young adult health care decision

[stargazer08]

My DD will graduate this November. She received an employment offer which includes health care. $87/mo for PPO coverage with 300 deduct and usual 80/20 coverage. If she declines insurance, she will get $1300 that is taxable. DH and I feel it's best for her to obtain private coverage with a HSA policy that has a $2500 or $5000 deductible which will run her between 85 to 100 per month (priced with lower deduct). She has the $$ for the deduct and it's my opinion that her contribution to the HSA will offset the extra $1300 taxable income she'll get by forgoing their insurance. She's healthy and should have no problems getting a policy on her own. There is plenty of time for the application process to run its course before she will have to make her health care decision with her future employer so if she's denied coverage, she'll have plenty of time to pick up coverage through her future employer. Is there any reason we should not steer her in this direction? Just want a reality check here. We have told her she'll have to take an active role in her health care decisions since it's her money she'll be spending and her coverage will not be tied to her job. She'll also have to keep good records (save receipts) for reimbursement and that she can save receipts for years and submit them at anytime for reimbursement. Is there any reason to not do the HSA for such a young adult?

 

[Rich_by_the_Bay]

Assuming she is on her own, I'd recommend the employer PPO insurance to start. The risk of the HSA at her age is that without savings, she could end up on the hook for thousands for the deductible in the event of a hospitalization, accident, etc. at a time in her life where I presume she does not have much savings. Or are you and DH willing to cover that risk for her?

If she went with the PPO/$300 deductible for a couple of years at which time she would have a stash for meeting the deductible, it would be a better choice.

Of course the benefits of each should be compared closely, etc.

 

[free4now]

Numerically it depends on how often she will need healthcare; the HSA account will cost more if she makes significant use of healthcare. Say the HSA plan costs the same $87 that she would pay per month for employee care and assume she needs $5k worth of healthcare. Under her employee plan she pays $300 deductible plus $1300/yr, but with the HSA account she pays the full deductible, $2500 or $5000.

Also, the employee plan may have better coverage in terms of the number and scope of procedures covered.

The HSA would also make the budgeting challenge much more difficult because DD would need to manage saving and spending the $2500 or $5000 deductible. For someone just out of college with no assets the tendency to spend that money on something else might be very strong.

I have a $4k deductible HSA and I think it's a great tool, but for someone so young and just starting out it may be too sharp of a tool.

 

[Zoocat]

To me, the choice should be based upon the most reliable safety net for your daughter, which is what health insurance should ideally provide. Young people change jobs frequently. They often end up with periods of no health insurance. Getting a private policy with a HSA now would resolve that possible situation. Dealing with the record keeping and paperwork is not that difficult for a college grad. I'm sure with some coaching she can handle it just fine.