Anyone else NOT go with the HDHP (employer medical insurance)

[FrugalFisherman10]

I think I should go with a regular old PPO health insurance plan through my new employer. Anyone else still do this?

I feel like mustachians and MadFientist followers and pretty much everyone else with personal finance interests got so enamored with the HDHP and HSA combo the last several years. But I am not sure that best fits my expenses and needs.

I generally think of myself as healthy, and yet I blow past my deductible the last several years. This past year it was therapy/counseling.
I'm a 30 year old single male, insuring just myself. And while I lead a healthy lifestyle and am generally healthy, I incur kinda alot in medical expenses. 

I've linked a workbook with some maths if you want to check it out. Am I crazy to leave the employer $1000 HSA contribution and the ability to sock away some savings that I get to keep on the table?
https://docs.google.com/spreadsheets/d/1PY0a6zuuwuxFlCAT0F_2O__RaVV6ibTSA7ocJ8kch5I/edit?usp=sharing


Note: I do NOT plan to do the madfientist thing of saving my medical receipts and records for 30 years to later withdraw my funds completely tax free. I've tried it a bit and keeping up with that just seems impossible. Instead, I will be paying for medical expenses as incurred, out of my HSA.

Let me know your thoughts!

[Morning Glory]

My choices were a little different than yours, but I went with the middle tier ppo. The way I compare plans is to add the yearly premium and the per person oop max, then take the one with the lowest total.

Does your graph include the annual premium?

 Also my employer does not offer matching hsa contribution and there is a quarterly fee associated with the hsa.

My ppo also provides 100% coverage for primary care before meeting the deductible so that was a consideration too.

ETA you could combine the ppo with the flex spending for some tax savings if you know about how much you spend on healthcare per year.

[BikeFanatic]

My friend who had a baby went with the High deductible plan to do the HSA tax break, but they spent a fortune on the care. Doesn’t make sense to me. I am on the cheapest HMO plan and I tend to get X-rays or something that costs money. You are very young though so cancer and other considerations are so rare you could swing  the high decuctable health savings account maybe every other year?
Just saying I don’t believe in them for older adults like me, but you could try it. Is it only 1000 per year you can save?

[slappy]

It depends on the max OOP of the HDHP. I have had multiple kids while on a HDHP. My OOP max is $4k per year. We blow through that in January sometimes with kids being sick/ER/hospitalization. However, I never pay more than $4k a year.

Also, I don't do the "Madfientist thing" either. I'm assuming there will be plenty of expenses in retirement to use up that money. I'm not worried about reimbursing myself for past expenses. I'll just use it for medical expenses in retirement. Unless one of my kids needs braces or something, and then I guess I'll consider using it for that. My overall point is that you don't have to save expenses for 30 years in order for the HSA to be beneficial.

[Laserjet3051]

I have never selected hdhp. In theory it has its advantages, but in practice this product is far inferior than the low/no deductible plans for my family for many reasons. I dont ever want my family to decide that they shouldnt go to a doctor or emergency room because of cost. In some situations, the decision could prove fatal.

[SaucyAussie]

For me, I save about 3K a year in premiums by going with the hdhp, and then my company throws in 1K for the HSA so I am 4K ahead without medical expenses.  The difference in deductibles is about 4K, so in a high medical expense year, it is pretty much a wash.

So once I factor in the advantages of having an HSA, it really is a no-brainer.

[slappy]

I have never selected hdhp. In theory it has its advantages, but in practice this product is far inferior than the low/no deductible plans for my family for many reasons. I dont ever want my family to decide that they shouldnt go to a doctor or emergency room because of cost. In some situations, the decision could prove fatal.

This is such a strange argument, especially for mustachians. Not everyone has access to a low or no deductible plan. If a person (particularly a mustachian) has chosen a HDHP, I would assume that person is competent enough to not deny necessary medical care to save a buck. Also, in my particular situation, it almost seems like I am incentivized to get as much care as possible, because once I reach my (relatively low) OOP, everything else is covered. I do understand  your “in practice” argument for people with lower incomes or higher OOP max. Personally, I have a line item in the budget to cover the OOP max, which I thought was the recommended way to handle a HDHP. (Yes I realize this is much easier to do when the OOP max is $4k compared to when it is $13k. All of my comments apply to people who have a choice, not people who only have HDHP as an option and/or people who have high OOP max.)

[mountain mustache]

I think if you regularly use services, it makes sense to go with PPO in this case. I'm your age (29) and have the option of PPO or HDHP with $500 employer contribution. I go to physical therapy once a week all year (chronic injuries) and so it's worth it to me to have a plan with co-pays before you hit the deductible. If I was 100% healthy, didn't need PT, or therapy, or occasional x-rays and MRIs for my back, I'd totally do the HSA plan, but it's not worth the risk for me. If you are using services weekly/monthly I just don't think the numbers work out. I do have the option of an FSA so I can use pre-tax money for my health expenses, but of course it has to be used up every year (which I have no problem doing! haha)

[slappy]

I think if you regularly use services, it makes sense to go with PPO in this case. I'm your age (29) and have the option of PPO or HDHP with $500 employer contribution. I go to physical therapy once a week all year (chronic injuries) and so it's worth it to me to have a plan with co-pays before you hit the deductible. If I was 100% healthy, didn't need PT, or therapy, or occasional x-rays and MRIs for my back, I'd totally do the HSA plan, but it's not worth the risk for me. If you are using services weekly/monthly I just don't think the numbers work out. I do have the option of an FSA so I can use pre-tax money for my health expenses, but of course it has to be used up every year (which I have no problem doing! haha)

I’ve often thought the HDHP makes the most sense if you never need care or if you need a ton of care. Like I mentioned above, my HDHP covers everything after we pay the OOP max, so at that point, it’s like “bring on all the care!” We used to have a weekly therapy bill and I never really thought about it because I knew that at some point, the OOP max would get hit and then it would all be covered anyway.

[charis]

It is very situation and math specific, but my family of four has been on an HSA for six years. We usually hit the deductible (3k) mid year due to 2/weekly appointments, then pay on 5% for medical for the rest of the year. It's great because the plan matches $1800, our premium is much lower than a PPO, and the copays for weekly appointments would add up quickly.

That's not to say that an PPO isn't the right choice for you but you should do the math to estimate the price difference, not just guess because you think an HSA will be more expensive.  Remember that you don't pay full rack rate on an HSA before hitting the deductible, it is still a negotiated rate.

I also don't plan to save receipts.  We max the family HSA and generally use half for current expenses (if needed) and invest the rest (invested HSA balance is 37k).  We will use it for future medical expenses and anything leftover will go to my kids.

ETA my family has been in the ER several times, and we've never had to pause to question the cost.  If we can't afford it at the time, we take it out of the HSA. I don't understand this line of argument at all. And if you have a lot of treatment costs, like we do, an HSA can be very valuable.

[mountain mustache]

I think if you regularly use services, it makes sense to go with PPO in this case. I'm your age (29) and have the option of PPO or HDHP with $500 employer contribution. I go to physical therapy once a week all year (chronic injuries) and so it's worth it to me to have a plan with co-pays before you hit the deductible. If I was 100% healthy, didn't need PT, or therapy, or occasional x-rays and MRIs for my back, I'd totally do the HSA plan, but it's not worth the risk for me. If you are using services weekly/monthly I just don't think the numbers work out. I do have the option of an FSA so I can use pre-tax money for my health expenses, but of course it has to be used up every year (which I have no problem doing! haha)

I’ve often thought the HDHP makes the most sense if you never need care or if you need a ton of care. Like I mentioned above, my HDHP covers everything after we pay the OOP max, so at that point, it’s like “bring on all the care!” We used to have a weekly therapy bill and I never really thought about it because I knew that at some point, the OOP max would get hit and then it would all be covered anyway.

I think it really just depends on the plan. My HDHP option has a $5k OOP max for the year. This year I will spend less than $2k on PT/X-Rays, Dr Appointments, etc because of low co-pays on my PPO. The premium difference per month is $40, which is $480 a year...if I had gone to my 30 PT appointments on the HDHP I would probably have spent double what I have on the PPO, and still not hit the OOP max for the year. If I was having major surgery, or expensive treatments, I might consider the HDHP. But in my case I'm only missing out on a $500 employer contribution, so it's not a huge amount of money, and definitely doesn't make up for the cost difference of my specific treatments.

[charis]

What is your deductible and what is your coverage after you hit it? You can't compare plans unless you are looking at these numbers.  Our family OOP is 10k and we've never gotten close to it.

[RunningintoFI]

Just want to point out that one value of saving receipts is that it can serve as an additional component to an emergency fund if you are laid off during a crazy time like during an economic recession tied to a pandemic and you can get access to tax free money at a time when it is really valuable.  I didn't need that access 3 decades from now, but I was happy to have it 1 year after the medical expenses occurred. 

[charis]

Just want to point out that one value of saving receipts is that it can serve as an additional component to an emergency fund if you are laid off during a crazy time like during an economic recession tied to a pandemic and you can get access to tax free money at a time when it is really valuable.  I didn't need that access 3 decades from now, but I was happy to have it 1 year after the medical expenses occurred.

+1. We typically reimburse ourselves for the prior year's costs, if we need to. Those statements are usually accessible online. It's definitely useful as part of an EF.

[Sibley]

I've done a mix. You really need to look at the plans you have available and figure out what you expect to have in medical costs, then compare to premiums + OOP max.

HDHP sometimes make sense, sometimes don't. My parents for example are on the HDHP despite the fact that they hit the deductible. In fact, the last couple years, they've hit the OOP max. In their case, the costs end up being front loaded. But the premiums are so much lower than the PPO plan that it makes sense (OOP max is the same I believe).

[FrugalFisherman10]

so sounds like everyone is just saying "it depends".
 Atleast there's some others out there that go with the non-HDHP option.

Since several of you were asking, here I have attached a screenshot of the costs for three different plans I'm offered. There's a zillion more options than this for some reason, but these seem to be representative of the three 'tiers'.

This is the same info at the link I provided in the OP.

[use2betrix]

When it was just me, I always did the PPO because cost-wise, it was a no-brainer. Now that my wife is on my insurance, we do the HDHP because it’s like $700 less per month or something crazy. I have maxed out my HSA the last 3 years. I do like the madfientist does, however, and we save all our receipts and will use them for reimbursement far in the future. May start taking pictures of them and saving them electronically.

One thing I do notice - I do neglect my health from a Dr. visit perspective a bit more. I still take 1-2 prescriptions and have to see the dr every other month for that. If I’m experiencing pain/injuries i’m far more likely to wait it out or do a lot of research on my own for my own plan to rehabilitate. It also doesn’t help that I’m hourly, so missing work for Dr appts becomes very expensive very quick.

Next year, my wife and I may switch to the PPO plan and just knock out a ton of nagging medical items we’ve been dealing with (my shoulders/feet, we may have a baby, etc.)

[mountain mustache]

That PPO plan option is so good, it seems like a no brainer to me...but I’ve never ever had a plan with such a low deductible. What are your copays with that plan?

[AMandM]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part and way higher OOP costs because of the HD part. You spend more on the HDHP plan regardless of whether you use a lot or a little medical care. I don't understand why anyone would pick it, unless they were absolutely committed to seeing a doctor outside the network.

[charis]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part and way higher OOP costs because of the HD part. You spend more on the HDHP plan regardless of whether you use a lot or a little medical care. I don't understand why anyone would pick it, unless they were absolutely committed to seeing a doctor outside the network.

This post makes no sense. Have you ever been on an HDHP?

[Morning Glory]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part and way higher OOP costs because of the HD part. You spend more on the HDHP plan regardless of whether you use a lot or a little medical care. I don't understand why anyone would pick it, unless they were absolutely committed to seeing a doctor outside the network.

This post makes no sense. Have you ever been on an HDHP?

It's possible that their employer charges more for the hdhp than the ppo. Makes no sense but it could happen.

[MDM]

so sounds like everyone is just saying "it depends".

Correct, because neither all PPO nor all HDHP plans are identical.

You should evaluate the ones available to you and then choose accordingly.

[slappy]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part and way higher OOP costs because of the HD part. You spend more on the HDHP plan regardless of whether you use a lot or a little medical care. I don't understand why anyone would pick it, unless they were absolutely committed to seeing a doctor outside the network.

Seems like a few people have already said why they pick it.

[MDM]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part....

HDHP stands for High Deductible Health Plan (https://www.irs.gov/pub/irs-pdf/p969.pdf).

Not sure what you mean by "the HP part."

[mm1970]

It depends. I used to be the person a few people asked "What should I do??" each year when changes happen.  I tried to teach them to fish.

I switched to an HMO when I was pregnant with kid #2.  I've stayed on it because it's cheap for me.

[charis]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part and way higher OOP costs because of the HD part. You spend more on the HDHP plan regardless of whether you use a lot or a little medical care. I don't understand why anyone would pick it, unless they were absolutely committed to seeing a doctor outside the network.

This post makes no sense. Have you ever been on an HDHP?

It's possible that their employer charges more for the hdhp than the ppo. Makes no sense but it could happen.

Possibly, though not way higher, and that's not the only thing. Every HP (health plan), whether high deductible or PPO, has premiums, and it doesn't speak to the amount. And a high deductible does not mean higher OOP necessarily, that depends on the plan and the services used. The claim that HDHP is always more money regardless of the $$ spent on medical costs is just false. And we rarely used an out of network provider, so... what?   I had a PPO plan prior to 6 years ago, and HSA has several appealing aspects for mustachians that go beyond the cost comparison.

[bigblock440]

Like others have said, you have to do the math yourself.  Just on the surface, it looks like you're paying an extra $850 in premiums to save $2700 in deductibles if you max out.  Then you have the co-pays vs co-insurance, and general healthcare costs in your area, your OOP max, and your expected medical costs.  In my case, the PPO essentially was just paying the deductible in regular installments coming from the paycheck.  Every year you don't max the deductible, you come out ahead with the HDHP, at least in that case.

[Proud Foot]

You might double check your numbers on the spreadsheet. When I look at I see a #VALUE error for the Cigna PPO. Also, how do you have a deductible and OOP Max that are different numbers if you have 100% coverage after hitting the deductible?

Without that information its harder to really evaluate the three plans.

[AMandM]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part....

HDHP stands for High Deductible Health Plan (https://www.irs.gov/pub/irs-pdf/p969.pdf).

Not sure what you mean by "the HP part."

Wow! Thank for that. I honestly thought the HP stood for "high premiums." At my husband's employer, the employee share of premiums is higher for the HDHP plan than for the PPO plan.  So if you use little medical care, and just pay the (employee share of) premiums, you spend more under the HDHP than the PPO. If you use a lot of medical services, you pay for those yourself under the HDHP plan, up to the deductible, so you also pay more than with the PPO.

When I said I don't understand why anyone would choose it, I meant the HDHP at my husband's employer, not any HDHP in general.

[charis]

We always take the PPO. The HDHP policy has way higher premiums because of the HP part....

HDHP stands for High Deductible Health Plan (https://www.irs.gov/pub/irs-pdf/p969.pdf).

Not sure what you mean by "the HP part."

Wow! Thank for that. I honestly thought the HP stood for "high premiums." At my husband's employer, the employee share of premiums is higher for the HDHP plan than for the PPO plan.  So if you use little medical care, and just pay the (employee share of) premiums, you spend more under the HDHP than the PPO. If you use a lot of medical services, you pay for those yourself under the HDHP plan, up to the deductible, so you also pay more than with the PPO.

When I said I don't understand why anyone would choose it, I meant the HDHP at my husband's employer, not any HDHP in general.

I think that's a pretty rare situation.  Unless they are offering to fund the HSA or some other advantage, what's the point?  No one world ever choose that plan.  As to your point about out of network providers, it may not be a choice for some people, particularly in rural areas.

[Sugaree]

Like the previous poster have said, it's very situational.  I have a ton of choices, but for many years I was on the super duper BCBS FFS plan.  I switched to a HDHP this year and the premiums are almost half of the old plan and nearly half of the premiums are passed through to my HSA.  I've been keeping a running total and so far, we're about $2000 ahead of where we would have been if we'd stayed on the old plan, even using the HSA debit card like it's intended. 

Where I find the HDHP to have drawbacks is that I'm spending a lot more time dealing with billing.  Part of it is that it's not a plan that many people are familiar with (and don't always know how to submit things correctly to).  And part of it is because I now have to make sure everything that should count towards the deductible does.  With the old plan, I showed up, paid a co-pay and let the doctor's office deal with the behind the scenes stuff.  Now there's a new tab on my spreadsheet to track that shit.  I just, today, finally got a bill from January straightened out.  Sorta.

But can I just say, holy hell, at least they require the doctor's office to charge the negotiated rates.  I just got a bill from my kid's speech therapy.  That $200 doesn't look too bad when they billed over $1000. 

[seattlecyclone]

There's no hard-and-fast rule here. Every employer offers a different set of plans and subsidizes employee premiums differently. I think you're doing the exact right sort of analysis here.

I notice in your spreadsheet that you don't seem to be accounting for the tax savings you would get from an HSA contribution. The max contribution for a single person is $3,550. Subtract the $1,000 employer contribution and you can put in $2,550 yourself. If you're in the 22% bracket and paying the normal 7.65% FICA, you could be saving 29.65% * $2,550 = $756.08 in taxes by maxing out your HSA. This would move the red and blue lines down by this much on your graph, potentially making the Cigna HDHP slighly outperform the Cigna PPO even in your "extra high medical expenses" category.

[MDM]

I've linked a workbook with some maths if you want to check it out.

You could self-test by comparing it with other tools, such as Health Savings Account (HSA) vs. Traditional Health Plan and the 'HDHP Analysis' tab of the case study spreadsheet.

[mountain mustache]

OP hasn't mentioned this, but is there an FSA option from your employer that you can use along with the PPO? My employer has an FSA option if you choose the PPO, which is what I do. I get the tax savings from pre-tax contributions, and I contribute the amount that will total (estimated) my medical expenses for the year. Yes it has to be used up every year, but since I already know I will have medical expenses, it is a great way to save pre-tax for things I already know I will be paying for. It feels like the best of both worlds for me, because if I had an HSA I would be using it to pay for my expenses anyway, so wouldn't get to take advantage of much of the long term investment HSA strategy.

[Fomerly known as something]

I have a HDHP, I also don’t save receipts, my HSA is my long term care plan.  I figure with 30-40 years to grow, It’ll be good even if I need memory care.

[Steeze]

Currently we are on DW’s PPO because it is very inexpensive and we are trying for a baby. We have been on an HDHP in the past, saved all the receipts, paid cash, and invested 100% of the contributions. No plans on spending any HSA money until retired.

With the baby expected early next year I am trying to decide if we should switch to HSA and hit OOP Max in the first quarter then have free health care the rest of the year. The OOP is the same for the PPO and HDHP.

I am definitely one of those people that puts off going to the doctor when I am on a HDHP though. My original strategy was to cycle between a low/no deductible PPO plan and a HDHP every other year And only schedule my appointments on the non HDHP years.

Once I got married though this was a tougher call. DW doesn’t care about taxes or HSA - she just wants to go to the doc anytime she wants without spending a ton on copays and bills in the mail. She is 1000x more satisfied to have a low/no deductible plan and higher premiums.

If it keeps DW happy and healthy then ... no HSA contributions for me.

[ericbonabike]

This year was the first time in my 20+ year career where a HDHP HSA plan was available.  My company rolled it out, and my wife and I spent a fair amount of time looking at it.  I think the answer all depends on your particular variables.

For us:  I estimated our PPO plan premiums & co-pays to cost:  $450 a month.  Total annual expenses:  $450*12+($500 to $1000) = 5900 to 6400

One of my primary concerns was that two of the prescription meds I'm on have huge out of pocket expense.  Like $800 a quarter if uninsured.  But we found goodrx, and that drove the cost down to $80 a quarter. 

For HDHP:  My premiums dropped to ~$250 a month.   And my company kicks in $3600 to our HSA.   So far, my out of pocket expenses for HDHP have been $1100.   So, the way I see it:  Premiums = 250*12 = $3000.   But company kicks in $3600.   But I've spent $1100.  If that $1100 spending rate continues for remainder of the year, I will spend: $1700.
So, $3000 - $3600 +$1700 = $1100.   
So, in my case switching to HDHP is projected to save $4500 - $5000 annually.  Plus tax advantages of sheltering the other $3600 we put into the HSA.

As far as storing receipts, what I do is scan every receipt.  I store in a digital folder.  And then I've created an excel spreadsheet which links to the receipt folder, with a running tabulation of annual of expenses.

We're debating next year.  My wife is pregnant and is due in march.  So we are considering switching back to PPO in January and foregoing the HSA contribution.  But we can't do that until November during annual enrollment and will require some careful analysis to see if there is a significant advantage either way.

[charis]

I have a HDHP, I also don’t save receipts, my HSA is my long term care plan.  I figure with 30-40 years to grow, It’ll be good even if I need memory care.

This is a great idea.  You can pay long term care insurance premiums with an HSA as well.  There will be no lack of health care costs in our later years, especially for early retirees who don't have access to employer health plans. 

I wonder if the OP has calculated the tax savings for the HSA.

[FrugalFisherman10]

You might double check your numbers on the spreadsheet. When I look at I see a #VALUE error for the Cigna PPO. Also, how do you have a deductible and OOP Max that are different numbers if you have 100% coverage after hitting the deductible?

Without that information its harder to really evaluate the three plans.

I fixed the spreadsheet.

You have a different OOP max and deductible I believe because of co-pays. Which I will summarize below...
Generic 30 day drug - $5 copay
Generic 90 day supply - 2 times regular copay, (so I guess you get a month for free?)

Outpatient medical
primary care - $25 copay
Specialist - $40 copay
X Ray - 100% after deductible (I guess that means it's free to me?)
Mental Health - $25 copay
Surgery - 100% after deductible
Physical Therapy - $40 copay (26 visits per year)
Emergency room - $250 copay
Urgent care - $40 copay
Chiro - $40 copay (26 visits per year)

Also, in response to seattlecyclone, I had not considered the tax-savings, but yes it would be about exactly as you calculated.

There is not an FSA option with the PPO it seems but I have reached out to Benefits to get that confirmed :/

In my case, the PPO essentially was just paying the deductible in regular installments coming from the paycheck.  Every year you don't max the deductible, you come out ahead with the HDHP, at least in that case.

I like this way of thinking about it. Thanks for putting it in that light.

And yes, I'm TRYing to evaluate it myself you dummies. That's what I'm doing here. And i need some validation that I'm looking at it right.

I think I addressed everyone's open questions. now i'm going to use those two tools MDM posted. Thanks

[FrugalFisherman10]

I added in some basic estimates of Co-pays I might incur during a given year, like some PT or chiro or something, and damn, the PPO just got way worse on my graph.
I must be doing something wrong now in the equations. If i'm not, why would anyone go with a PPO type arrangement? I guess maybe those who are having a baby during the year...but definitely not if you have a bunch of recurring type appointments.

see attachment.

Oddly enough, the middle of the road deductible is starting to look pretty promising. I had largely considered that one the plan I was least likely to go with initially.

[AnnaGrowsAMustache]

I have a slightly different situation in NZ, where healthcare is subsidised by the gov anyway. However, there are good reasons to have medical insurance here also, and some workplaces offer it as a perk. I declined the latest workplace insurance, because the insurance I already have offers much greater non-Pharmac cover. Pharmac is the government drug purchasing agency. They basically control what is bought in bulk and government subsidised one way or another. To go 'off-Pharmac' costs an enormous amount of money, potentially hundreds of thousands a year. Sometimes, there are cases of people needing a life saving drug that isn't included in the Pharmac schedule, and having to fund raise to stay alive. That sounds frickin horrible to me. That's mainly what I'm insured for! As well as biopsy, diagnostic, surgical and specialist.

[slappy]

This might be a stupid question, but does your work offer any program to help you evaluate the choices? At my work, during open enrollment, they have this program that helps you calculate the total costs of the plans. Its just like an app, and you put in your estimated expenses. How many doctor appointments, how many specialist appointments, how many ER trips, all of that kind of stuff. Of course it's all just an estimate, unless you have recurring stuff that you know you will have no matter what. Then the tool spits out a comparison, kind of like you are doing with the spreadsheet, except less work for you. :)

[FrugalFisherman10]

Yep, we do have that.
 I am trying to figure out how it came up with it's recommendations I guess. For instance it calculated a total estimated cost out-of-pocket  based on my responses, but the recommendations it gave me were not ranked by that. It wasn't like "1st recommendation = lowest out of pocket estimate, 2nd recommendation = next lowest"...

Which I guess makes sense, because current out of pocket costs aren't the only important thing when choosing insurance, but I couldn't track down how they calculated their estimate. It was just all very confusing so I am trying to understand it myself.

[charis]

It doesn't surprise me that the PPO came out behind.  I've never had a PPO offering that beat the HDHP, all things considered (including taxes savings, which lowers our agi combined with other tax advantaged accounts, which leads to more deductions, etc, etc).

I had an insurance fair rep admit that the HDHP is generally preferable, but most employees won't switch because they are scared of the unknown and learning a new way and don't want to or can't afford to pay upfront costs until they hit the deductible.

An HSA is one of the best accounts you can have and I would argue that should be the first funded after a 401k up to the match.

[Sibley]

Like the previous poster have said, it's very situational.  I have a ton of choices, but for many years I was on the super duper BCBS FFS plan.  I switched to a HDHP this year and the premiums are almost half of the old plan and nearly half of the premiums are passed through to my HSA.  I've been keeping a running total and so far, we're about $2000 ahead of where we would have been if we'd stayed on the old plan, even using the HSA debit card like it's intended. 

Where I find the HDHP to have drawbacks is that I'm spending a lot more time dealing with billing.  Part of it is that it's not a plan that many people are familiar with (and don't always know how to submit things correctly to).  And part of it is because I now have to make sure everything that should count towards the deductible does.  With the old plan, I showed up, paid a co-pay and let the doctor's office deal with the behind the scenes stuff.  Now there's a new tab on my spreadsheet to track that shit.  I just, today, finally got a bill from January straightened out.  Sorta.

But can I just say, holy hell, at least they require the doctor's office to charge the negotiated rates.  I just got a bill from my kid's speech therapy.  That $200 doesn't look too bad when they billed over $1000.

Hate to break it to you - but the billing was always screwed up. You just didn't have to deal with it the same way.

[caracarn]

To OP, I just came across your thread.  Scanning it relatively quickly it appears you have adjusted your calculation from what you started with because you were missing things.  You do want to make sure you do things correctly.

I have found that in every case where I have had an HDHP it if superior, usually far superior, in cost to the PPO at virtually all levels.  A well designed plan by your HR group should end up that way.  HSA contributions help create that and obviously the premium difference is a huge factor. 

At this point looks like you've got things lined up.  Only thing I would caution is to perhaps run your chart out past $5,000 in medical expenses unless you are certain that nothing changes.  Given that all lines have not yet leveled out for OOP, I have found at times that things flip at the point where you hit catastrophic expense levels (+$30K).  You can then make a fully informed decision on your risk tolerance.

[joleran]

I have found that in every case where I have had an HDHP it if superior, usually far superior, in cost to the PPO at virtually all levels.  A well designed plan by your HR group should end up that way.  HSA contributions help create that and obviously the premium difference is a huge factor. 

Yep, my calculations show the same thing.  This covers a lot more ground: https://docs.google.com/spreadsheets/d/14Q1_ChmDLeUNtmu2ZITOLQds47JAAph9TxyVud9ngqc/edit?usp=sharing

[seattlecyclone]

I must be doing something wrong now in the equations. If i'm not, why would anyone go with a PPO type arrangement?

Again, it really depends on the employer and how they've set up their plans and premiums. My previous employer was the same way: the HDHP PPO looked better than the low-deductible PPO in pretty much every scenario. Same network of doctors, just different billing parameters.

The one thing I could think of was that the low-deductible PPO had fixed copays for most doctor's visits, while the HDHP PPO used a percentage-of-cost coinsurance (after meeting the deductible, of course). If someone had to visit the doctor quite often for some chronic condition, and the doctor charges enough that the fixed copay is much less than the percentage coinsurance would be, then maybe the low-deductible PPO works out better in the end. For someone who will rack up most of their medical bills (if any) through procedures and hospitalization there was no way the HDHP wouldn't be the winner.

[McStache]

Another thing I've commonly seen different between PPO and HDHP options is how they treat prescription drug coverage.  In HDHP's, I've often seen that treated as part of the normal deductible, so you pay full freight until you hit the deductible.  With PPO's there's often a different schedule for drug coverage that kicks in immediately instead of after the deductible.  So if there were a case where you have a lot of prescriptions, but don't otherwise use much healthcare, the PPO could come out ahead.

[Laura33]

We once looked at a HDHP, but we have stuck with a PPO for me and HMO for DH/kids.  Number of reasons:

1.  We're older, so the benefit of thousands of tax-free dollars every year compounding for XX years was much lower.  By the time our employers offered the HDHP, we were within @10 years of our planned retirement dates.  If we were 20 years younger, I'd have taken a much closer look.

2.  My PPO is free -- my employer pays full freight for the insurance.  So I incur no extra costs associated with the higher PPO premiums.

3.  I use a lot of medical care, and my PPO is excellent for that.  I have a $20-$30 copay for visits and a $10-20 copay for meds, there is no deductible for in-network care or prescriptions (so I just pay the copay from day 1), the OOP max for the year is pretty low (when I had both weekly acupuncture/PT for an injury and biweekly therapist visits, I maxed out by June and had zero copay thereafter), and I have an FSA to cover all those copays tax-free. 

4.  Kaiser (DH/kids) is very easy to work with and cheap -- zero copays for preventive stuff, low copays for visits/meds.  I will acknowledge that this is not as appealing as mine, because DH pays for it via his cafeteria plan, so if he chose a lower-cost plan, he could use the extra $ elsewhere.  But the cost is not that significant.

5.  Neither of our insurers gives us any hassle whatsoever about billing (knock on wood).  I have had maybe two instances where they didn't bill something right, and they corrected it after a phone call.  I really really really HATE arguing about what things cost and dealing with billing snafus, and so I am paying for the convenience of making it not my problem.  And that is a tradeoff I will gladly accept at this point in my life. 

6.  Neither employer was offering enough of a contribution to the HDHP to make it worth our while to pay for our medical care OOP and deal with the potential billing hassles.  All of my costs are tax-free already due to the FSA and OOP max, and we're at a pretty high tax rate, so we benefit from not paying taxes on those dollars now.  To make use of the HDHP, we'd have to contribute our own money to fund it (which is tax free, which is good), and then pay for the full annual OOP max out of post-tax money (at our current high tax rate, which is bad).  Again, it just did not seem to make sense given the very excellent and cheap coverage we already get. 

In sum, it felt like taking on more risk and more hassle for a limited and questionable financial benefit.  YMMV.