I'm not an insurance agent or advisor, but this seems like a no-brainer to me. Pay $50 per month and max the HSA with $360 per month. You're still $10 dollars per month under what you'd pay in traditional insurance premiums, and you'll have $4300 of your own money in the HSA. Add the $2000 from your employer and the HSA will have $6300. That money is yours and you don't have to pay taxes on it. You can use it to pay for all your baby bills, or you can save it for retirement and withdrawal it all tax-free when you hit 65.

Your worst case scenario is the higher out of network Out of Pocket Max, and that difference is $4000 between the two plans. So even in the worst case scenario you're up $6420 (6300 HSA and 10 per month less going to health insurance) and only down $4000. In other scenarios you'll come out ahead even more. You just need to have the discipline to use your premium savings to fund your HSA.

If you're worried about the HSA being a scam, then just know it's your money. You can move it to another HSA account and some let you invest it. It's tax free to deposit and to withdrawal for medical expenses unless they change the law.

Someone let me know if I'm missing something here

I think you are mistaking that with an FSA.

HSA is like an added savings vehicle...like an additional Roth, but cant touch it without penalty until youre older (65 i think) unless used for medical related costs

It's not a scam. What an HDHP + HSA is asking you to do is take some financial ownership of your medical expenses. Companies, particularly those who are self-insured, push them because employee medical expenses directly affect their bottom line.

First of all, an HSA is not a medical plan. The plan is an HDHP (high deductible health plan). The HSA is the tax-free health savings account that you are eligible for if you enroll in an HDHP.

At my company, the HDHP+HSA does NOT cost more OOP than the "traditional" health care plans. Accounting for premiums, our OOP expenses are the same (just depends on if you are paying upfront via higher premiums or via a higher deductible).

Where you can save is if you DON'T hit your max OOP max (or even your deductible) because the premiums for the HDHP are so much less. Basically, on the HDHP, you aren't paying premiums for coverage that you don't use.

In 10+ years, my son and I have only hit our OOP max twice. So most years the HDHP is a huge win.

Also, most employers contribute something to the HSA. Mine puts in $1000 for families. So in addition to the reduced premium, I get free money. Looks like you'd get $2000. That's very generous.

HSA accounts are also triple taxed advantaged because the contributions are tax free, you don't pay taxes when you withdraw the funds (assuming you withdraw them according to IRS rules), and you can invest the funds (and the earnings are also tax free). The employer contribution is also tax free.

Looking at your numbers, you've indicated your in network OOP max is more for the traditional plan than the HDHP. So that's a win if you max out coverage.

The deductible for the HDHP looks higher, but you have to figure in your premium costs to do an apples to apples comparison (your premiums are essentially a pre-paid deductible).

I'm not sure why your out of network max for the HDHP is higher than the traditional plan, but those numbers always look bad because your employer does NOT want you going out of network (especially if they are self-insured).

Where you have to be careful with the HDHP is with prescription drug benefits. Ours are limited on the HDHP. So, if you are taking some expensive prescription drug that wouldn't be covered under the HDHP (or because the prescription deductible is separate from the health care deductible), you'd want to run those numbers for comparison.

With an HDHP, you are also eligible for an LPFSA (limited purpose FSA) for dental and vision expenses. It has the same tax advantages to the traditional FSA.

Muy said:

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Don't you lose what's left in your HSA at the end of the year, which is why you need to think about who all is being covered. My younger son took the HSA PPO option at his work because he's young and healthy, but still has a good plan in place if anything bad happens.

I always had the family on a PPO because of where I worked the cost was relatively low,deductibles were low, and office visits were $15. Plus with little kids back then you never knew what they would catch.

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The HSA on a high deductible plan is NOT an FSA. It rolls over year after year and is investable.

My HDHP is a PPO. They aren't mutually exclusive. PPO has to do with the provider network. HDHP has to do with OOP spend.

The big difference I notice is there is no co-pay on an HDHP. Certain "preventative" visits are free (assuming the doctor offices files the claim correctly). For visits that aren't covered, I pay the negotiated rate.

A non-preventative doctor visits costs me about $120 until I hit my deductible, then my portion is reduced. All care is covered 100% once I hit my OOP max.

HSAs are a great tax free investment tool.

Do the math on your premiums on high vs low deductible compared to your total out of pocket including Dr visits and whatever else like drugs

I've found it's essentially about the same max out of pocket but the low deductible assumes the worse case scenario between out of pocket and premiums which probably does not happen every year.

And the high deductible gives you the HSA option.

Aa far as I can tell the only reason to do a low deductible plan is for budgeting purposes. Just have ot spread out over the paychecks because you know your gonna have expensive drugs or whatever

ramblin_ag02 said:

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I'm not an insurance agent or advisor, but this seems like a no-brainer to me. Pay $50 per month and max the HSA with $360 per month. You're still $10 dollars per month under what you'd pay in traditional insurance premiums, and you'll have $4300 of your own money in the HSA. Add the $2000 from your employer and the HSA will have $6300. That money is yours and you don't have to pay taxes on it. You can use it to pay for all your baby bills, or you can save it for retirement and withdrawal it all tax-free when you hit 65.

Your worst case scenario is the higher out of network Out of Pocket Max, and that difference is $4000 between the two plans. So even in the worst case scenario you're up $6420 (6300 HSA and 10 per month less going to health insurance) and only down $4000. In other scenarios you'll come out ahead even more. You just need to have the discipline to use your premium savings to fund your HSA.

If you're worried about the HSA being a scam, then just know it's your money. You can move it to another HSA account and some let you invest it. It's tax free to deposit and to withdrawal for medical expenses unless they change the law.

Someone let me know if I'm missing something here

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He's ahead by more than $10 per month when you consider that the $4,300 that goes into his HSA is also untaxed.

I've been doing a HSA a few years now, max it and invest it in a Blue Chip fund and it's up 12k in that alone. I know it won't do that forever but that's a good start. As I get older and have more health issues I might change but if you are healthy it's a no brainer.

You're pretty much dead on. I had a colleague with cystic fibrosis a few years back, who was guaranteed to hit his out of pocket max every year.

We ran the numbers, and figured out (that at least for our plan) the HSA came out ahead in a very low medical expense year, as well as when you exceeded the plan deductible by a decent amount. Pretty much the only scenario where the traditional PPO "won" was a year you flirted with the deductible but didn't shatter it.

Looks like the HSA is the clear winner here. I'd recommend the same thing for the OP, take the HDHP/HSA option, use the premium savings to fund the HSA and watch your HSA account grow into a nice little bucket of cash over the years.

Pretty much the only other thing to keep in mind is in that first year, before you've built up a buffer in the HSA, is you might have to front the cash if you have early in the year medical expenses. But if that's a concern, you've got bigger problems.

In my house we save to pay the high deductible by March each year


If we need it, we pay it from savings thst we budget for. If we don't need it i put it in a taxable account or bump the 529. One year we went to Cancun

And we max out the HSA(or come close) each year and never spend any of it. It's invested. Would like to grow it to 100K by old age and let it act as a little self insurance for long term care.

The HSA is one of the greatest gifts the federal government ever gave the American taxpayer. They are incredible.

The prevailing wisdom among financial talking heads is that they are great unless you or a dependent has a chronic condition that requires ongoing care and as a result consistently hitting your annual max OOP.

Well, my 13 year old son was diagnosed with Crohn's at 9. He gets infusions every 8 weeks, and we still come out way, way ahead with the HSA. We just switched to it 4 or so years ago and have about 50k in it now. We should have 400k or so in it by the time we are in our late 50s, which will allow us to retire early and not worry about medical care.

I freaking love my HSA. It's the best damn investment umbrella there ever was.

It's been years since I did the math, but when I did, there was a very narrow situation where the PPO made more sense. I think it was basically if you had some stuff go down that pushed near, but not quite to your out of pocket max in the HSA.

It's really easy to think the high deductible plans are terrible because you're paying more when you go to see doctors, but I found that many people will complain about paying $100 to a doctor every few months while ignoring the fact that their premiums are multiples times that much per month lower.

My boss contributes $1,200 a year to our HSA's. I've never heard of a contribution that high.

And I'm still the only person in company on HSA.

People dumb.