[Insurance - HDHP (High Deductible Health Plan) or PPO?]

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River in Sight
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[Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by River in Sight »

[Moved into a new thread from: HDHP HSA vs PPO --admin LadyGeek]

Hoping for a sanity check on my own upcoming decision, here are the facts:

-Federal tax bracket: 35%
-State (VA) tax bracket: 5.75%
-My wife does not pay Social Security tax, and I exceed the Social Security wage base so I do not think SS tax is an issue in this decision
-Family of 3 (two 30-somethings and a 6 year old), no one has any health issues currently, no one takes any recurring medication. I never go to the doctor (although I should), my family typically just for physicals or other routine care. Although our health could change at any time, we rarely consume healthcare in any way.
-We have plenty of cash in the bank to cover any unforeseen expense.

Insurance Options
-Our insurance is through my wife's job, currently have a PPO with an annual premium of $7,000
Family Deductible: $0
OOP Family Max: $9400
Typical Co-Pay: $10-20
Preventative Care: No co-pay
-Her job also offers an HDHP with an annual premium of $2,650
Family Deductible: $2,800
OOP Family Max: $6,850
Typical Co-Pay: 15% co-insurance after deductible has been met
Preventative Care: No co-pay

Summary
-Premium savings would be: $4,350, part of which could be offset by a $2,800 deductible for non-preventative care
-I could contribute 7,300 to an HSA; by my calculations this would save me an incremental $1,240 on in tax

Considering this, it seems to me like switching to the HDHP with HSA would save me around $5,600 per year (premium savings plus incremental tax savings), minus any incremental deductible/OOP which I anticipate would be minor based on our history. Am I missing anything?
AnEngineer
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Re: HDHP HSA vs PPO

Post by AnEngineer »

Do they have the same network?
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grabiner
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by grabiner »

Assuming that you get the same network, you will come out ahead with the HDHP for any amount of health plan usage. And this doesn't even depend on the tax benefit, which suggests that there is something odd related to the way her employer subsidizes the insurance. (This can certainly happen, and it does with US Government plans. For those plans, the government pays 75% of the premium up to a limit, and part of the premium funds an HSA contribution, so it costs you only $450 in premium dollars to have the health plan contribute $1800 to your HSA.)

The other concern is non-financial: will you avoid getting needed medical care because of the cost?
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River in Sight
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Re: HDHP HSA vs PPO

Post by River in Sight »

AnEngineer wrote: Tue Nov 30, 2021 8:20 pm Do they have the same network?
The networks are different (PPO is United; HDHP is Aetna); I do not have a PCP so not too concerned myself, and both my wife and son's physicians accept both United and Aetna.
AnEngineer
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Re: HDHP HSA vs PPO

Post by AnEngineer »

grabiner wrote: Tue Nov 30, 2021 9:04 pm The other concern is non-financial: will you avoid getting needed medical care because of the cost?
To help, note that if you hit the OOP max with both plans, you'd do better with the HDHP here.
River in Sight wrote: Tue Nov 30, 2021 9:15 pm
AnEngineer wrote: Tue Nov 30, 2021 8:20 pm Do they have the same network?
The networks are different (PPO is United; HDHP is Aetna); I do not have a PCP so not too concerned myself, and both my wife and son's physicians accept both United and Aetna.
There's a difference between accepting certain insurance and being in network. Also, networks are not universal for a company, you have to investigate the plans in question.
runninginvestor
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Re: HDHP HSA vs PPO

Post by runninginvestor »

River in Sight wrote: Tue Nov 30, 2021 9:15 pm
AnEngineer wrote: Tue Nov 30, 2021 8:20 pm Do they have the same network?
The networks are different (PPO is United; HDHP is Aetna); I do not have a PCP so not too concerned myself, and both my wife and son's physicians accept both United and Aetna.
You should glance at each provider network. They may overlap a bit since they are both large national insurers, but they may not. Get a feel to see if your current doctors are on one or both; then look at potential specialists/area hospitals/nearby urgent cares/pharmacies.

On the face of it. The HDHP seems like a better option. And I would certainly feel comfortable with Aetna being the insurer handling claims.

Aetna will have different policies for who's responsibility it is for prior authorizations, balance billing (although recently passed federal law should limit this nationally), emergency care, and urgent care. It might be worth it to try and get a hold of the full coverage booklet and skim through some of those important areas.

For example, when my spouse went on a new HDHP they required notification within 48 hours of any inpatient stay or else they claim that they might not cover it. This insurance also puts the onus on the patient to make sure referrals and authorizations have been met before doing the procedure. Whereas my insurance puts the onus on the providers to ensure there is prior authorization.
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by SimpleStupid »

River in Sight wrote: Tue Nov 30, 2021 8:01 pm -I could contribute 7,300 to an HSA; by my calculations this would save me an incremental $1,240 on in tax
Hi. I'm trying to analyze a HDHP for us also, and wondering how you calculated the HSA tax savings? I was simply thinking that we'd take the HSA contribution, multiply it by our tax rate, and that would be the savings. But that would have amounted to far more in your case than the $1,240 you came up with. Thank you for any guidance you can provide.
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River in Sight
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by River in Sight »

SimpleStupid wrote: Mon Dec 06, 2021 10:39 am Hi. I'm trying to analyze a HDHP for us also, and wondering how you calculated the HSA tax savings?
Maybe I'm thinking about it wrong, but this is what I came up with:

-Today, we pay ~$7,000 annual premium, all of which is tax deductible
-If we switched, we would pay $2,650 annual premium, plus $7,300 HSA contribution, all of which is tax deductible
-Thus the net increase in tax deductible amount caused by switching is 2650+7300-7000=2,950
-The savings would be 35% (Fed) + 5.75% (State) + 1.45% (Medicare)=42.2*2,950=$1,245 (my wife doesn't pay social security tax)
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AnnetteLouisan
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Re: HDHP HSA vs PPO

Post by AnnetteLouisan »

runninginvestor wrote: Wed Dec 01, 2021 7:37 am
River in Sight wrote: Tue Nov 30, 2021 9:15 pm
AnEngineer wrote: Tue Nov 30, 2021 8:20 pm Do they have the same network?
The networks are different (PPO is United; HDHP is Aetna); I do not have a PCP so not too concerned myself, and both my wife and son's physicians accept both United and Aetna.
You should glance at each provider network. They may overlap a bit since they are both large national insurers, but they may not. Get a feel to see if your current doctors are on one or both; then look at potential specialists/area hospitals/nearby urgent cares/pharmacies.

On the face of it. The HDHP seems like a better option. And I would certainly feel comfortable with Aetna being the insurer handling claims.

Aetna will have different policies for who's responsibility it is for prior authorizations, balance billing (although recently passed federal law should limit this nationally), emergency care, and urgent care. It might be worth it to try and get a hold of the full coverage booklet and skim through some of those important areas.

For example, when my spouse went on a new HDHP they required notification within 48 hours of any inpatient stay or else they claim that they might not cover it. This insurance also puts the onus on the patient to make sure referrals and authorizations have been met before doing the procedure. Whereas my insurance puts the onus on the providers to ensure there is prior authorization.
And one truly doesn’t have time or energy to deal at such times… much better for the onus to be on them. Goes without saying but …
SimpleStupid
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by SimpleStupid »

River in Sight wrote: Mon Dec 06, 2021 6:29 pm
SimpleStupid wrote: Mon Dec 06, 2021 10:39 am Hi. I'm trying to analyze a HDHP for us also, and wondering how you calculated the HSA tax savings?
Maybe I'm thinking about it wrong, but this is what I came up with:

-Today, we pay ~$7,000 annual premium, all of which is tax deductible
-If we switched, we would pay $2,650 annual premium, plus $7,300 HSA contribution, all of which is tax deductible
-Thus the net increase in tax deductible amount caused by switching is 2650+7300-7000=2,950
-The savings would be 35% (Fed) + 5.75% (State) + 1.45% (Medicare)=42.2*2,950=$1,245 (my wife doesn't pay social security tax)
Gotcha. Makes perfect sense. Thank you!
Topic Author
River in Sight
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by River in Sight »

Just wanted to say thanks for the feedback and I decided to go with the HDHP, the savings was too great to pass up. I am certain it will not impact our healthcare usage as I never go to the doctor anyway, and my wife would never let this be a consideration for care for her or our son.

Additionally, I was going to use the employer-sponsored HSA provider (PayFlex) by default, but after reading around on the forum realized I could use whoever I wanted, so I am going to use Fidelity where the rest of our accounts are. My wife does not pay SS tax so it's only a nominal amount of savings (Medicare only) we're giving up, and since Fidelity has fewer fees than PayFlex I assume it will come close enough to evening out.
AnEngineer
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Re: [Insurance - HDHP (High Deductible Health Plan) or PPO?]

Post by AnEngineer »

River in Sight wrote: Sun Dec 12, 2021 6:27 pm Just wanted to say thanks for the feedback and I decided to go with the HDHP, the savings was too great to pass up. I am certain it will not impact our healthcare usage as I never go to the doctor anyway, and my wife would never let this be a consideration for care for her or our son.

Additionally, I was going to use the employer-sponsored HSA provider (PayFlex) by default, but after reading around on the forum realized I could use whoever I wanted, so I am going to use Fidelity where the rest of our accounts are. My wife does not pay SS tax so it's only a nominal amount of savings (Medicare only) we're giving up, and since Fidelity has fewer fees than PayFlex I assume it will come close enough to evening out.
You can also contribute via paycheck and then do an indirect rollover (once per 365? days) or direct transfer (usually a fee) to Fidelity. You can also move out employer contributions this way.
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