Which medical plan to go with?

[iam21177]

Having just gotten married, I am changing my status/name with my work. I am 36, hubby is 34.

As dual university employees, we have the option of this "wonderful" dual coverage plan. HR is really pushing it.

The plan involves $2366 yearly premiums as dual coverage.
$1.25 generic drugs (90 day)
$10 copays
$350 individual/$700 family detectible

Hubby is already on a HDHP plan before we met. He has an HSA which is maxes. I plan to do the HDHP so we can do the family maximum for the HSA come open enrollment time. Deductible is $1500 individual/$3000 family.

This HR lady is really hesitant to make the switch for me (my plan is the plan that would change). She keeps saying I need to come in so she can explain all the dual benefits. "OMG you don't seem to understand these amazing benefits you are giving up!!!" Unless there is more than what is on the pamphlet, we feel HDHP so we can get the family HSA max is really the way to go. The only triple tax deferred account out there!

I do have 2 Rx that I have to take every day. I'll have to start paying $200+ out of pocket for those (they aren't on the $4 Walmart deal). We don't go to the doctor often right now. I did have an ER visit in 2012 and H had an ER visit in 2011. Preventative care is no cost on any of our plans, HDHP or not. We have funds to pay big bills up front.

We can switch plans later if we feel we're going to the doctor more, that is allowed.

So am I not seeing the amazing benefits of this dual coverage like this lady is insisting? Doesn't a triple tax deferred plan seem more advantageous in the long run since we want to retire early and are going to have to pay for medical expenses in early retirement?

 

[JoeWras]

I love my HDHP/HSA. But then again I don't have a plan choice like your "wonderful" plan, which I think is actually pretty wonderful compared to most plans out there, especially with the coinsurance many are adding.

First, if you rarely go to the doctor and only have $200 in prescriptions, then I think you are right on to think HSA.

If you go to the doctor a lot for every cough, cold, flu and puke, then consider your wonderful plan. But it sounds like you don't do that.

Finally, consider the hit on going to the emergency room if something bad happens (break a leg, get a gall stone attack). That's a $2300 differential. But not really, because of the tax advantage! You'll have to figure the tax advantage, but it is probably at least $2000 for you two if you contribute the full $6k and make good money.

It comes down to this, in my opinion:

- Rare doctor visits, manageable prescriptions: HSA wins
- You visit the doctor for every wart, cough and ache, then wonderful wins (due to low $10 copay)
- You win on anything catastrophic due to tax advantage and the fact that your copay won't save you from hospital fees (probably).

Finally, to make it work, contribute the maximum to the hsa.

 

[iam21177]

Thanks for the reply! You are right, we don’t really frequent the doctors if we go by our past history. Sure that can change in the future. Each of our ER bills were at about $700, so that’s doable out of pocket. (If there are no taxes on the bill, we’ll just leave the HSA alone most likely.)


We would plan to contribute the family maximum for sure.
Hubby’s HR person is all for the HSA and even does it with his family of 7! My HR person cannot fathom why anyone would not opt for the dual benefits and is insisting I meet with her.

 

[JoeWras]

We would plan to contribute the family maximum for sure.
Hubby’s HR person is all for the HSA and even does it with his family of 7! My HR person cannot fathom why anyone would not opt for the dual benefits and is insisting I meet with her.

That's unusual. Megacorp here is pushing HSA plan.

A lot of people were dubious and distrusting of Megacorp HR due to this "selling," but some of the engineer types came up with some pretty clever spreadsheets (with graphs) to show the effect I mention above.

That is:
- Rare doctor visits, low prescriptions: HSA wins
- Many doctor visits, many prescriptions: Traditional wins
- Catastrophic: HSA wins

There was a "knee" and "sweet spot" in the curve for those middle "traditional plan" wins. The spreadsheet took into effect copays, negotiated costs for the HDHP plan, the tax effect of the income reduction going into the HSA, etc. It was pretty cool, but of course might differ with other Megacorp plans.

Finally, the one thing the spreadsheet didn't take into account was if costs were paid out of regular funds (not HSA), and if the HSA was growing tax deferred. This is hard to quantify, but yet another part of the benefit we didn't even consider. (This would be +3 of the so called "triple tax advantage".)