Author Topic: HDHP+HSA or Premium Health Insurance when planning for baby?  (Read 1647 times)

zeli2033

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HDHP+HSA or Premium Health Insurance when planning for baby?
« on: August 22, 2018, 08:56:24 AM »
Hey Mustachians with kiddos!

Pre-kid mustachian here thinking about trying for a mini M next year. This means changing up the health insurance because it turns out...having a baby in the U.S. can be quite expensive! (not talking about culminating all the crap, just talking about everything leading up to + actual birth + any post-birth complications). We currently receive health insurance through my husband's work and given how much better it is than mine, we'll most likely keep going that route. Now we need to decide if we should keep going with our HDHP + HSA or if we should switch to the premium health insurance plan for the lower deductible and higher percentage of coverage for services.

High-level things that may or may not be of note:
- We are in the accumulation phase of wealth building
- This is the first year we've had and maxed an HSA so at the end of the year, there will only be ~6.9k
- Not sure we'd want to actually use the HSA money for medical expenses but instead would consider simply paying cash for expenses up to OOP Max of $10k to allow our HSA to stay invested
- Having literally no control over when we might actually conceive a child, I don't like the idea of paying into Premium health insurance and being overinsured should the baby thing not happen for awhile.

There's more certainly but honestly, I'm just interested in hearing how others went about making this type of decision and what the pros/cons of the outcomes were in their experiences. Thanks in advance for any thoughts you choose to share!

Also...not sure if this is the right place for this. I debated Ask A Mustachian as well but figured the kid zone was a better place to start.

MDM

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #1 on: August 22, 2018, 09:12:34 AM »
Might be worth putting your numbers into a couple of comparison tools, e.g., Health Savings Account (HSA) vs. Traditional Health Plan and the 'HDHP Analysis' tab of the case study spreadsheet.

Bracken_Joy

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #2 on: August 22, 2018, 09:34:41 AM »
Do the two plans have different coverage levels? I would recommend looking into infertility coverage. Even if one "only" covers diagnostics, and the other doesn't, you're talking $1-2k for the basic tests they often do for infertility. Some states require coverage, but even then it's employer dependent and levels vary significantly.

zeli2033

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #3 on: August 22, 2018, 09:13:09 PM »
MDM, good suggestion. I tried taking a look at the HDHP Analysis tab in the spreadsheet awhile ago and honestly I was a little baffled at how to get into it. I'll be setting some time aside this weekend to dig in and understand it more.

Bracken_Joy, coverage levels are better for premium versus the HDHP (10% difference in what we're on the hook for after the deductible and of course the deductible is quite different between the two). But otherwise the services covered are the same, including those for Infertility coverage. Thank you for surfacing this as I hadn't taken a hard look at the specifics despite following journals where this is a topic of discussion and knowing there's a possibility we'd want to leverage that if needed.

Thank you both for your input!

mtnman125

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #4 on: August 27, 2018, 12:11:18 PM »
We switched to HDHP a couple years ago and couldn't be happier.  I have a chronic condition controlled with medicine and regular doctor visits, and even with childbirth we're years ahead of total cash outlay would have been for "fancy insurance".  With our plan, HDHP premium +max OOP is lower than premium + deductible for PPO. 

You mention "his insurance is better than mine"- make sure you are comparing apples to apples.  Example, my wife's employer offers $1k for HSA if selecting HDHP.  Turns out my employer cost is less overall (Premium, Deductible, Max OOP) even without an HSA "bonus"

Also, depending on how your employer plan is set up, it may be a better deal for Mom/Baby to be on one insurance, and dad on another.  With my employer, if I opt out of their insurance, I am not entitled to any of what their insurance contribution is (years ago I got $100/paycheck).

Lastly, as you know- you dont have to decide right away if you want to cash flow the medical expenses or submit for reimbursement.  For us, we'll generally just absorb the costs into monthly budget, but if it reached a point we'd have to alter our savings goals (401k, Roth, etc) or eat up more EF than comfortable with- we'd just submit the receipt.

zeli2033

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #5 on: August 29, 2018, 12:01:13 AM »
Thank you so much for your input! Good call on making sure we’re looking at an apples to apples comparison, I will need to take a deeper look to confirm that is the case once new benefits are announced.

fatcow240

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #6 on: August 29, 2018, 08:53:22 AM »
Check if the deductible is applied to the max out of pocket.  We have had both types of plans.


What are the total premiums + out of pocket for both?
Please list annualized premiums, deductibles, and max out of pocket for both.


For me HDHP was the easy choice.  The LDHP premiums + deductibles + max out of pocket was more expensive than the HDHP and I get an HSA.  There was only a small sliver between the deductible and max out of pocket that I would come out of ahead with the LDHP.

seattlecyclone

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #7 on: August 29, 2018, 03:16:51 PM »
If you and your spouse both have workplace health plans available, look into covering the birth mom and/or baby on both health plans, effective on the date of birth. The birth is a qualifying event for change of coverage, so you don't need to be locked into paying double premiums for the whole year.

For both of our kids, what we did was had my wife on her plan alone for the entire year. As a single person on her employer's plan she had a lower deductible and out-of-pocket max than if she was on a family plan with me, or with the kid added to hers. Then we added both her and the baby to my plan effective on the delivery date. Both plans are HDHPs.

How do the payments work with double coverage?
* Each person on two plans has one plan as "primary" and one as "secondary." Adults on their own employer's plan always have that plan as primary for them, while the other is secondary. If a dependent is on two parents' plans, whichever parent has a birthday falling earlier in the year is primary and the other is secondary.
* Each plan looks at each claim, and computes how much it would pay as if there isn't another plan in the picture. The primary will pay the amount they normally would, while the secondary will pay the amount they normally would unless that would add up to more than the total bill, in which case they only pay the remainder.

Here's a real-life example from when our second kid was born earlier this year.
My wife's plan (for a single person) has a $2,000 deductible, $3,000 out-of-pocket max, and 20% coinsurance after the deductible.
My plan (for a family) has a $3,000 deductible, $6,000 out-of-pocket max, and 10% coinsurance after the deductible.

She paid about $500 this calendar year prior to the delivery date for various prenatal stuff, leaving $1,500 left in the deductible.
The hospital charged her about $7,500 for hospital room and board. With her plan she had $1,500 left on the deductible, plus 20% of the next $5,000 brings her to the out-of-pocket max. Her insurance paid $5,000, leaving $2,500 remaining. We would have had to pay that out of our own pockets if she was only on one insurance plan.

However because we signed her up on my plan too, let's look at how much they paid. The expense was $7,500. Subtract the $3,000 deductible and $450 coinsurance (10% of the remaining $4,500), and my plan is willing to pay $4,050. That's more than the $2,500 that we still owed after my wife's insurance paid their part, so my insurance pays $2,500 and we owe nothing out of pocket. This also satisfies the deductible on my plan, meaning we only pay the coinsurance for any of my son's bills.

His hospital bill was $4,000. The fact that my wife's bill used up the deductible meant we only owed $400 for him rather than $3,100 ($3,000 deductible plus 10% of the remaining $1,000).

Just for those two expenses, double-covering my wife meant that our out-of-pocket costs went down by $5,200. That's a lot more than the extra premiums we're paying to add my wife to my plan for half the year.

Note however that when you have double coverage, the amount you pay can depend on the order in which claims are received by the insurance company. If my son's bill had gone in first, we would have owed the full $3,100 on that one because the deductible had not been satisfied at that point. My wife's bill would still have ended up being fully covered between the two plans. That's a $2,700 difference just based on which bill goes in first!

For that reason we were proactive about getting the hospital to bill the secondary insurance for my wife's expenses right away. We called their billing department the day we got back from the hospital. Where our son was concerned, we played it a bit coy and said we had not made a final decision about which plan to cover him under, as we have 30 days from the birth to make that choice. They assumed we'd probably cover him under my wife's plan and we didn't disabuse them of that notion until after we saw the claim go in for my wife's bill.

zeli2033

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #8 on: August 31, 2018, 03:56:23 PM »
Wowza, thank you for sharing your experience in such detail, seattlecyclone! I had not even considered the possibility of venturing into double coverage.

In the next month, DH and I should have the details on next year's healthcare coverage specifics. We'll be digging into spreadsheets ALOT to try sussing out the best options given the great feedback and experience shared in this thread.

slb59

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #9 on: September 18, 2018, 07:23:07 AM »
I made myself a spreadsheet of what I'd be paying based on each plan my company offered. I figured out my normal usage, then what I'd pay for pregnancy, and developed scenarios for best case, most likely case, and worst case. I then assigned probabilities to each of those happening (not that I'd admit to being such a geek on any other forum!) and figured out a total cost per plan based on the weighted average of the scenarios. For me, it worked out that one plan was the winner only if the best case happened, and another won for average, worst case, and the calculated weighted average. So, it was an easy choice.

If it helps you figure out your costs, a pregnancy usually includes a specialist office visit copayment that covers your entire pregnancy checkups (if you go into a new plan year - are pregnant in both December and January - you probably will have to pay this again), 2-3 lab visits, 1-2 additional copayments for sonogram if they can't do that in house ("imaging" or specialist copay), delivery fee, hospital stay, baby's first checkup from the doctor, and extra fees for anything else you use like drugs, anesthesiologist, circumcision, and hearing test. You can usually find a rough estimate of the costs through your insurance company, and all insurance plans are required to publish a Summary of Benefits and Coverage that includes the cost breakdown for each item and a chart at the end that shows you how they apply the rules for having a baby. Different companies do things differently, so it can be helpful to see how they set it up.

One thing to definitely pay attention to is your MOOP (maximum out of pocket) for each plan. Once you hit that dollar amount, you're not going to pay another penny. That made the plan with a slightly higher premium but much lower MOOP the best deal for us, and is part of why HDHPs are often a great choice when you're staring down huge medical expenses.

It was a lot of math, but doing my best to research costs and actually running numbers really was a helpful exercise that kept us from second-guessing our choices later on, as well as figure out how much we needed to save. FWIW, with my first kid I had a normal pregnancy right until the end, when I had a C-section, needed a plasma infusion, was on blood pressure drugs, and spent an extra few days in the hospital.  That one had the standard set of costs I gave you above, but then amounted to about $60k in the hospital for the surgery, anesthesiology, extra drugs, extra monitoring, a plasma infusion, etc. I was on premium insurance, so paid a $500 copay plus like $300 for the stupid surgical assistant they gave me that wasn't covered by insurance (I should've fought that charge!). The second kid, I came down with gestational diabetes and low platelets around 32 weeks. I ended up paying for like 5 extra lab visits, and three extra specialist copays, but since I had a standard, planned C-section my hospital stay was more like $20k before insurance, even though it was the same hospital as my first kid. For the third one, I was being monitored super-closely but they did the labwork and ultrasounds in-house and I didn't pay extra for it. However, we hit that MOOP and hit it hard! I had low amniotic fluid, and so he was born six weeks early. I spent one night in the hospital being monitored before he was born, and he spent two weeks in NICU-lite ("special care nursery"). He had hospital stay and doctor visit charges for that, as well as lab visits and cost for formula and vitamins while he was there. Pre-insurance costs were close to $100k. The good news in that scenario is no matter how expensive it gets, you're pretty much not going to go over your MOOP ("pretty much" = the special care nursery was out of network, even though the hospital was in network. We had to file a few rounds of paperwork with the insurance to get them to cover it in network, and there was no MOOP for out of network so we would've been pretty much bankrupt).

boarder42

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #10 on: September 18, 2018, 04:03:50 PM »
You gotta do the math every plan is different on my wife's hsa still made sense.

Paul der Krake

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #11 on: September 22, 2018, 04:50:21 PM »
Wowza, thank you for sharing your experience in such detail, seattlecyclone! I had not even considered the possibility of venturing into double coverage.

In the next month, DH and I should have the details on next year's healthcare coverage specifics. We'll be digging into spreadsheets ALOT to try sussing out the best options given the great feedback and experience shared in this thread.
Holy crap, same here. Now I wonder if I should add myself to the wife's "no premiums" plan...

aimz28

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #12 on: September 26, 2018, 05:13:53 PM »
When I was pregnant with my 2nd child I sat down with the billing office at my OBGYN during open enrollment and they helped me estimate the costs. At that point, the HDHP and the HMO pretty much broke even. I went with the HMO just in case there were any other unforeseen expenses. It turned out to be a good decision because my son had to be hospitalized when he was 6 weeks old and we only had to pay the copay.

Since then, the HMO has increased in price so I will be sticking with the HDHP that we've been on for a couple years even though we're expecting another baby. It really is a case-by-case basis, so just do what you can to gather the data and crunch the numbers. I know these numbers will vary with location, but just for your reference here in AZ my OB's office charges 2600 for all the prenatal care and delivery, and the hospital charges another 3-4k. When I was on the HMO I only paid a copay, but I forfeited contributing to my HSA.

Steeze

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #13 on: September 26, 2018, 06:28:23 PM »
DW has a caddilac plan at work that covers both of us for 200/mo with no/very low deductible. Or we could have the HSA plan for 0/mo plus they give you 600 in the account.

We chose the caddilac plan because we were planning on having a baby this spring.

Turns out DW got cold feet and is 2nd guessing having kids. We will have paid for the caddilac plan for nothing. Set us back by not having the extra tax advantaged space, 2400 in premiums, and 600 in free money.

On the other hand for 200$/mo we can go to any dr. As often as we want for nothing. It's an awesome luxury and gives me a sense of freedom. Maybe it's worth it.

I was uninsured for several years, then was on an HSA plan for a while. As an avid snowboarder and skateboarder it was always in the back of my mind. It's nice to know I can break my leg and I'm only out a couple hundred now.

gemütlichkeit

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Re: HDHP+HSA or Premium Health Insurance when planning for baby?
« Reply #14 on: November 08, 2018, 03:50:35 PM »
Looking at my employer's health plan info and it seems they've closed this loophole.  It says, "If the benefits of (Employer Group Health Plan) are payable before those of another plan (that is, this Plan is primary), the benefits of this Plan will be payable as provided for in this Plan.  However, if the benefits of the other plan are payable before those of this Plan (that is, the other plan is primary), the benefits of the (Employer Group Health Plan) will be reduced so that the combined benefits under this Plan and the other plan will not be more than the benefits available under this Plan."

If you and your spouse both have workplace health plans available, look into covering the birth mom and/or baby on both health plans, effective on the date of birth. The birth is a qualifying event for change of coverage, so you don't need to be locked into paying double premiums for the whole year.

For both of our kids, what we did was had my wife on her plan alone for the entire year. As a single person on her employer's plan she had a lower deductible and out-of-pocket max than if she was on a family plan with me, or with the kid added to hers. Then we added both her and the baby to my plan effective on the delivery date. Both plans are HDHPs.

How do the payments work with double coverage?
* Each person on two plans has one plan as "primary" and one as "secondary." Adults on their own employer's plan always have that plan as primary for them, while the other is secondary. If a dependent is on two parents' plans, whichever parent has a birthday falling earlier in the year is primary and the other is secondary.
* Each plan looks at each claim, and computes how much it would pay as if there isn't another plan in the picture. The primary will pay the amount they normally would, while the secondary will pay the amount they normally would unless that would add up to more than the total bill, in which case they only pay the remainder.

Here's a real-life example from when our second kid was born earlier this year.
My wife's plan (for a single person) has a $2,000 deductible, $3,000 out-of-pocket max, and 20% coinsurance after the deductible.
My plan (for a family) has a $3,000 deductible, $6,000 out-of-pocket max, and 10% coinsurance after the deductible.

She paid about $500 this calendar year prior to the delivery date for various prenatal stuff, leaving $1,500 left in the deductible.
The hospital charged her about $7,500 for hospital room and board. With her plan she had $1,500 left on the deductible, plus 20% of the next $5,000 brings her to the out-of-pocket max. Her insurance paid $5,000, leaving $2,500 remaining. We would have had to pay that out of our own pockets if she was only on one insurance plan.

However because we signed her up on my plan too, let's look at how much they paid. The expense was $7,500. Subtract the $3,000 deductible and $450 coinsurance (10% of the remaining $4,500), and my plan is willing to pay $4,050. That's more than the $2,500 that we still owed after my wife's insurance paid their part, so my insurance pays $2,500 and we owe nothing out of pocket. This also satisfies the deductible on my plan, meaning we only pay the coinsurance for any of my son's bills.

His hospital bill was $4,000. The fact that my wife's bill used up the deductible meant we only owed $400 for him rather than $3,100 ($3,000 deductible plus 10% of the remaining $1,000).

Just for those two expenses, double-covering my wife meant that our out-of-pocket costs went down by $5,200. That's a lot more than the extra premiums we're paying to add my wife to my plan for half the year.

Note however that when you have double coverage, the amount you pay can depend on the order in which claims are received by the insurance company. If my son's bill had gone in first, we would have owed the full $3,100 on that one because the deductible had not been satisfied at that point. My wife's bill would still have ended up being fully covered between the two plans. That's a $2,700 difference just based on which bill goes in first!

For that reason we were proactive about getting the hospital to bill the secondary insurance for my wife's expenses right away. We called their billing department the day we got back from the hospital. Where our son was concerned, we played it a bit coy and said we had not made a final decision about which plan to cover him under, as we have 30 days from the birth to make that choice. They assumed we'd probably cover him under my wife's plan and we didn't disabuse them of that notion until after we saw the claim go in for my wife's bill.