Author Topic: Does this HDHP/HSA move make sense?  (Read 1020 times)

El Gringo

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Does this HDHP/HSA move make sense?
« on: January 18, 2020, 04:28:43 PM »
I had kind of a crazy idea for my wife's and my health insurance and am interested in some feedback.

My wife and I (both about to turn 33 years old) have been married for two years, and during that time she has been on my PPO health insurance (total premium is $3492.48). My work offers a PPO or an HDHP. Even though we're both generally healthy, I've been reluctant to sign up for the HDHP because the employer contribution was low and I felt like the slight upside was not enough to take the risk of a huge potential deductible if something happened.

But my wife is starting a new job that has really nice health benefits. They offer an HDHP plan, but also this really interesting thing called Nonstop Wellness, in which the employer covers all out-of-pocket costs (including co-pay, deductible, and insurance) through a thing called a Health Reimbursement Account (I posted about it here: https://forum.mrmoneymustache.com/welcome-to-the-forum/nonstop-wellness-health-insurance-am-i-missing-something/msg2504412/#msg2504412). Because of the HRA, they don't provide access to an HSA.

The idea that I had, was signing both of us up for her HDHP, but then also signing myself up for my HDHP, which would give me access to an HSA (and my employer's contribution). Additionally, my employer this year has doubled the amount of money they are contributing to the HSA. Here are the numbers:

1) If we enrolled both of us in her HDHP, it'd cost us $2,859.96 for the year, with no out-of-pocket costs.
2) If we each enrolled in our own plans separately, it'd cost her $910.08 for her (HDHP) + $1397.04 for me (PPO), for a total of $2,307.12, plus any out of pocket costs I may have (which, fingers crossed, should be minimal)
3) If we enrolled both of us in her HDHP, plus I signed up for my HDHP (to get an HSA), it'd cost $2,859.96 (her HDHP) + $826.32 (my HDHP), but my employer would contribute $1,000 to the HSA. So the net cost would be $2,686.28. In this scenario, since I am also enrolled in her HDHP, I would also be ensured of no out-of-pocket costs through the HRA. I would also have an HSA that I could contribute more money to if I wanted to (it'd be some, but not a lot, as we live in a HCOL area with modest non-profit salaries).

Does this seem reasonable? Make sense? I assume I can be double-insured, right? What are people's thoughts?

bacchi

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Re: Does this HDHP/HSA move make sense?
« Reply #1 on: January 18, 2020, 04:38:21 PM »
This is possible only if both plans are HSA qualified (i.e., a true HDHP) and if the HRA is a limited purpose HRA.

Paul der Krake

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Re: Does this HDHP/HSA move make sense?
« Reply #2 on: January 18, 2020, 04:38:52 PM »
Rules get complicated fast, but you're not eligible to put money in your HSA under a double coverage situation, unless both plans are HDHP.

See this:
https://www.irs.gov/instructions/i8889#idm140493806559072

Quote
Other Health Coverage

If you have an HSA, you (and your spouse, if you have family coverage) generally cannot have any health coverage other than an HDHP. Your spouse can have health coverage that is non-HDHP provided you are not covered by that plan. If you have a health flexible spending arrangement or health reimbursement arrangement, see Pub. 969.

pk_aeryn

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Re: Does this HDHP/HSA move make sense?
« Reply #3 on: January 18, 2020, 05:35:42 PM »
And is it usually true that your employer’s insurance will be primary? So if you sign up under your employer plan, they are your primary insurance and you’d have to use your HDHP before you could use any coverage from your wife’s plan.

El Gringo

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Re: Does this HDHP/HSA move make sense?
« Reply #4 on: January 20, 2020, 08:27:34 AM »
Rules get complicated fast, but you're not eligible to put money in your HSA under a double coverage situation, unless both plans are HDHP.

See this:
https://www.irs.gov/instructions/i8889#idm140493806559072

Quote
Other Health Coverage

If you have an HSA, you (and your spouse, if you have family coverage) generally cannot have any health coverage other than an HDHP. Your spouse can have health coverage that is non-HDHP provided you are not covered by that plan. If you have a health flexible spending arrangement or health reimbursement arrangement, see Pub. 969.

Interesting. What's confusing is that both plans WOULD be an HDHP, but hers doesn't offer an HSA because of the HRA, which seems to be what bacchi is getting at:

This is possible only if both plans are HSA qualified (i.e., a true HDHP) and if the HRA is a limited purpose HRA.

If I understand correctly from googling, a limited purpose HRA is for dental/vision, right? Because her HRA is the opposite: it's just for medical, and then you can use an FSA for dental/vision.

Valhalla

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Re: Does this HDHP/HSA move make sense?
« Reply #5 on: January 20, 2020, 08:49:33 AM »
Your logic fallacy regarding HSA is mis-placed.  When I switched from PPO to HDHP I was able to save thousands per year, which I put into my HSA.  The amounts I have saved in my HSA is now fairly sizable, and now more than covers any annual out of pocket cost whether on PPO or HDHP.

I am so much further ahead with the HSA than had I just wasted that money on the PPO.  I know the feeling of comfort / security with the PPO is alluring, but you're paying a lot for that feeling.  After a few years, with a healthy HSA fund, you'll feel way more secure knowing that you have saved the premiums for a rainy day, and not thrown it away on an expensive PPO.

El Gringo

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Re: Does this HDHP/HSA move make sense?
« Reply #6 on: January 20, 2020, 09:42:33 AM »
Your logic fallacy regarding HSA is mis-placed.  When I switched from PPO to HDHP I was able to save thousands per year, which I put into my HSA.  The amounts I have saved in my HSA is now fairly sizable, and now more than covers any annual out of pocket cost whether on PPO or HDHP.

I am so much further ahead with the HSA than had I just wasted that money on the PPO.  I know the feeling of comfort / security with the PPO is alluring, but you're paying a lot for that feeling.  After a few years, with a healthy HSA fund, you'll feel way more secure knowing that you have saved the premiums for a rainy day, and not thrown it away on an expensive PPO.

I don't know. Here's the numbers. As an individual, with HDHP I'd save $500 on the premium, but responsible for most of the costs until I reach the $2,800 deductible (vs. $500 for PPO). Unless I all around avoid going to the doctor, it seems unlikely to come out ahead.

2020 PPO:
In-network deductible: $500 for individual; $1,000 for family
Co-pays: $20/doctor, $40/specialist, $200/emergency room
Co-insurance after deductible: 20%
Out of pocket maximum: $5,000 for individual; $10,000 for family

Annual premium: Employee: $1,397.04, Employee + Spouse: $3,492.48

2020 HDHP
In-network deductible: $2,800 for individual, $5,600 for family
Co-insurance after deductible: 20%
Out of pocket maximum: $5,600 for individual, $11,200 for family
Annual premium: Employee: $826.32, Employee + Spouse: $90.06

HSA contribution:
Employee Only: $1000
Employee & Spouse: $2000
(until this year, it was $500 and $1000)

Paul der Krake

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Re: Does this HDHP/HSA move make sense?
« Reply #7 on: January 20, 2020, 09:46:04 AM »
What's your marginal tax bracket? Are you above the SS cap?

El Gringo

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Re: Does this HDHP/HSA move make sense?
« Reply #8 on: January 20, 2020, 10:18:49 AM »
What's your marginal tax bracket? Are you above the SS cap?

My wife and I together will make around $105,000 and take the standard deduction.