Open enrollment for health plans starts at my day job soon. Now that I have a child, I’m looking at the HSA (Health Savings Account) combined with a HDHP (high-deductible health plan) with a high deductible versus the PPO (traditional) health plan option again, and with a few changes that have been made in the HSA plan over the last few years, it looks quite appealing. I’m not seeing any real downsides, but though I’d ask for opinion from my friends on the good ‘ol interweb. ;)
Basics of HSA:
- HSA paycheck deductions will be ~$2000/yr less than PPO
- HSA has a single deductible for the family of $3000
- Preventative care is paid at 100% at all times.
- All other care is not paid until deductible is met; then is paid at 100% (including prescriptions.)
- Reading through the plan summary, post-deductible coverage appears identical to PPO
Basics of PPO:
- $300 individual / $600 deductible
- $1500 individual / $3000 family out-of-pocket maximum (not including prescription copays)
- $30 office copays
- 80% coinsurance after deductible for most other services, including lab
As far as expenses go on the HSA, I’ve added things up, and we will be paying around $225/mo for medication copays for the three of us. This means that our monthly expenses will be a little bit more than the premium savings just for medication. If we add any office visits (which we will — chiropractor, etc.), the monthly expenses go up much quicker. However, once we hit $3000 total, we’re done paying out of pocket. In the year in full, HSA can only possibly cost us $1000 more than PPO (if we never buy medications or see the doctor under the PPO, which isn’t the case).. and it will likely cost us much less, because of the $600 family deductible under the PPO and the copay cost for medications (one medication alone ends up being $400/yr, as there is no generic available.)
The only real downside I see to the HSA is that it may end up “frontloading” medical expenses — if an emergency room visit was required in January or February, for example, it’d be a $3000 expense out of pocket. However, we wouldn’t have to pay another penny for the rest of the year, as I understand it at least.
Have any of you made the switch to HSA, and if so, has it been a positive move for you? Are there any downsides that I am not seeing?
Appreciate your comments! HSA vs PPO isn’t an easy choice..
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IMHO the HSA will be a better bet in the long run, I would suggest a health savings account if your work offers one,that will then take the 3000 out of pocket, and take it out over all your paychecks for the year, but allowing you the full 3000 upfront. I spent a TON on money on medical each year, and hitting that out of pocket is a huge stress reduction for me at least. I hit my out of pocket by about May normally.
@amanda Thanks! That’s pretty much what I’ve been thinking… so I can actually have them drop 3k in the account right away and do payroll deductions for it throughout the year – that would be friggin COOL.
Thanks!
we switched to an HSA last year and have not had any problems. I am not sure what your plan says but typically most preventitive care is covered. Even if something bad happens right away most places will let you make payments of you can’t cover the cost up front. if you have other questions youknow how to find us.
@Jason ah, yeah, good point.. I always forget about the payment option.. thanks!
We decided to go with the HSA.. here’s hoping it was a good decision! ;)
Hey just to add my $.02 – I have a wife and son (now 19) on our HSA that we’ve been on since 2006 and it was working great as all 3 of us are in decent health – my employee put in $1800 per yr and we were spending mostly less than $1000/yr on medical – so we were saving around $800 or more per yr – that was until our son was snow boarding and came down wrong – just broke a bone in his left hand – 2 ERs, then surgery – followed by another since the first didn’t take and now therapy. Needless to say our $5200 max was drained nearly instantly. I switched back to PPO since the deductible is going from $5200/yr for family to $7000 and the Premium that comes out of my check is really no different from the PPO – so esp since I have an active 19 yr old – I’m going the safe route – PPO – until it us just wife and I , I think PPO is the best choice – it only takes 1 significant exp for PPO to be worth it – hope this is helpful
Indeed it is helpful, thanks!
I am saving nearly $2000/yr in premiums, and our deductible is only $3000, so hoping it will work in our favor. ;)
@NC I thin you are a jack (censored) and an idiot. It will only take one accident to drain your HSA.
HSA is nothing but a rip off.
@TX Thanks for your comment; next time, please don’t bother with the profanity. If you have a HSA/HDHP combination that will allow that to happen, it is certainly not for you.. in our case, in every scenario we calculated that is realistic for us (including worst-case), the HSA/HDHP combo has been better for us. I don’t agree that I’m a jack-bleep, but I am a self-proclaimed idiot, so I agree 100% with that! :)
nc you come off as pompous. Your posts appear to be boastful of your current medical situation and ability to easily cover your deductible. I’m sure that your arrogance rubs those around you the wrong way, perhaps you should ask them about it if you don’t believe me.
Thanks for the opinion Roland.. I think. ;)
Thanks for posting this topic because I am wondering the same thing myself. I am leaning toward the HSA as well. The only thing that makes me hesitate is that we will likely have another baby next year. The way my husband’s HSA plan works is 90% of eligible expenses are covered after the $3000 deductible is met. So if by chance the labor and delivery bill is sky high, I could be out a decent amount still having to fork out the 10%. But the premium savings over the PPO is really attractive… Anyway, I appreciate you sharing your opinion!
Glad to hear that this post was helpful for you! It’s been good for us so far.. no regrets on making the change.
You can always call your insurance company and ask for an estimate of ‘standard’ labor scenarios, but it varies so widely that I don’t know how useful that is. Have you checked to see if they do at least cap the out of pocket expenses at *some* point? I’ve heard of plans that do something along the lines of 100% copay until $x out of pocket, then 20% copay until $y out of pocket, after which everything is covered at 100%.. but every plan is different and I’m no expert in this area!
I recently had an emergency appendix surgery, after all said and done my hospital bill came out to be $50000. Since it happened in April, not only my Aetna HSA got completely drained, I also had to pay for a lot of other treatments all out of pocket. I truly believe HSA may work for young professionals 25 – 35. For anyone else you are just taking an unnecessary financial risk by signing up for HSA.
Yikes!
In our case, our maximum out-of-pocket on the HSA in conjunction with the payroll costs for the HDHP end up being less than what we are guaranteed to spend each year on copays for the PPO and payroll costs for the same.. but yeah, certainly need to compare the two plans, and make sure that you can afford the worst-case scenario on the HDHP.
Sorry to hear it didn’t work out for you.. thanks for the cautionary note!
A year later, is HSA still working out for you? I just googled “HSA” and found your site. My company is presenting us with this option vs. the traditional PPO Plan and will contribute $500 to get us started. Although I have kids, they are covered under my husband’s insurance and so am I as a secondary insurance. So, it’s just me under my plan w/the now optional HSA. Can you let me know your thoughts now that it’s been a while? Are you saving more or less? Advantages/disadvantages? Thanks!
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