan premiums are so, so low. We considered putting the whole family on it, but ultimately chose to keep me with the HSA & high deductible and everyone else on her. It gives us balance. We made the decision because most years I am probably the healthiest in the family (at least in term of costs).

We are using my HSA as an additional retirement vehicle. In a few years I've managed to squirrel away an additional $18k tax free, and most of it is invested in the market. The gamble is I won't need it for a while; risk that I might have to sell some to cover costs and take a net loss on it.

We are all different, and what works for me may not work for you. Heck, what I think works for me now may not actually work for me, it's a gamble/risk/hope situation. We can do all the calculations and forecasting and risk/reward comparison, but with health care there is always going to be uncertainty.

 

[HuntHarder]

You’re able to put $5000 a month into your HSA tax free? The yearly limit for 2023 is $3850 per individual and $7750 per family. ??

Nope. Lol damn auto fill. 5k a year

 

[HuntHarder]

Another quick plus to HSA, if you are not gonna hit your deductible, I tell the urgent care or dr. I don't have insurance and the cash price is usually substantially cheaper than they would charge if it was going toward your deductible. Then I pay with my HSA card.

 

[ODB]

Another quick plus to HSA, if you are not gonna hit your deductible, I tell the urgent care or dr. I don't have insurance and the cash price is usually substantially cheaper than they would charge if it was going toward your deductible. Then I pay with my HSA card.

Funny you say this. I told my wife that is exactly what we should do with our main doc. He would be out of network on the HSA. I said well just ask for the cash price and pay with the HSA debit. That would be interesting.

Again, great info from all you guys - thanks.

 

[Sevens]

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.

Came here to say this. Also, you can use a credit card that earns points to pay for the medical bill and then reimburse yourself from the HSA.

 

[wingmaster]

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.

HSA distributions can be taken out for non-medical reasons at 65 for purposes of avoiding the penalty, but it will still be taxed at ordinary income. So at that point it's more like a Traditional IRA rather than a Roth IRA.

HSA's are a very high-priority contribution for me, lower than a 401k match but higher than a Roth IRA. Don't forget that travel expenses can also be reimbursed in accordance with the annual IRS mileage rates.

 

[4090Sharps]

The fact that this is a topic really makes me loathe insurance companies, private medical providers, and sometimes, America.

One important consideration with a high deductible HSA plan is that changing jobs (or losing one) in a year when you need healthcare can put you in a tough financial position.