Author Topic: Comparing 2 high deductible medical plans- HSA or non-HSA  (Read 2105 times)

nyanks

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Comparing 2 high deductible medical plans- HSA or non-HSA
« on: October 09, 2014, 04:23:41 PM »
I've been told my Carefirst high-deductible plan (for which I currently pay $134/month) is being dropped and I need to switch. I am comparing 2 plans, both PPO's (I hate HMOs), both "bronze" level.

1. $5500 deductible, HSA qualified, 10% after deductible: $232/mo
2. $6350 deductible, non-HSA qualified, 0% after deductible, $242/mo

Which should I get? I'm an independent contractor. Half my income is W2, half 1099. I am trying to max out IRA and 401k, not sure that I can put more into HSA this year, unless take away from the 401k. I feel like a dumbass. Thanks in advance for any advice.

seattlecyclone

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Re: Comparing 2 high deductible medical plans- HSA or non-HSA
« Reply #1 on: October 09, 2014, 04:49:34 PM »
Ignoring the premiums for a moment, the plans are equivalent as long as you need less than $5,500 of treatment. Between $5,500 and $14,000 of costs, plan 1 is better because the lower deductible plus 10% coinsurance is still a lower total cost. Past $14,000 of costs, Plan 2 is better.

Now consider that Plan 1 has premiums that are $10/month less than Plan 2. That changes the math a bit. Now, you're $120/year better off with Plan 1 if you need less than $5,500 of treatment, and the break-even point moves out to $15,200.

Add in the fact that Plan 1 makes you eligible for an HSA and Plan 1 starts to look even better. An HSA is an even better savings vehicle than an IRA because the money is untaxed both on the way in and on the way out, so you should max this out before your IRA if you have to choose.

All of this supposes that the medical expenses are really an apples-to-apples comparison between the two plans. If Plan 2 offers a better set of available doctors, or has negotiated better rates with the doctors and hospitals you're more likely to visit, or is more willing to pay out claims with minimal hassle, you may well find Plan 2 to be a better deal overall. These things are remarkably hard to find out before choosing a plan.

nyanks

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Re: Comparing 2 high deductible medical plans- HSA or non-HSA
« Reply #2 on: October 09, 2014, 05:00:40 PM »
Thank you so much, Seattle. That was very helpful.

bonjourliz

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Re: Comparing 2 high deductible medical plans- HSA or non-HSA
« Reply #3 on: October 09, 2014, 07:41:51 PM »
Is there an out of pocket max on plan 1?  If so, it may change the analysis before $14k.

Also, check how the plans treat prescriptions.  I have noticed that some require you to meet the deductible before they pay anything, while others pick up a % right away.  And of course different companies may have different approved drug lists/pharmacy reqts, etc. (Mail order vs brick & mortar, for ex) Those have made a differnce for us.

nyanks

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Re: Comparing 2 high deductible medical plans- HSA or non-HSA
« Reply #4 on: October 10, 2014, 06:29:31 PM »
Thanks very much, all. The plans were the same, excepting the listed differences.

I just chose the HSA-qualified plan. Really appreciate the help.