Author Topic: Help me pick my insurance plan. HDHP with new baby?  (Read 3178 times)

frugalnacho

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Help me pick my insurance plan. HDHP with new baby?
« on: November 07, 2017, 01:48:33 PM »
Open enrollment is upon us and my company is changing insurance up on us.  Me and the wife don't have extensive medical problems and would probably be best with a HDHP, but we just had our first baby on 10-29-17.  He is healthy so far, but I really have no idea what to expect going forward.  Would really love some input and advice from the community on what would be the best option for my family. 

My gross annual salary is $75k plus about $5-15k annual bonus (not guaranteed though - and the company was just purchased 4 months ago, so we'll see if they follow through on bonuses).  Wife has no income.

So these are the options I have:

1. Cigna OAP PPO HDHP with HSA 6550 (HDHP)
2. Cigna OAP PPO 3000 (3000)
3. Cigna OAP PPO 1000 (1000)

Here is the relevant information for each (deductible and out of pocket max [OOPM] given as individual/family):

HDPD - annual premium $5,340.   Deductible is $6,550/$13,100.  OOPM is also $6,550/$13,100.  I can have an HSA with this account, my company gives me $500 free, I can contribute another $6,400.  My actual costs will fall somewhere between $4,840 and $17,940 (accounting for free $500).  No copays, I just pay 30% after deductible.  Deductible and OOPM are the same though, so I'm not sure how this makes sense.  Seems like I pay 100% of costs until deductible/oopm is met, then insurance pays 100% because I'm at the OOPM, no?

3000 - $8,108.52.  Deductible is $3,000/$6,000.  OOPM is $5,000/$10,000.  No HSA with this account.  My actual costs will fall somewhere between $8,108.52 and $18,108.52.  $30 copay, insurance covers 20% after deductible reached.

1000 - $9,774.48.  Deductible is $1,000/$2,000.  OOPM is $4,000/$8,000.  No HSA with this account.  My actual costs will fall somewhere between $9,774.48 and $17,774.48.  $20 copay, insurance covers 20% after deductible reached.

It seems like if I have no or low medical expenses the HDHP is the clear winner, then as we have more expenses it gradually shifts towards the other plans.  If we have a catastrophic amount of medical expenses then all plans are very similar.  It also seems that if all the expenses are incurred by a single family member that the HDHP will be the lowest overall cost.  I have no idea where we will fall on that spectrum.   

Any advice and input is appreciated.

swinginbeef

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #1 on: November 07, 2017, 02:42:58 PM »
I'm guessing the deductible numbers aren't correct if they match the OOPMax numbers and the plan says that it's 30/70 after deductible. My current plan has the deductible set at about half the MaxOOP. And from my experience, unless you're the type to run to the ER for every little booboo, you'll end up way ahead by going with the HDHP w/ HSA plan. If you and your wife don't have chronic health issues and the baby's doctor hasn't given any indication that they are worried, HDHP/HSA is probably the plan for you.

rubybeth

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #2 on: November 07, 2017, 02:43:50 PM »
I think the HSA option is likely your best pick. The out of pocket max/deductible thing you should probably clarify with the plan administrator or your HR department--whoever seems to know the most. It likely is true that your out of pocket max is the same as the deductible, in which case, that's the most you would pay in the case of a terrible health issue.

With a baby, you will likely be visiting the doctor more than usual, but some of that stuff--vaccines, checkups, etc. will likely be considered 'preventative care' and will be partially covered. You could look back at what office visits cost during the pregnancy and estimate from there. It's normal for babies/kids to get sick a lot, and for first time parents to have the instinct to get things checked out (a very good instinct, I think--a friend of mine had a baby with a bad virus last year, turned out to be meningitis and meant weeks in the hospital!). If you can handle the worst case scenario with the HSA, I think maxing the HSA funds to help cover costs is a good plan--and has nice tax advantages whether you use the funds now or save for later.

chaskavitch

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #3 on: November 07, 2017, 03:16:35 PM »
I have an 18 month old, and we're on a HDHP.  I was glad to have 6 months on the PPO after he was born to try to get over any fears of random baby illnesses, and so far he's been fairly healthy.  My company is RIDICULOUS and puts $2000 into an HSA for a family plan, but the reduction in premiums alone has saved me $1000, so I'm up $3000 for the year.  We've spent $790 on doctor's visits, which included a bout of mastitis which needed antibiotics, two surprise doctor visits + antibiotics for ear infections, and an (unnecessary) knee x-ray for a painful clicking noise.  Consequently, I'm still up $2100, which I'm super glad about.

Yearly visits for adults, and all well-baby checkups/vaccines should be 100% covered in most plans.  Also keep in mind that after many providers bill your insurance, even if that insurance pays for nothing, you'll get a "discount" off of the billed price for being insured.  I think our ear infection visits cost ~$190 each, and my urgent care visit for mastitis was just over $100.

It looks like if you don't have any accidents, you're saving $3000 a year in premiums, which is pretty awesome and almost covers the extra you'd pay if something catastrophic happened on the HDHP and you had to pay out the nose for an emergency. 

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #4 on: November 07, 2017, 04:19:12 PM »
I think the HSA option is likely your best pick. The out of pocket max/deductible thing you should probably clarify with the plan administrator or your HR department--whoever seems to know the most. It likely is true that your out of pocket max is the same as the deductible, in which case, that's the most you would pay in the case of a terrible health issue.

With a baby, you will likely be visiting the doctor more than usual, but some of that stuff--vaccines, checkups, etc. will likely be considered 'preventative care' and will be partially covered. You could look back at what office visits cost during the pregnancy and estimate from there. It's normal for babies/kids to get sick a lot, and for first time parents to have the instinct to get things checked out (a very good instinct, I think--a friend of mine had a baby with a bad virus last year, turned out to be meningitis and meant weeks in the hospital!). If you can handle the worst case scenario with the HSA, I think maxing the HSA funds to help cover costs is a good plan--and has nice tax advantages whether you use the funds now or save for later.

Preventative care is covered 100% for all plans.  I believe the all the wellness visits, vaccines, etc should be covered with nothing out of pocket from me.  I should only have to pay if the baby actually gets sick and we schedule an appointment, or go to urgent care, or the hospital or something like that.



I have an 18 month old, and we're on a HDHP.  I was glad to have 6 months on the PPO after he was born to try to get over any fears of random baby illnesses, and so far he's been fairly healthy.  My company is RIDICULOUS and puts $2000 into an HSA for a family plan, but the reduction in premiums alone has saved me $1000, so I'm up $3000 for the year.  We've spent $790 on doctor's visits, which included a bout of mastitis which needed antibiotics, two surprise doctor visits + antibiotics for ear infections, and an (unnecessary) knee x-ray for a painful clicking noise.  Consequently, I'm still up $2100, which I'm super glad about.

Yearly visits for adults, and all well-baby checkups/vaccines should be 100% covered in most plans.  Also keep in mind that after many providers bill your insurance, even if that insurance pays for nothing, you'll get a "discount" off of the billed price for being insured.  I think our ear infection visits cost ~$190 each, and my urgent care visit for mastitis was just over $100.

It looks like if you don't have any accidents, you're saving $3000 a year in premiums, which is pretty awesome and almost covers the extra you'd pay if something catastrophic happened on the HDHP and you had to pay out the nose for an emergency.

I get a free $500 with the HDHP so really the difference in premiums is either ~$4,900 or ~$3,300 depending on which plan I compare to. If the baby gets sick and racks up some stupid amount of hospital bills then I'm not seeing the advantage of the more expensive, lower deductible plans.  I'm paying out of the ass up front in premiums for those plans to the point that my overall max out of pocket is pretty much the same for all plans (for total family).  If only one family member gets catastrophic medical bills and reaches the individual OOPM then it seems like the HDHP is cheaper.  HDHP wins in every case that I can imagine.  The medical bills are not completely free for the non-HDHP plan so I'd have to rack up medical bills that significantly exceed that difference in premiums before the plan actually saved me money, and by that point I'm nearing the OOPM for all the plans (and the HDHP still wins in that case). I'm hoping you guys can poke holes in my logic here (actually I hope I am correct and y'all agree with it).

rubybeth

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #5 on: November 08, 2017, 08:58:51 AM »
No, I agree with you, frugalnacho--I assess the risk every year with multiple plan options from my employer, my husband's employer, and the exchanges. It makes more sense for me to pay the lower premiums even with the risk of reaching that deductible--and since I'm mustachian, I have more than the deductible saved in HSAs and emergency funds, so I'd be fine financially even if medically, I'm in a bad spot. If the preventative stuff with the baby will be covered, and baby gets sick even five times during the year and you end up with five clinic visits at $200 each time (insurance likely negotiates that down somewhat), you'll still be way ahead.

Fwiw, I've been on an HDHP for many years, and always plan for the worst but hope for the best. It's mostly worked in my favor by saving the premium cost and bearing more of the risk. The last two years, I've had some chronic pain that has resulted in multiple physical therapy and doctor visits, plus I started therapy this year since the pain is also affecting my mental state--so far this year, I've been seeing medical professionals a ton, and I have still only paid around $1,000 in bills (all with the pre-tax HSA funds). Unless I get hit by a car or have an appendicitis or something, I won't reach my $6,500 deductible before the year is out.

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #6 on: November 08, 2017, 10:07:39 AM »
I've modified my numbers a little bit to account for tax savings in the HSA.  If I contribute the max of $6,400 I will save $489.60 in FICA tax, and assuming the 10% income bracket $640 in federal income tax, and $272 in state of michigan taxes for an net real annual cost of $3,438.40.  Using this updated value I've graphed the plans actual cost vs incurred medical expenses.  I wasn't sure how to incorporate things like copays and instead just assumed I would cover 100% of medical expenses up to deductible, and then my coinsurance costs up to the OOPM for each plan.

If only 1 member of my family gets sick or uses medical expenses and the other 2 of us remain healthy and use near zero medical expenses then it looks like the HDHP comes out ahead.  I don't see how we could not save money with the HDHP in this scenario.

If more than 1 family member incurs bills and we have to pay the family deductible and up to the family OOPM then the graphs change.  The 3000 plan is garbage and loses to the HDHP for all but a very narrow range of expenses between $13k-$14k.  The HDHP looks much better early on if we don't incur many medical expenses and looks like it could be  savings of around $6,300/yr.  However if we incur ~$10k-24k in medical bills we would have been better off with the 1000 plan with the maximum discrepancy of around $2,500/yr.  So worst case scenario with the HDHP I actually end up paying $2,500 more.  I think it's more likely that my family medical expenses will be less that $10k though.  The fact that I think I'm more likely to be on the saving side than the losing side, and the saving side potential is 2.5X that of the losing side makes it a clear choice to roll with the HDHP.

 
« Last Edit: November 08, 2017, 10:11:20 AM by frugalnacho »

seattlecyclone

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #7 on: November 08, 2017, 10:22:23 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #8 on: November 08, 2017, 10:29:08 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

It lists an individual deductible of $6,550 and a family deductible of $13,100.

swinginbeef

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #9 on: November 08, 2017, 10:37:03 AM »
that may be the deductibles based on who you cover. Ours is set up where if you are covering just yourself, you're on an Individual plan but if you cover the wife and kid as well, you're on a Family plan. Being on a Family plan, we're on the hook for the family deductible even if all of the expenses are for a single family member.

seattlecyclone

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #10 on: November 08, 2017, 10:37:07 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

It lists an individual deductible of $6,550 and a family deductible of $13,100.

That might not mean what you think it means. My plan lists the same thing, with an individual deductible of $x and a family deductible of $2x, but that's just referring to what type of plan you have. If you have a family plan you have to pay the full $2x deductible even if only one person needs medical attention. Now that I look into it, this seems to actually be a requirement for all HDHPs. Here's an article about it.

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #11 on: November 08, 2017, 10:59:26 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

It lists an individual deductible of $6,550 and a family deductible of $13,100.

That might not mean what you think it means. My plan lists the same thing, with an individual deductible of $x and a family deductible of $2x, but that's just referring to what type of plan you have. If you have a family plan you have to pay the full $2x deductible even if only one person needs medical attention. Now that I look into it, this seems to actually be a requirement for all HDHPs. Here's an article about it.

It lists an individual OOPM of $6,550 and a family OOPM of $13,100.   If the individual is not applicable to me because I have the family plan it's wickedly misleading to include that on a side by side lay out of the non-HDHP (which list individual/family deductibles and max that work like normal).   I'm contacting HR to find out what's up with that.

charis

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #12 on: November 08, 2017, 11:18:08 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

It lists an individual deductible of $6,550 and a family deductible of $13,100.

That might not mean what you think it means. My plan lists the same thing, with an individual deductible of $x and a family deductible of $2x, but that's just referring to what type of plan you have. If you have a family plan you have to pay the full $2x deductible even if only one person needs medical attention. Now that I look into it, this seems to actually be a requirement for all HDHPs. Here's an article about it.

It lists an individual OOPM of $6,550 and a family OOPM of $13,100.   If the individual is not applicable to me because I have the family plan it's wickedly misleading to include that on a side by side lay out of the non-HDHP (which list individual/family deductibles and max that work like normal).   I'm contacting HR to find out what's up with that.

We have embedded deductibles - individual within the family.  So each member has their own deductible but it all counts toward the family deductible as well.  So I think you have it right.

I always advise people toward an HDHP/HSA, but my employer seems to offer one that is better than most - $3k family deductible - 6850 OOPM - 10% after 3K deductible met - $1500 contribution to HSA.  There is almost no scenerio where it would make sense to pass on the HDHP, in my case.

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #13 on: November 08, 2017, 11:21:43 AM »
Quote
What is a High Deductible Health Plan?
A High Deductible Health Plan (HDHP) is a PPO Plan but with higher deductibles and out-of-pocket maximums.  Given the higher out-of-pocket costs and maximum liability, typically an HSA payroll deduction is less than a traditional PPO plan.  With an HSA, like a PPO plan, you must first pay your applicable deductible before the health plan begins to pay benefits and your coinsurance applies.  You are covered 100% for eligible preventive care services obtained in-network.

The out-of-pocket maximum limits your financial liability and protects you from major expenses. This is the most an Individual or Family coverage will pay in a Calendar Tear.  Whether enrolled as an Individual Only or Family coverage, an Individual will not pay more than the Individual Deductible or Out-of-Pocket Maximum.


Emphasis mine.  This is from the benefits booklet we were given.  This certainly makes it sound like it is an embedded plan (contrary to what seattlecyclone just said).   I'm double checking with HR though, because that is a big distinction.

frugalnacho

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #14 on: November 08, 2017, 11:30:49 AM »
Take a close look at whether the HDHP actually caps individual medical expenses at the lower level. That's one big difference between the plans at my employer: if you're on the HDHP, the deductible is the deductible regardless of what combination of family members racks up the medical bills, while there's a lower per-person cap on the other plans.

It lists an individual deductible of $6,550 and a family deductible of $13,100.

That might not mean what you think it means. My plan lists the same thing, with an individual deductible of $x and a family deductible of $2x, but that's just referring to what type of plan you have. If you have a family plan you have to pay the full $2x deductible even if only one person needs medical attention. Now that I look into it, this seems to actually be a requirement for all HDHPs. Here's an article about it.

It also states in that article that:

Quote
The Department of Health & Human Services has tweaked the rules slightly for non-grandfathered health plans using an aggregate deductible. This affects most family HDHP health plans. The added wrinkle is this: a health plan can't require any individual to pay a deductible that is higher than the federal limit for the out-of-pocket maximum for individual coverage, even if that person is covered under an aggregate family deductible.

It looks like the health plan is pegging the numbers to 2017 maxes rather than 2018, even though it's for the 2018 year

Quote
Year    Minimum deductible (single)    Minimum deductible (family)    Maximum out-of-pocket (single)    Maximum out-of-pocket (family)
2017[8]    $1,300    $2,600    $6,550    $13,100
2018[9]    $1,350    $2,700    $6,650    $13,300

But it seems to me that with my deductible and OOPM, even if this plan is aggregate and not embedded, this new legislation effectively makes it embedded since no individual member of my family can incur more than $6,550 (actually $6,650 by law, but plan states individual OOPM is $6,550 - ultimately not a huge deal).

Or am I misunderstanding all of this?

seattlecyclone

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #15 on: November 08, 2017, 01:35:45 PM »
I think that makes sense. My plan's deductibles are more toward the lower end of the allowed range, so that new requirement from 2016 limiting an individual's spending even if they haven't met the family deductible doesn't come into play.

nickybecky1

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #16 on: November 08, 2017, 01:48:20 PM »
Our plan has a single family deductible that everyone has to hit before it counts, but an individual OOP max. I did have to call several places to confirm that though since the documentation from our employer is pretty confusing.

Like jezebel, I have an amazing HSA plan from my employer and can't figure out the scenario where it's not a better deal if I max my HSA savings, including delivering a baby. However, I think that's really specific to my employer's plans because of how much they contribute.

Merrie

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #17 on: November 11, 2017, 11:26:58 AM »
I would go with the HDHP. If you don't get sick much, it's the clear winner. If you have a year where you get sick a lot, it's no worse than the PPO plans really; the difference in the OOP max is fairly negligible, particularly when stacked up versus the likelihood that you won't need that much care. Plus the HSA rolls over. If you felt you were virtually guaranteed to reach the OOP max, then you'd want to look at which plan had the lowest OOP max. 

Jon Bon

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Re: Help me pick my insurance plan. HDHP with new baby?
« Reply #18 on: November 11, 2017, 01:24:22 PM »
You(we?) are way over analyzing this.

First of all HDHP with HSA are only something to worry about the first year. After that your HSA balance will grow year over year and it is not even a concern anymore. My balance is somewhere between 15-25k? But I dont check or track because it is on autopilot.

The second more important point is this: If you hit your Out of pocket maximum of 5,000, 10,000, whatever, the money is going to be the least of your concerns. If I spent 10,000 on health care in a year something would have to be seriously wrong. How do I know?  We had twins on an HSA we did not even hit our maximum then.

Remember money is just a tool, family is priceless.