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High-Deductible Health Insurance - Am I Missing Anything?
Old 10-08-2010, 05:45 PM   #1
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High-Deductible Health Insurance - Am I Missing Anything?

I am contemplating leaving my employer to become an independent contractor. One of the major questions, of course, is health insurance. I've never purchased individual health insurance before, so would really appreciate any feedback on this board.

Our situation:

- 32 and 34 years old (DH is on my plan currently)
- No children and no plan in the next 3 years (hard to plan too much ahead)
- In great health

Currently we only use our insurance for an annual check up and a dental cleaning 1-2 times a year.

I live in MN. The two large health insurance providers are HealthPartners and BCBS. Both offer similar individual insurance plans. The ones I am interested in have the following:

- $3,000 to $5,000 deductible
- one annual check up is included
- $200 - $400 co-pay for first ER visit
- pretty low co-pay for generic drugs (neither of us have been on any medication for the last 10 years)
- No maximum insurance pay-out

We'll need to pay the dental cleaning out of pocket, but it won't be too much. The plan is mostly a catastrophic insurance for us.

The monthly premium for these plans is only $120 - $140 or so per person. Does that seem right? I am nervous because I have never purchased health insurance before and am afraid I'm missing something major.

I am also currently looking for other employment, so it's possible we will only be on this plan for 6 months to a year. Hard to know in this environment. If we decide to have kids, we'll definitely need to switch to a family plan. DH owns his own (extremely small) business so we may be able to buy insurance under his company, after more parts of the health-care reform are implemented.

Thank you in advance for your insights!
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Old 10-08-2010, 05:55 PM   #2
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If you anticipate good health for a while, it is hard to beat the deductible savings going in, and lack of taxes coming out for health care.

Even though I'm retired and 61 years old, we just signed up for the HSA option ourselves - the premium reduction is almost the same as the HSA contributions we plan to make, so it became very attractive. In 4 years we'll have to abandon since I will be Medicare eligible, but at $7050 per year of contribution for 3 or 4 years, it will be a nice hedge.

You can even use your HSA funds from prior years to pay Medicare premiums. I can't see a losing scenario in our situation. If you are employed you can even consider dropping your use-it-or-lose-it flex plan.

I suggest seriously considering it if you can sustain some unexpected medical expenses before you accrue a nice nest egg in your HSA.
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Old 10-08-2010, 06:02 PM   #3
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Thanks! I am fairly uneducated about HSAs. Will need to read up on them over the weekend!

I don't really understand what the appeal of a "traditional" health care plan is. The difference in premium is so astounding it more than makes up for deductible itself, at least in our case.
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Old 10-08-2010, 07:48 PM   #4
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Ok

In all insurance the key is the ability to renew the insurance no matter what happens this year. Even better is the right to convert it to any other plan that is offered. This renewal/ conversion right is often far more important and valuable to many people than the current level of coverage. It is similar to a "call" option on life insurance. i.e. suppose instead of life insurance you could buy the right to buy life insurance in the future at the rate for that date you could get today.

As a practical matter this is what compulsory health insurance actually provides
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Old 10-08-2010, 08:07 PM   #5
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Just retired and in good health. Been using a high deductible HSA plan for a couple years. In my opinion it is the way to go for those in good health. You can contribute up to ~$3k single and $6K family per year to your HSA account and it is tax deductible. Any funds remaining in the HSA account after you reach 65 can be withdrawn like it was an IRA account.
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Old 10-08-2010, 09:28 PM   #6
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This sounds more like a watered down traditional plan than a high deductible HSA-compatible plan. If you have first-dollar benefits for generic drugs and ER visits, then it won't be HSA compatible. Make sure your policy includes full coverage for brand name and specialty drugs. If it doesn't, find another plan. You would really regret it if you needed any expensive prescriptions that don't have a generic alternative (which is a lot of them)....

BCBS will have a better network most likely and you will have much better coverage if you're out of state.

I took a quick look at the BCBSMN website and if I were your agent, would tell you to be looking at the Options Blue plan with $5,000 combined deductible and 100% paid afterward. $179/month for both of you combined. Or the $2600 deductible with $5200 max out of pocket for $195/month. That plan is compatible with an HSA, sounds like the one you are looking at is not. Hope that helps.
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Old 10-08-2010, 11:26 PM   #7
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My accountant initially told me that I qualified for a HSA due to the high deductable which is part of a group plan from my employer.

I turns out that since I do get prescription benefits from day one, I do not qualify for a HSA.
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Old 10-09-2010, 01:45 AM   #8
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Thank you all for your contributions. I never really looked closely at HSAs and didn't realize it had so many benefits. Like many things, it would be so much easier to plan if I knew how things would turn out! These are some great suggestions. Thanks a lot!
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Old 10-09-2010, 05:10 AM   #9
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If you decide to get an individual health plan, I'd suggest you do so with the help of an agent from NAHU - National Association of Health Underwriters. They can help you get an idea of how things will turn out and only have you apply for ones in which you are likely for approval. Plus, it doesn't cost you any more than if you applied directly.

I went that route when I decided to FIRE and applied for a high deductible plan. In my case, my employer had just switch to either a traditional plan with larger co-pays or a HSA as the only two choices. I chose the HSA route with FIRE'ing in mind so I had that duck already in line.

I'm quite satisfied with my HSA. I use it for spending as opposed to savings (like an IRA). It's great to know that I get to reimburse myself for qualified medical expenses (for example, I racked up about $2000 in dental bills this year), plus the triple tax advantage helps too.
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Old 10-09-2010, 11:01 AM   #10
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When I need to shop for Health insurance I print out all the coverage and then check them all out . You don't want a huge co-pay for surgery and you want the total out of pocket amount to be reasonable & the yearly or lifetime maximum pay out needs to be high enough to cover the worst scenario.
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Old 10-09-2010, 11:31 AM   #11
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Our retiree medical plan has the deductible to be a HDHP, but when I asked about an HSA they told me that it doesn't qualify because the HDHP with HSA laws apply to employer plans, not retiree plans.

I looked for info specific to this online and didn't find anything.

Medical eductible is $2000 each. Prescription deductible is $550 each.
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Old 10-09-2010, 11:39 AM   #12
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Quote:
Originally Posted by Sue J View Post
Our retiree medical plan has the deductible to be a HDHP, but when I asked about an HSA they told me that it doesn't qualify because the HDHP with HSA laws apply to employer plans, not retiree plans.

I looked for info specific to this online and didn't find anything.

Medical eductible is $2000 each. Prescription deductible is $550 each.
If you have a prescription deductible and Rx benefits before your medical deductible, it's not going to be HSA compatible. To qualify as HSA-compatible, there can't be any benefits other than preventative care before you've paid the deductible.
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Old 10-09-2010, 12:18 PM   #13
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If you have a prescription deductible and Rx benefits before your medical deductible, it's not going to be HSA compatible. To qualify as HSA-compatible, there can't be any benefits other than preventative care before you've paid the deductible.
No Rx benefits before meeting the Rx deductible. I'm pretty sure that's separate from the medical deductible. So it looks like one of us could meet the Rx deductible and get to the level with the benefit (35% copay) before meeting the medical deductible.

Thanks for clearing that up. Neither the medical plan or the pension plan people explained it that way.
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Old 10-09-2010, 12:27 PM   #14
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No Rx benefits before meeting the Rx deductible. I'm pretty sure that's separate from the medical deductible. So it looks like one of us could meet the Rx deductible and get to the level with the benefit (35% copay) before meeting the medical deductible.

Thanks for clearing that up. Neither the medical plan or the pension plan people explained it that way.
The Rx deductible has to be met, but you could still get Rx benefits before paying your medical deductible from the way you're describing it. They probably didn't explain it to you that way because they didn't know the answer.
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Old 10-09-2010, 12:58 PM   #15
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http://www.healthinsuranceinfo.net/m..._Insurance.pdf is link to a booklet put out by Georgetown University and is helpful when shopping for health insurance. It has a worksheet to use to compare plans.
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Old 10-09-2010, 05:02 PM   #16
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Hello GoodSense - This is one of the best sites in my opinion :

Find Insurance Options

Good luck

Quote:
Originally Posted by GoodSense View Post
I am contemplating leaving my employer to become an independent contractor. One of the major questions, of course, is health insurance. I've never purchased individual health insurance before, so would really appreciate any feedback on this board.
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Old 10-09-2010, 05:06 PM   #17
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Hello GoodSense - This is one of the best sites in my opinion :

Find Insurance Options

Good luck
Except that website won't give you the help of someone who actually knows what they're talking about. Do some research (that site may be a good place to start), then find an independent agent to confirm what you think you understand and explain to you what you don't understand, and maybe make a suggestion or two.
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Old 10-09-2010, 06:00 PM   #18
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Latest issue of Consumer Reports has ratings by state of insurers as well as advice on buying insurance.

I have not read the article yet, but it looks extensive.
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Old 10-09-2010, 08:22 PM   #19
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I am leaving a medical plan that was tied to a part-time job I had with a company in which I invested that is now circling the drain. I have signed up for an HSA-compatible HDHP. After going through all the pros/cons, I'm convinced the whole country should be on one of these.

From a medical cost standpoint, paying the first $10,000 or so in expenses (except for a small amount of preventative) will really concentrate the mind on costs. For example, drugs that used to cost $200-500 per month (almost hidden to the insured) will now be replaced with less expensive substitutes. Doctor visits only when really necessary.

The HSA itself is a fantastic deal, especially if you can pay your medical expenses outside the HSA. If you do, the $6K or so you put in, aside from being deductible, can grow tax-free. When you turn 65, you can get it back without tax or penalty for any reason. Until then, if you save your receipts, you can get a distribution for allowed expenses with no penalty. The only way to lose is if whatever you put the HSA money in declines in value, because you cannot take a deductible loss on that.
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Old 10-09-2010, 09:10 PM   #20
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Quote:
Originally Posted by 45th Birthday;986060If you do, the $6K or so you put in, aside from being deductible, can grow tax-free. [B
When you turn 65, you can get it back without tax or penalty for any reason[/B]. Until then, if you save your receipts, you can get a distribution for allowed expenses with no penalty. The only way to lose is if whatever you put the HSA money in declines in value, because you cannot take a deductible loss on that.
Are you sure? I understood that at 65 withdrawals for nonmedical expenses are subject to tax. Withdrawals for medical expenses are, of course, tax-free.

Hope you're right.
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