Discontinue HDHP/HSA plan despite it being the better financial option?

[sergio]

I will probably be discontinuing the HDHP/HSA plan for 2021. I hate the mental "games" that it involves.

I've never skipped on care, but I would be lying if I said the thought of paying $200-300 for an office visit doesn't cross my mind any time there is a minor issue. I feel really guilty about it since we have 2 kids on the plan as well.

I know one guy who tried to skimp on as much health care as possible in 2019, only to end up in the ER with a broken arm in early December, a month before the deductible/OOP reset. He could've basically had "free" care all year since that ER trip would max out OOP of $6000 anyways.

People have told me "just pay with your HSA dollars" but being an uber-saver I haven't taken a cent out of the HSA and have just paid with cash.

Has anyone been in my situation? Psychologically I'd feel much more comfortable paying $20 for an office visit of $50 to see a specialist, $500 for an ER trip, etc. The networks are the same, premiums are roughly double - $250/month for HDHP w/$7000 OOP max, $450/month for 20/50 copay plan.

The money I would've put in the HSA would then be redirected to our taxable account or 529 plan.

Or am I looking at this the wrong way? Any input would be greatly appreciated.

 

[bloom2708]

Isn't it too late as we are 5 months into 2021? Or do you have a qualifying change? Maybe you meant 2022?

What are your other options? It is helpful to compare all the details of HDHP vs PPO.

Many variables. More premiums vs lower with more out of HSA/pocket.

 

[RunningBum]

Each fall when it comes time to pick a medical plan, I do a spreadsheet.

First is the fixed cost (premium) of each plan.

Then I figure out the variable cost of medical care, including up to the various deductibles of the plan, and then up to the max out of pocket.

Then I factor in the taxable value of the HSA, which is your HSA contribution times your marginal state and federal tax rate. If you need the income reduction of the HSA contribution to keep from going over the cliff (if the cliff comes back in another year), you factor in the subsidy vs. no subsidy, which almost certainly favors an HSA policy.

What I find is that most years the cheaper high deductible policy is best if I have low costs, then the lower deductible policy is best for a middle range of medical costs, then the policy with the lowest out of pocket costs (has been an HSA policy for me) works best for high medical expenses, though this year a gold an an HSA policy were almost the same.

So in most years it's impossible for me to know which will be the best financial option, but I can see the breakeven points and the highest difference points to help me make my decision.

Once I've made this analysis I don't worry about individual medical payments, especially where I would've hit a deductible with gold buy not yet with bronze HSA. I trust my calculations that it will all work out.

I agree that "just pay with your HSA dollars" is a non-factor, or worse. All that does is change which pocket you take money out of, and as you say, if you can leave your HSA alone to grow tax free, that's a better choice.

If one policy has different costs for office visits, specialists, ERs, your calculations are more complicated. Take your best shot.

Most times the difference in plans isn't too large, with two exception cases:
- If the HSA contribution keeps you from going over the subsidy cliff, use an HSA plan
- If you are generally healthy and many years have little or no medical expenses, use a lower premium plan

 

[Gotadimple]

IMO you are not looking at this in the wrong way you just need to consider everything.

There are two ways, make an annual deposit and use it to offset the cost of care throughout the year. Or, if you can afford it, make the deposit and pay for care out of pocket. Meanwhile the HSA money is growing and earning (a bit of interest, or more if you can invest it in growth mutual funds/stocks from within the HSA).

In the HDHP/HSA scenario earnings are tax-free when you do a distribution for medical expenses, and later in life can cover higher medical costs due to age. After age 65 you can withdraw everything tax-free.
https://www.irahelp.com/slottreport... employer health insurance plans also qualify.

The difference in your second scenario (taxable account) is that you will earn on your savings and will be taxed on your earnings (interest, dividends, capital gains). If your state has an income tax, you may be able to take a deduction on a 529 deposit.

So many things to think about.

-Rita

 

[ocean view]

My first year on the HDHP plan I had similar thoughts. Here’s how I got past it. The difference in premium between my bronze plan and a silver plan at that time was something greater than $500 per month. Even as I was going through treatments for shoulder issues, I knew there was no way that I would incur $500 of OOP every single month. And I didn’t.

So it’s a gamble. Pay the increased fixed cost or maybe pay less. I’d say try it for a year. If it doesn’t work financially, then switch next year.

 

[zinger1457]

I've never skipped on care, but I would be lying if I said the thought of paying $200-300 for an office visit doesn't cross my mind any time there is a minor issue. I feel really guilty about it since we have 2 kids on the plan as well.

Your office visit cost estimates are way higher than I have experienced based on the final insurance company negotiated rate. Unless there are special test required my typical office visit costs have been in the $50-100 range. In any case I would never skip out on a visit if I felt it was important.

 

[Irishgirlyc58]

Your office visit cost estimates are way higher than I have experienced based on the final insurance company negotiated rate. Unless there are special test required my typical office visit costs have been in the $50-100 range. In any case I would never skip out on a visit if I felt it was important.

I just switched to a HDHP/HSA this year.
Have had 2 visits to urgent care for ~$200/visit.
One Dr. appointment to establish a new PCP for ~$300.
So, I thought the estimated costs were spot on.

I too struggle with how much the visits cost compared to my Kaiser plan.
I had 2 reasons for changing
1. Anticipated retirement with employer healthcare subsidy ending. The cost of premium and the deductible added together is about $150 a month less than the Kaiser premium.
2. Kaiser is about 45 minutes away. The older I get the more concerned I got about that distance.

My employer fronted the first years deductible costs so that helped a lot also.