HDHP+HSA vs PPO for Pregnancy/Delivery

[rp17]

I know I'm not the first to post this question, and I know it varies by plan and you just have to do the math. But as I've never had a baby before, I'm not sure I understand exactly how the billing works and want to make sure I'm doing that math correctly. It's open enrollment at work, and as my husband and I are currently trying to get pregnant, I want to make sure I select the best health plan should that happen next year. I'm currently on a HDHP+HSA with my employer (individual, as DH is on his own plan with his employer). I'm trying to determine if it's best to stay on this plan, or if a PPO would offer better coverage during pregnancy and delivery.

Premiums
HDHP+HSA: $20.40 biweekly ($530.40 annually); Maxing out HSA with $3,500 in annual tax-free contributions
PPO: $49.08 biweekly ($1276.08 annually)

Coverage: See attached

After reviewing these for several days, I can't see a situation in which the PPO wins. Both plans have the same deductible, both plans have 80/20 coinsurance once the deductible is met, and the HDHP has a lower out-of-pocket max. The only way I can see that the PPO might win out is if somehow the Primary, Specialist, or Routine Lab & X-Ray co-pays kick in somewhere the HDHP would otherwise have me paying 20% co-ins. I contacted my OB to get an idea of charges, and they said they do "Global Pregnancy" which is basically one lump sum bill (which exceeds the deductible of both plan options). I imagine since this is one lump sum bill, co-pays would not apply even in the PPO? Then I imagine outside of the OB bill, I'd be responsible for 20% of the hospital bills under both plans as "Inpatient Hospital Services," which is why I think the HDHP wins in that I hit the max out-of-pocket sooner.

I just want to make sure I'm not missing something, that there's not something I'm completely unaware of about having a baby that somehow means the PPO might actually be better. For instance, if the newborn would have separate bills that mean I actually have to hit the family deductible/OOP (even though I'm on an individual plan), and that the PPO would cover some of that with co-pays vs co-ins?

Any insight is appreciated.

[seattlecyclone]

I think your logic makes sense. Note that once your kid is born, he/she will have his/her own hospital bill. For my wife's very uncomplicated delivery earlier this year, there were about $12k of bills in her name and about $5k of bills in my new son's name. If you need an epidural or C-section or longer hospital stay or NICU time it could easily be much more than this.

Using these relatively low billing numbers:
Under your HDHP you'll pay $530 in premiums, $3,000 in deductible and $2,800 in coinsurance, for a total of $6,330.
Under the PPO you'll pay $1,276 in premiums, $4,000 in deductible and $2,600 in coinsurance, for a total of $7,876.

Any increase in these bills will push your total cost up by 20% under both of these plans until you hit your out-of-pocket maximum, which is actually higher in the PPO. So no, I don't see under what scenario you would do better giving birth under the PPO compared to the HDHP.

This is similar to my employer, it's hard to envision a scenario where the PPO is the cheaper option. Looking at your plans the main thing I can think of is that the PPO doesn't require you to pay your deductible for primary care or specialist visits, they're just a fixed copay. If you tend to need a lot of these the PPO might be a better deal in a normal year, but not in a year where you end up in the hospital.

[rp17]

Thanks! Just wanted to make sure there wasn't something I was failing to take into account. Sounds like sticking with the HDHP is the way to go.
Congrats on your son earlier this year :)

[JenniiF]

When I had my son, we used a credit card sign up bonus and ended up with $600 dollars in cash back. I was using a Christian Healtshare, and our total deductible was $1000 - so I ended up paying $400 for our baby. $149/month premium. Unfortunately healthshare prices have gone up, and this won't be possible with the next baby. Since you're going to be paying a big chunk of money for your delivery, a credit card sign on bonus would be a good way to get a few hundred dollars back or some travel rewards.

[rp17]

Thanks for that advice. I can see it being a great option if you don't have an HSA or FSA set aside already. In my case, I've been maxing out my HSA through bi-weekly paycheck deductions. At a 24% income tax rate, setting aside $3500 of tax-free income in a year is basically the equivalent of getting $840 back. Slightly different approach than the credit card, but same end result.

[seattlecyclone]

No reason you can't do both HSA and credit card rewards. Charge the hospital bill to the credit card and then get reimbursed for it from the HSA. To be on the safe side tax-wise, only withdraw from the HSA up to the post-rewards cost of the medical expense.

[rp17]

Oh interesting, I have never used my HSA in that way. If I'm paying a medical bill, I've always made the payment directly from my HSA using the corresponding debit card. How does that change what receipts I need to save in case of a future audit? Just keep the medical receipt showing I paid by credit card, and then a banking receipt showing I transferred that same amount from my HSA to my checking account?

[seattlecyclone]

For an HSA it doesn't matter how you paid. There's no requirement to use the provided debit card. Unlike FSAs, the custodian has no responsibility to validate that the money withdrawn is used on a valid medical expense. It's your money and you can withdraw it whenever you like. Whether that withdrawal is tax-free or not is between you and the IRS. I think if you keep the bill and the credit card statement showing a payment for that amount, that should be enough to satisfy an auditor, but I have no first-hand experience in the matter.

[chemistk]

Oh interesting, I have never used my HSA in that way. If I'm paying a medical bill, I've always made the payment directly from my HSA using the corresponding debit card. How does that change what receipts I need to save in case of a future audit? Just keep the medical receipt showing I paid by credit card, and then a banking receipt showing I transferred that same amount from my HSA to my checking account?

I believe this is enough. Definitely save all hospital bills, plus the receipt when you pay by CC. You can then reimburse yourself for the exact amount of the CC charge.

As an aside, where can I sign up to get your health plan??? My empolyer's was flipped around compared to yours (they eliminated the PPO option this year) - our PPO had lower OOP max, lower deductible, copays for most of the standard procedures, and a lower monthly cost!

The biggest upside for us is that my employer contributes $2k a year to our HSA, but that only covers the cost of difference by a slim margin.

Oh and definitely don't forget that your newborn will have his/her own bill after birth too!

[rp17]

The biggest upside for us is that my employer contributes $2k a year to our HSA, but that only covers the cost of difference by a slim margin.

Oh and definitely don't forget that your newborn will have his/her own bill after birth too!

That's a nice employer contribution! Mine only contributes $240 a year to my HSA.

How does the newborn bill work? Does it apply to my deductible just the same? Or does it not kick in until after the 31 days you have to add your baby to your policy, in which case you'd now have to reach the family deductible/OOP max?

[chemistk]

I really think it's all up to how your hospital handles billing. We got our newborn bill before my wife's bill after our first was born, but then they changed their billing department and we got the newborn bill for our second about a month after my wife's.

Your bill applies to both your individual and family deductible, and then the newborn bill applies to his/her own individual deductible but also to the collective family deductible. My wife ended up consuming our family deductible & reaching the OOP max, so all the bills came out to $0 anyway. I immediately added him to our insurance, so he was on the plan before everything was even processed.