Back of the envelope of two extreme cases:
1. Uncomplicated pregnancy.
Your expenses stay below $1950/$3000 deductibles. Although sometimes deductibles in HDHP and PPO are not exactly comparable because of what gets paid for and what is counted, let's ignore that since we are focusing on the extreme case.
With PPO:
$5616 in tax (including FICA) exempt money. Assuming 25% total tax rate (state/local/federal) + 7.5% FICA => $3790.8 in after-tax money.
(Assume) $1950 in expenses => $1950.
Total cost: $5740.8 with PPO.
With HSA:
$564 in tax exempt money = $380.7 in after tax money.
$1950 in expenses
Total cost: $2330.7
HSA is a clear winner in this case.
2. You blow past all kinds of maximums for whatever reason.
This does not have to be for any catastrophic reasons. A bout of preeclampsia that heals itself -> additional day or two of hospital stay for observation will do it.
With PPO:
$5616 in tax (including FICA) exempt money. Assuming 25% total tax rate (state/local/federal) + 7.5% FICA => $3790.8 in after-tax money.
$6450 in expenses => $6450.
Total cost: $10240 with PPO.
With HSA:
$564 in tax exempt money = $380.7 in after tax money.
$6000 in expenses
Total cost: $6380
In both the extremes, HSA wins by a lot!
There is a zone in the middle, where you have met the deductible for PPO and the insurance starts paying, but HSA does not, where the PPO would gain some ground. I remember once doing a very detailed analysis on this for a case I faced with similar choices and found that there is never a situation where PPO came out a winner. In my case the HDHP was more expensive than yours, which would further favor the HDHP in any analysis!! ($564/year!! Holy cow!! Is your employer hiring? :-D)
Hi all,
It's Open Enrollment time and I am almost 5 weeks pregnant with my first child. Expected due date is in July. I have been on the HDHP plan through my employer for the last few years and I think it will still be the smartest option even through pregnancy and potentially beyond, but I wanted to get a second opinion from you all to be sure. I've attached the stats of each plan.
Since I'm going to hit the deductible on the HDHP anyway, the plans look the same to me after that point (90% coverage). The only major difference I see is that prescription meds are not covered until after the deductible is met on the HDHP, but that's not a big deal to me because I'm not on expensive meds now. Am I being short-sighted, or is this a no brainer? HDHP wins?
Premiums for PPO: $5,616/year Deductible: $1,950 Out of Pocket Max: $6,450
Premiums for HDHP: $564/year Deductible: $3,000 Out of Pocket Max: $6,000
Also, I'm thinking of getting supplemental life insurance and short term disability insurance (in case things go sideways at delivery). Are these extra options a good idea? What is generally an acceptable amount to pay for these extra benefits?
Thanks for your help!