WWYD: PPO vs HSA

[Lanthiriel]

I have been using the HDHP/HSA option for health insurance for the past 10 years. It's always been the most attractive option for a number of reasons, but I'm not sure it pencils out at my new employer. Consider the following:

Me

• 30 yo female
• Fat but with no current medical conditions or concerns other than a family history of spinal stenosis that I definitely have but is currently manageable through exercise and a quality mattress
• Married with no kids and husband has his own fully paid for health insurance through his employer
• Recently had Fallopian tubes removed, so no baby or pregnancy-related expenses anticipated (barring immaculate conception)
• 22% tax bracket

HSA Plan
Deductible: $2700
Max out of pocket: $5400
Employee premium (monthly): $86
Employer contribution to HSA: $120

PPO
Deductible: $500
Max out of pocket: $1500
Employee premium: $0
$30 copays on most doctor's visits and prescriptions

I selected the PPO for 2018 because the $34 net just didn't seem worth having that much higher of a deductible and out of pocket. I know that in a perfect world where I rarely go to the doctor besides an annual check up (which has been my usual MO except for the tubal earlier this year), I would be better off having access to the HSA for tax and growth purposes. But we don't live in a perfect world, and as I get older, having cheaper/more consistent health care costs seems nice.

BUT I'm now second guessing my choice and want to make sure I give some serious consideration to what I want to do before the next open enrollment period.

Any advice?

[AZDude]

I'm guessing the PPO is not free, but is actually ($86 + $34) per month? That seems relatively inexpensive for health insurance. You should thank your employee for being one of the few still offering decent benefits.

$34 * 12 = $408 per year. That is a decent amount, but probably not making huge waves in your financial plan. However, there are other things to think about.

Like, what is the long term financial plan? Some people here use the HSA as another investment vehicle that will be used to help pay healthcare costs once they are retired. IE, you put $2,600 into your HSA every year for 10 years, then retire, you would have ~$40,000 to use on healthcare in retirement.

Just something to think about.

[Lanthiriel]

The PPO is free--at least to me. It's 100% employer paid. Zero monthly out of pocket expenses for me. The $34 is basically the net positive between paying $86/mo to be on the HSA plan and then having my employer contribute $120/mo to the HSA. It seems weird that you have to pay to participate in the HSA but the PPO is completely covered.

I am SUPER lucky to work for a company with good benefits. Luckily it's pretty standard in engineering consulting. The only downside is a fairly pitiful match (1.5%), but for a company with under 100 employees, I'm just happy to have access to an HSA.

You're right that long-term I'd very much like to have a fat pot of money that's been invested in VTSAX for 15 years to pay my healthcare premiums. But that gain could quickly be wiped away by a couple of major life circumstances that force me to pay the out of pocket. Though, honestly, the first scenario (fat HSA), is probably more likely.

[Cromacster]

The PPO is free--at least to me. It's 100% employer paid. Zero monthly out of pocket expenses for me. The $34 is basically the net positive between paying $86/mo to be on the HSA plan and then having my employer contribute $120/mo to the HSA. It seems weird that you have to pay to participate in the HSA but the PPO is completely covered.

I am SUPER lucky to work for a company with good benefits. Luckily it's pretty standard in engineering consulting. The only downside is a fairly pitiful match (1.5%), but for a company with under 100 employees, I'm just happy to have access to an HSA.

You're right that long-term I'd very much like to have a fat pot of money that's been invested in VTSAX for 15 years to pay my healthcare premiums. But that gain could quickly be wiped away by a couple of major life circumstances that force me to pay the out of pocket. Though, honestly, the first scenario (fat HSA), is probably more likely.

FYI HSA funds cannot be used to pay premiums.

[AZDude]

The PPO is free--at least to me. It's 100% employer paid. Zero monthly out of pocket expenses for me. The $34 is basically the net positive between paying $86/mo to be on the HSA plan and then having my employer contribute $120/mo to the HSA. It seems weird that you have to pay to participate in the HSA but the PPO is completely covered.

I am SUPER lucky to work for a company with good benefits. Luckily it's pretty standard in engineering consulting. The only downside is a fairly pitiful match (1.5%), but for a company with under 100 employees, I'm just happy to have access to an HSA.

You're right that long-term I'd very much like to have a fat pot of money that's been invested in VTSAX for 15 years to pay my healthcare premiums. But that gain could quickly be wiped away by a couple of major life circumstances that force me to pay the out of pocket. Though, honestly, the first scenario (fat HSA), is probably more likely.

FYI HSA funds cannot be used to pay premiums.

Correct, but you could then get the highest deductible, lowest premium plan and use the HSA funds for all out of pocket expenses.

[diapasoun]

I have an HDHP -- no premium to me and my company seeds my HSA at $145/mo, so I make a little over $1700 a year on that plan. That's worth it to me, because I'm 32 with no real health issues; I don't spend $1700 on care in a year.

That being said, I sometimes end up having to go in for an office visit other than my physical once a year -- this year, I had bronchitis after the flu and was travelling across the country to help my very sick mother recuperate after open heart surgery. I definitely went in to see my doctor, because I wanted the OK to even be near her, as well as meds to reduce the coughing as quickly as possible. That visit cost me nearly $500 out of pocket. On my plan, I'm still $1200 in the black. If I'd been on your plan, that would have eaten up the "earnings" on the plan and then some.

Given that, I would say that if you anticipate one office visit outside your physical per year, the decision has to be made solely on the basis of whether access to the HSA is worth it for you. If you think it's very, very unlikely that you'd have an extra office visit, then the HDHP plan would be my choice.

[terran]

The PPO is free--at least to me. It's 100% employer paid. Zero monthly out of pocket expenses for me. The $34 is basically the net positive between paying $86/mo to be on the HSA plan and then having my employer contribute $120/mo to the HSA. It seems weird that you have to pay to participate in the HSA but the PPO is completely covered.

I am SUPER lucky to work for a company with good benefits. Luckily it's pretty standard in engineering consulting. The only downside is a fairly pitiful match (1.5%), but for a company with under 100 employees, I'm just happy to have access to an HSA.

You're right that long-term I'd very much like to have a fat pot of money that's been invested in VTSAX for 15 years to pay my healthcare premiums. But that gain could quickly be wiped away by a couple of major life circumstances that force me to pay the out of pocket. Though, honestly, the first scenario (fat HSA), is probably more likely.

FYI HSA funds cannot be used to pay premiums.

Except when they can: COBRA and Medicare.

[Lanthiriel]

The PPO is free--at least to me. It's 100% employer paid. Zero monthly out of pocket expenses for me. The $34 is basically the net positive between paying $86/mo to be on the HSA plan and then having my employer contribute $120/mo to the HSA. It seems weird that you have to pay to participate in the HSA but the PPO is completely covered.

I am SUPER lucky to work for a company with good benefits. Luckily it's pretty standard in engineering consulting. The only downside is a fairly pitiful match (1.5%), but for a company with under 100 employees, I'm just happy to have access to an HSA.

You're right that long-term I'd very much like to have a fat pot of money that's been invested in VTSAX for 15 years to pay my healthcare premiums. But that gain could quickly be wiped away by a couple of major life circumstances that force me to pay the out of pocket. Though, honestly, the first scenario (fat HSA), is probably more likely.

FYI HSA funds cannot be used to pay premiums.

Except when they can: COBRA and Medicare.

Good to know--thank you!