Help! Health insurance – Blue Cross PPO, or Blue Cross HSA?

by nc on November 6, 2009 · 20 comments

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..

Update: I’ve been on the HDHP+HSA for a few years – see the comment thread for additional notes. The short of it is that it’s worked out great for me, but consider your options carefully!

{ 19 comments… read them below or add one }

amanda laughton November 6, 2009 at 1:04 pm

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.

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nc November 6, 2009 at 1:12 pm

@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!

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Jason Tait November 6, 2009 at 1:13 pm

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.

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nc November 6, 2009 at 1:15 pm

@Jason ah, yeah, good point.. I always forget about the payment option.. thanks!

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nc November 16, 2009 at 2:00 pm

We decided to go with the HSA.. here’s hoping it was a good decision! ;)

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Chuck January 4, 2010 at 8:09 pm

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

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nc January 4, 2010 at 8:17 pm

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. ;)

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TX November 18, 2010 at 4:16 pm

@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.

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nc November 19, 2010 at 8:04 am

@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! :)

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Roland March 6, 2010 at 7:21 am

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.

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nc March 6, 2010 at 7:40 pm

Thanks for the opinion Roland.. I think. ;)

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MMD September 17, 2010 at 8:54 pm

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!

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nc September 18, 2010 at 2:30 am

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!

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Macrosoft November 18, 2010 at 4:31 pm

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.

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nc November 19, 2010 at 8:01 am

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!

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Trisha September 22, 2011 at 2:26 pm

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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AGH November 14, 2012 at 1:43 pm

@NC any updates on the HSA?
My company is now offering it to us and I’m on the fence about it. I read Macrosoft’s tale and wonder about that and I don’t get an easy feeling about the HSA. To me medical insurance is like life and car insurance. Yes it’s money you spend each month (that you are not going to get back) but it’s peace of mind that in case you need it it’s there. With the HSA I am not getting that peace of mind in part since it’ still new to me but also becuase there is no safety net (ie. big insurance company) it’s just me and my HSA and any type of payment plan I can agree with the hospital/medical provider.

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nc November 16, 2012 at 12:45 pm

Sorry fo the delayed response on how it’s gone! First, I should make it clear a HDHP (high-deductible health plan) goes along with a HSA – the details of the HDHP will determine if going to a HDHP with HSA is worth it for you.

For my family, going with a HSA+HDHP has us saved money each year we’ve been on it (2010, 2011, and 2012.) However, my HDHP has what I consider to be very good terms – it is now a $3500 deductible instead of a $3000 deductible, but once you exceed that deductible, everything is covered at 100%, including medication. I’ve heard of some plans that have a deductible that is just insanely high, and that some others do not necessarily cover all services at 100% after your deductible is met (it may be that they don’t cover some services at all, like a catastrophe plan? Not really sure.)

Here’s my underlying advice to people considering switching:

* First off, calculate the savings in premiums.
* Second, look at the deductible (if any) on your PPO, and figure out how much of it you’d likely end up paying over a year.
* Third, figure out how much you pay for copays in a general year.

Add the numbers above together; if they come out to be close to your deductible on your HDHP, it may be worth it. (I’m assuming you have a HDHP similar to mine — if your HDHP doesn’t give you 100% coverage after the deductible is met, the math would be a lot harder.) I’d also advise that if you do switch to a HSA, that you deposit at least the amount that you’re saving on premiums into the HSA account each month; ideally more.

Also, *please* remember that if you decide to change to a HDHP+HSA, and have an expensive medical event early in the next year, you need to be able to cover the expenses, either with cash that you can afford to put in your HSA, or with a credit card or similar (ugh) if you have to. For example, we had a baby in March, which blew out the HSA’s deductible.. fortunately, we had planned for it, and had enough money in the HSA account to handle it. I would wager that a lot of bad experiences with HSA plans either come from medical expenses occurring before there is enough money in the account, or from a HDHP that just isn’t great.

I hope that this helps those of you who asked how it was going; again, I apologize for not replying sooner; I will do my best to respond to future questions in a more timely manner!

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RAK1116 December 13, 2012 at 10:34 am

I totally agree with NC. I am with PPO rt now. My company is offering me HSA also this year contributing $500/yr. I am very good in math, the first moment my company explained me about HSA, I have calculated the same things in same order as mentioned by NC. That’s a perfect advice. Also, only issue is paying deductible upfront if you come across a major health problem/surgery. There is an easy way, if you contribute max money you can afford to HSA in first 2-3 paychecks in a calendar year (ex: signup for 12000/12=$1000/month contribution) and then stop contributing after 2-3 pay periods by informing your employer. So you will have total deductible amount in your HSA to ease tour life. Even something happens in January, hospitals will send you bills after 20days minimum and you will still have some due time to pay. Meanwhile you can pool up money in HSA which you can pay totally for your deductibles. Hope this helps:-).

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