Help!!! HSA vs PPO by Nov 25

[handsnhearts]

Hi Mustachians,

It is open enrollment time again. 

Last year I did the PPO with healthcare and dependent FSA.

Last year our income jumped higher than ever, and along with some unexpected earnings and some uncalculated stock sales, we pain paid money to the IRS! UGH!!!!

This year, things are a bit different. We are aware that our income has grown a lot and are doing our best to stash as much money in tax advantaged funds.  We submitted our taxes on October 15, due to complications, and so all of this is in the last month. 

1) DH and I are maxing out 401k's.  We both get a match as well. 
2) will put in for IRA when bonus comes in the next few weeks.
3) I am not self-employed, so no surprises there this year.

We also had a ton of health care related expenses this year, but they were not well anticipated.  In fear, I only contributed $500 to health FSA, the max roll-over if not spent.  Well, we could have claimed up to the max contribution this year. 

Next year, I anticipate even higher expenses.  These are for non-covered medical expenses. 

 
DH is on insurance through his work, and DD is through me currently.  However we can add her back to his insurance for ???? (I seem to remember $75/week, but I think that was for the whole family (early 2015 before my job change), I will double check this) $30 extra per week, or $1550 annually.

Anyway, I am not sure if the HDHP HSA makes sense or not.  It is unlikely that anything will be left in the account by end of year.  However a lucky break could change that.  (I am not optimistic).

My employer will contribute $100/mo in addition. 

HSA                           self     family
In network Deductible 2000   4000(I think current treatment is likely in-network as it currently is and HSA is with same company, but must double check.)
Out of Network           4000    8000


Employee Only                            PPO          HSA
Annual Deductible                   $500           $2,000  presumes in-network
Annual Out-of-Pocket Maximum   $3,000   $3,000
Annual Payroll premium cost   $420           $180

Employer HSA Contributions              +$1,200
EE HSA Contributions (optional)   N/A   Max +$2200/yr
FSA Health care                      +$2600          N/A
                                               
                                               

Employee with child
Annual Deductible                   $1,000   $4,000
Annual Out-of-Pocket Maximum   $6,000   $6,000
Annual Payroll premium cost   $1,440   $360

Employer HSA Contributions               +$1,200
HSA Contributions (optional)   N/A   Max +$5550/yr
FSA Health care                      +$2600          N/A

So the total for the Me and Child is $6750 in HSA - all spent in the year, plus $360 for premiums. = $7110 spent -$1200 (employer) = $5910.  and however much else for deductible costs unforseen.  Nothing left for deductible if needed.  (Can pay cash if necessary but would like to avoid)

Or me alone - $2200 + $180 = 2380 - 1200 = 1180.  But then paying all remaining costs with taxed income.  And I could use the advantage of anything because of new high tax bracket. 

I can presume anything between $4000 and $40,000 in non deductible HSA and/or  FSA eligible costs in the next year.  Plus any normal costs. 


Which makes most sense?

(PS, please do not ask about the health care I am receiving that is not covered.  I won't share, except to say that it is completely in line with my values and I am willing to go into deep debt or bankruptcy to make it happen if I had too (those are not happening at all, but that is the seriousness of the situation))

Thank you much!
PS Need to notify employer by friday, nov 25. 

[handsnhearts]

Hi all! 
If you looked at this before, somehow the computer posted an early version without all the details.  I have updated it. 

[ohsnap]

Are your non-covered medical costs considered reimbursable by an HSA?  If so, I think the employee + child HSA is the way to go. 

My reasoning is this:
1. PPO doesn't give you an advantage because the premiums are more expensive, and most of your medical expenses aren't covered by that plan anyway.
2. The allowable family HSA contribution is much higher than for a single covered person, so you will save more in taxes on that contribution than you would pay in increased premiums.

Even if your non-covered medical costs aren't HSA reimbursable, the HSA still might be worth if for the long-term savings ability. (It sounds like you have the cash flow for that).  Your premium cost is so low through your employer that I wouldn't even think of adding dd back to husband's expensive plan.

[handsnhearts]

Thank you for the reply! 

The expenses that are not covered by health insurance are qualified for HSA and FSA spending, so either could work.

DD would cost an extra $1558 annually to add back to DH's plan.

My only worries are that if something goes wrong, I won't have the money saved to pay for it. I do have emergency fund, which may get used up, and we could borrow from family or open a HELOC on our rental if it really hit the fan. So we will be ok. I could also increase my hours for more pay too. Or sell stocks. Or withdraw Roth or 401k. I guess there are plenty of options.

The thing I don't like about HDHP is people often don't go in and take care of something simple when they should because they don't want to pay the cost. I am worried about being in that situation.

How do others handle spending for your HDHP when you don't have HSA savings?


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[Sibley]

Max out the HSA and maybe bump up your emergency fund.

[handsnhearts]

So I currently have

$3000 in emergency/irregular bills fund
$50,000 in emergency fund (much of which will probably be used to pay for the medical care)
$15,000 in checking, $5000 of which is earmarked for checks already written for bills.

I think I will try and put some in the irregular bills for normal medical expenses, maybe $3-4000, so I don't sweat the small visits for routine care.   Obviously, I will pay everything out of the HSA first, and then if anything is over, I can just pay post-tax like I would anyway.  I could put the difference in the premiums there, which is $1100 and go from there. 

Thanks for the input.  I think I am going with the HDHP HSA.  Just a bit nervous...