Author Topic: Company provided Insurance vs. Personal Health Insurance options  (Read 1505 times)

danb

  • 5 O'Clock Shadow
  • *
  • Posts: 37
Hello all, I am in the middle of negotiating with a potential new employer and they do not offer an HSA plan like I am used to having. I have enjoyed having the ability to deduct the annual max, and pay cash for all medical expenses to help build up some early retirement money.  This new plan would cover my wife and I (no kids) and my premiums would be $134.93/month. They would be no deductibles.  My wife and I rarely get sick and are in good health. (plant based diet + bicycling for the win). I enjoy the low premium aspect of this plan, but it doesn't offer me the chance to get the tax savings that an HSA offers. This new offer will bump me from the 15% tax bracket to the 25% one, so I think any tax deferral I can do would help. (Married filing jointly, sole income provider)

Here is a link to the plan details:

(BluePreferred PPO Platinum 0)
https://www.ehealthinsurance.com/health-insurance-companies/carefirst-bcbs-maryland/benefit-detail/?health-plan=100023

They also offer an FSA and DCA (which i have never used before, and don't think I would use)

I would like to try to negotiate my offer letter further with them to see about providing my own health insurance allowing me to have an HSA with low cost index investment options. Is this a reasonably good idea? Can anyone recommend a plan? Any feedback would be greatly appreciated on this subject. I'd really appreciate any help with doing the calculations.

For example: their proposed PPO plan would cost me $1619.16 / year, and I would be paying taxes on an extra $6650 dollars per year of my AGI that is not going into an HSA, plus loosing the potential interest putting away that money into a stock focused investment account. If I were to find a good high deductible personal plan for my wife and I, how do I know what sort of compensation adjustment to ask for, would it just be an exact $1619.16 / year adjustment for the company to break even, or more, or less? Should it be based on the cost of the new plan, where is the value trade-off?

Thanks,

--Dan

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 4844
  • Age: 34
  • Location: Seattle, WA
Re: Company provided Insurance vs. Personal Health Insurance options
« Reply #1 on: October 19, 2016, 08:32:00 PM »
Having an HDHP through work is great and all, but it sounds like this new employer is offering you gold-plated coverage with a very large subsidy. I really doubt you'll be able to find Obamacare-compliant insurance on the private market for anywhere near as low of a premium cost as your new employer is offering.

Just as an example, I priced out insurance on the Washington state exchange for a 30-year-old married couple. The cheapest HSA-compatible plan is $361/month and has a $13,000 deductible.

Just because you're healthy doesn't mean you won't get in a bike crash and need to go to the hospital. The insurance your company is offering might not be my first choice either, but it's not worth turning it down and going alone unless they're going to give you quite a bit more pay for the privilege. And if that does happen, you'll likely be in the 25% tax bracket anyway.

Grizzly Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Company provided Insurance vs. Personal Health Insurance options
« Reply #2 on: October 19, 2016, 10:43:52 PM »
I think you're thinking about this a bit strangely. Your employer plan is a pretty damn good deal and  I would take it.

Let's lay out the numbers.

Employer Plan

Annual Premium - $1600
Lost Tax Deduction (6650 @ 25%) - $1700
Total 'Premium' cost- $3300

Out of pocket plan (using the numbers from seattlecyclone)

Annual Premium - $4332

So before even considering the difference in deductible, you're already out more money by trying to go the self-insurance route. Add in the potential for a $13000 out of pocket charge from the self-insurance plan and this is a terrible idea. Then add in the hassle of shopping around for insurance. Then add in the potential headache of dealing with a private insurance company. One of the biggest benefits of an employer-provided plan is that HR will go to bat for you vs. the insurance company. Take the insurance from your employer. This is a case of trying to be too clever by half.
« Last Edit: October 19, 2016, 10:47:48 PM by Grizzly Dad »

Sibley

  • Magnum Stache
  • ******
  • Posts: 3528
  • Location: Chicago, IL
Re: Company provided Insurance vs. Personal Health Insurance options
« Reply #3 on: October 20, 2016, 12:23:42 PM »
Yeah, agreed. Take the employer provided insurance. Make sure that you max out whatever retirement accounts you can to help with the tax bill. But otherwise, it's the price of making more money.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2143
  • Location: Cleveland
Re: Company provided Insurance vs. Personal Health Insurance options
« Reply #4 on: October 20, 2016, 01:51:13 PM »
IIRC, if you're eligible for a traditional employer plan, that makes you ineligible for an HSA. I'm not sure how that works if you decline employer coverage, but my employer coverage (work for a hospital) made us ineligible for the HSA offered with my wife's last job (hope that makes sense).