Health Insurance with HSA Option

I like the idea of a HSA (Health Savings Account), since it's like having an additional IRA. Better, the money you spend on healthcare is totally tax free (not just deferred), and after 65 you can spend the money on anything.

But the HSA compatible plans that, for example, Blue Cross offers have disadvantages. For example, they have higher deductibles ($7,000) and don't cover office visits until you meet the deductible. Also, we're only in the 20% (fed & state) tax bracket.

Do any of you have an HSA compatible plan, or have you evaluated them?

Thanks!

[wabmester]

I switched to an HSA plan after the last double-digit increase in my insurance premium (yes, CPI-style substituion really does happen).

For me, it was a no-brainer since the delta in premiums was higher than the delta in deductibles. We now have a family deductible of $2600/yr and pay about $300/mo for a family of three. I evaluated one other plan (we don't have that many in our area), and both the deductible and premium was much higher. Sadly, I expect ours to go up to market rates next year since our insurance company was just acquired by one of the Big Boys.

[justin]

How do doctor's visits and hospital visits work with high-deductible plans generally. I know it "depends on the plan".

For example, if I go to my general practitioner, and his usual visit costs $90 w/ no insurance, would it be a charge of $15 (or $20 or $30) copay, the negotiated insurance rate (probably $50-60) or the full $90?

Same for a hospital visit. Take for example, my wife's recent childbirth. Total bill that insurance paid: $3600. If I had no insurance and paid for the same service out of pocket it would have been $8000. Would I be paying the deductible on the $3600 amount or the $8000 amount if I had high-deductible insurance (lets say $5000 deductible). Or do I pay up to $5000 and then the insurance company "takes care of the rest". In this case the insurance company would have no additional liability due to their negotiated rates being low.

On a side note, has anyone ever successfully negotiated with a medical provider/hospital to have services performed at a reduced rate (one-time or from time to time in the future?)? Is there an insurance product that allows you to self insure 100% and just have the insurance company handle the claims settlement to effectively give you their negotiated rate?

So many questions...

[Art]

Blue Shield (as opposed to Blue Cross) has a $2,400/$4,800 family deductible HSA compatible PPO- but I don't think ANY HSA PPO plan will pay a dime (except for an annual checkup) until you meet the deductible- that's the point of these low-premium plans.

For only a few bucks more, you can get a standard (NON- HSA) PPO with a $2,000/$4,000 family deductible that WILL pay for MD visits ($45 co-payment), Rx drugs (low co-pay), and other services BEFORE you meet the deductible.

This is what I have, it's what I end up selling. HSAs look good on paper, but when you compare them to standard PPOs (with Blue Shield, anyway)- they're not so hot. I've never sold one. The premium difference is too slight.

BUT: If you have a REALLY bad year, you'll wish you had a HSA/PPO, because the max out-of-pocket/calender year is only $3,200/$5,800 with this plan... but the max out-of-pocket for the standard, NON-HSA PPO $2,000/$4,000 is $7,000/$14,000 IF you use PREFERRED PROVIDERS... and if you screw up and use NON PREFERRED PROVIDERS, up to $$10,000/$20,000 per calender year.

All of the above is for educational purposes, it is not intended as specific advice, etc.

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How do doctor's visits and hospital visits work with high-deductible plans generally. I know it "depends on the plan".

Yes, it does depend on the plan. *But my understanding on the Blue Cross HSA plan I'm considering is that below the deductible, office visits are not covered, but you do get the negotiated rate.

For another very basic non-HSA plan, you do not get the negotiated rate in that situation.

Man these things are complex! *You can can't just change one variable at a time. *For example, one plan adds HSA, but the deductible is different, or the coverage is different. *Sheesh. *I'm glad I have the time to understand the plans, so that I can beat these guys at their own game! *Also, I've figured out how to bypass the Blue Cross phone menu.

[wabmester]

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Originally Posted by justin How do doctor's visits and hospital visits work with high-deductible plans generally.

It should work basically the same as your low-deductible plan. * The insurance company still negoiates the prices on your behalf (which can be a huge savings vs going naked).

In our case, in additional to the higher deductible, we gave up maternity care (we have no new plans in that area), and there are some smaller differences such as well-care visits now go towards the deductible whereas they didn't before.

Like anything, you'll need to compare the various trade-offs. * I consider the HSA tax-break to be icing on the cake, not a make-or-break.

Good to have some expert opinions, Art.

I've got it narrowed down to three plans. Hard to put them in a nutshell, but here it is:

Current plan
A. $5,000/member deductible standard plan, office visits BC pays 70% -- premium $327/mo

B. $7,000 two-member deductible, HSA, no office visits below deductible, but get negotiated rate -- $244/month, BC pays everything above deductible

C. $2,500 deductible, no office visits and no negotiated rate -- premium $179/month, BC pays 80% above deduct

[wabmester]

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Originally Posted by TromboneAl C. $2,500 deductible, no office visits and no negotiated rate -- premium $179/month, BC pays 80% above deduct

When you say "no negotiated rate," I assume that only applies to the $2500 deductible, right?* *So, your total premium + worst-case deductible is $4648, which is below the deductible of A and B.* *And your current premium alone today is $3924, so even if you end up paying the entire deductible on C, your downside is $700 or so.

Obviously an overly-simplistic analysis, but I would go for (C).

[Art]

Al, what you MUST nail down is your MAXIMUM out-of-pocket costs/calender year for all three plans (including whether you use preferred or NON-preferred providers when the plan breaks it down that way- not all do (with Blue Shield, the HSA PPO doesn't make that distinction but the standard NON HSA PPO DOES).

Also, in some plans you refer to two party deductibles, others you describe as per member, which makes comparisons difficult.

I find this stuff as horribly painful as you do, so I haven't compared BC to BS in a while... so I'm curious, what do you prefer about BC vs. BS? Last time I checked, the premiums and benefits were close, but things may have changed (now, BS has a lower deductible HSA PPO than BC- if I understood you correctly).

[MJ]

With my health insurance, "negotiated rate" refers to an in-network provider. If you use an out of network provider, the insurance will accept only reasonable and acceptable rate for the location.
For example, if you have no co-pay insurance then
if an in network GP charges $200 you will be charged and pay the negotiated rate of $85 before your deductable is met and nothing after your deductable is met
if an out of network GP charges $200, you will pay $200 before your deductable is met. If your deduction is met, you will pay $50 = $200 - $150 (reasonable rate).

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...what do you prefer about BC vs. BS?

It's the fact that I already have a BC plan, so it's not complicated to switch to a new BC plan. Also, I know that it works in terms of providers in the area. Since we live in the boondocks, it could be that there are fewer BS providers around (haven't looked into that).

[Art]

Al, you raise two excellent points: simplicity and good provider network.

If you will not be required to go through medical underwriting by switching BC plans (or you are only required to go through very fast, simplified underwriting), I'd agree with you that this may be a good reason to stay with BC.

My guess is that the underwriting will be the same either way, but I don't know for sure.

As for providers, I'd be surprised to find any difference at all between these two networks- you can easily get a free regional directory from BS and confirm this. Or you can make a few phone calls to your current docs' offices and ask the billing people if one company is more or less accepted in your area than the other.

The corporate cultures are very different. The benefits seem to be different. The premiums may be different. As horrible as this process is, it may be worth it to compare them carefully. You can do a lot worse than BC, for sure. But the differences may make a comparison worthwhile. Have fun!

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Obviously an overly-simplistic analysis, but I would go for (C).

I would too.* But another variable is that plan C has no prescription drug benefit, so the cost of DWs hormone replacement pills would make a big difference there.

Wab,

How much have you put in your HSA account?

Max out of pockets are: A: 10K, B: 7.5K, C: 10K

I did a little analysis for a few routine exams and some diagnostics for DW.* This is how much they cost under plan A, and how much they would have cost under the others:

Plan A: $678
Plan B: $1012 (negotiated rate)
Plan C: $1936

We are as healthy as they come for 50 year olds, but s___ happens.

So, right now I'm leaning towards plan B.* *Like the commercial says:

Health Insurance Premium: $244
Routine exams and tests: $1012
Keeping the government's hands off some more of your money: Priceless

[Art]

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Originally Posted by TromboneAl So, right now I'm leaning towards plan B.* *

And it has the lowest out-of-pocket maximum. Of the three, that would be my choice.

[maddythebeagle]

Interesting discussion. I am in the work world and I think employers are looking to move toward insurance like this. I think that it is reasonable since it seems to encourage people to make consumer choices and save money in their own account year-to-year. It seems like employee unions, etc. dont want because they want everything for free, but with the costs of health care going up, I dont know what other choices there are. Seems like this would lower costs, maybe. Anybody out in the work world with this type of insurance and do these HSA's stay with you even if you retire early. How much does the employer add per year in the HSA?

[wabmester]

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Originally Posted by TromboneAl How much have you put in your HSA account?

I plan to max out each year (for us, that would currently be $2600/year). If you've looked into this at all, you've probably discovered that there are a limited number of institutions who can manage HSA contributions, that fees are relatively high, and that investment options are somewhat limited. Tentatively, my plan is to go with hsabank.com, but I'm waiting till the last minute (which I think is September for those who filed an extension) to see if more options become available.

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that fees are relatively high, and that investment options are somewhat limited.*

Yes, that takes some of the fun out of it:

There is a monthly service fee of $3.50 taken from your bank account each month. ($2.25/bankaccount and $1.25/brokerage) You will also be responsible for any applicable trading fees. You will also be charged a $50 per year fee if your brokerage account does not have at least one executed trade per calendar year. Due to these fees and the minimum balance requirement, it may not be beneficial for low balance account or new accounts to invest immediately. Carefully weigh the alternatives of keeping your HSA funds in the bank account versus investing.

The $2.25 bank account fee is waived when the balance is over $3,000 so one could wait until Jan 2, and make the initial 2005, and the 2006 contributions on that day to put the balance over $3,000 immediately (if I understand things correctly).

[MooreBonds]

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Originally Posted by TromboneAl The $2.25 bank account fee is waived when the balance is over $3,000 so one could wait until Jan 2, and make the initial 2005, and the 2006 contributions on that day to put the balance over $3,000 immediately (if I understand things correctly).

That's exactly what I did, Al. I subsequently invested my $5,250 (remember, 2005 increased the HSA contribution limit due to inflation to $2,650/year for an individual policy) among IGR (200 shares, REIT fund, yielding 8.35%) and CEI preferred class A (100 shares, yielding 7.92%). Even though I'm getting socked for both the brokerage monthly fee and a low-balance fee, the interest that my funds are earning more than offsets the fee. Sure, it cuts down the return, but it's better than putting $3,000 in the account earning measly savings accounts rates to avoid the $1.25/month fee.

If you can, don't even think about touching the HSA assets. Let those babies multiply over the years and just fund your minor health care expenses out of your pocket change. Of course, if you do encounter a significant medical expense, it may make sense to cash in your HSA...but my plan is it let it ride for as long as possible, and let it become yet another retirement savings vehicle (among my annuities and SEP/ROTH IRAs).

Now that I look at it, Al, I have a question - isn't the HSA policy only defined as ANY policy that has a deductible higher than $1,000, and lower than $10,000? If so, wouldn't ANY of the policies you listed qualify under the gov'ts definitions? (I can't remember if the gov't has any fine print on high-deductible policies). Remember - just because an insurance company doesn't call it an "HSA Policy" may not necessarily mean the gov't wouldn't let it qualify...it might pay to double check the technical definitions.

Also, don't forget that it's $2,600 for an individual policy, and $5,000 for a family (more than 1 person) policy, so if your deductibles are higher than $2,500, you might be able to up that contribution.

--Peter

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isn't the HSA policy only defined as ANY policy that has a deductible higher than $1,000, and lower than $10,000? If so, wouldn't ANY of the policies you listed qualify under the gov'ts definitions?

I had the same question, and don't know the answer.

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but my plan is it let it ride for as long as possible, and let it become yet another retirement savings vehicle

Ah, but if you use it for medical expenses, the withdrawals are tax free, and you don't want to squander that benefit. But good point -- I guess the best is to let it ride for a while (10 yrs?) and then start using it for medical expenses. I'm glad you mentioned that.