HDHP and Family Planning

[wmschm]

Hello!

I'm in the middle of my open enrollment for health benefits at work.  This year, a new plan is being offered, an HDHP!  I was excited to see this option initially.  My employer does not offer an HSA, though from my research I think I could get a nice one through HSA Bank or HSA Administrators.  The other plans offered are a standard low deductible high rate plan and an HRA.  Currently I have the HRA.

Naturally, I wanted to run the numbers to see if this HDHP with an HSA could work for me.  Spoiler alert, I can't see how it will come out better.  The reason I cannot get the HDHP to work for me is because I'm looking at getting a few ragamuffins in the next few years.  The HDHP has  a deductible of $9200, versus the HRA's of $2000.  With an estimated cost of $15000 per hellion (if that number's wrong, let me know, I've never made a baby), The HSA gets depleted very quickly and out-of-pocket payments need to be made.

Rather than type out all the sloppy math I did, I was hoping there might be some folks out there who could possibly share some knowledge that they've gathered through experience with HDHPs, HRAs, having babies, stuff like that.

It seems to me, that while it could be a great financial tool for a young healthy person/family (which I am) with no large expenses on the horizon (which I'm not), my HDHP with HSA does not make for a very good health cost mitigator.

My question is, is there a secret to getting the HDHP to work for abnormally large expenses, or should I just stick to a more traditional healthcare plan?

Thanks guys,
Will

[jefffff]

Do the math and trust the numbers, you don't need us. I guess others can produce their own baby-making health cost estimates.

[etselec]

You should also double-check that the HDHP offered by your work is actually HSA-eligible. Not all are.

[msilenus]

Check and trust your numbers.  Consider other options.  Does your employer offer other options?  Can you decline coverage and buy on an exchange?

I had an option of having an HDHP/HSA when we were planning our second kid.  Passed on it, had a baby, then signed onto the HDHP/HSA the next year.  Nothing wrong with that.

[wmschm]

Checking its eligibility is a smart idea.  The wrong answer to that question could solve the whole issue outright.

I also like the idea of passing on it until large planned life expense are in the past.

I appreciate the helpful replies.  It's nice to get other people's thoughts.  Doing the math is one thing, but I just hoped to get a few ideas from others as well.

[BoulderTC]

I had a similar question and posted it partway down on this already existing thread, and someone gave some well thought analysis and methods to see which is better. You might be interested in reading it:

https://forum.mrmoneymustache.com/ask-a-mustachian/any-reason-not-do-to-hdhphsa/msg156386/#msg156386

[Rural]

Since open enrollment is annual, assuming you plan young minions over the next few years, I think the real question is whether you anticipate a minion this year, not within the next several years. You're not locked into your choice for more than one year, after all.

Oh and, yes, make sure it is HSA eligible.

[wmschm]

Thanks for that link Boulder, that thread's super helpful.

Seems like the HDHP that other people are being offered are vastly superior to the one I'm being offered.  Some HDHP's have a deductible of $2500??  Compared to mine's $9200, that's a much easier choice!

The one I was considering also had a OOP Max of $12,000, which is a bit intimidating with the co-insurance only 60% covered after deductible.

In short, it's no wonder my numbers kept coming out on the side of the HRA.  I kept hearing all this hype about the HSAs and how they were the bees knees (http://www.madfientist.com/ultimate-retirement-account/) but I just wasn't seeing it.  Now I see the reason.  It's because the one my employer is offering is pretty lousy if you expect to have anything other than a yearly check-up.

[sulaco]

That deductible seems very high, but here's another thing to consider (please correct me if I've misunderstood this): depending on your tax bracket out if pocket medical expenses are deductible. You don't need to pay for medical expenses out of your HSA, so you can think of it as just another retirement savings account and let it grow (especially if there is any employer contribution).

Since your deductible is so high, it still might not be worth it, and if you can't take the medical expenses deduction, even more so.

[rubybeth]

I've mainly only had HDHPs since going off my parents' insurance 10 years ago. I really like them, esp. since my employer gives me flexible benefit dollars so I can max out my HSA and more than cover the deductibles. DH and I have a variety of options, though, because we don't plan on having a baby, and we have learned that it's much less expensive to be on separate health insurance plans, and not on combined family coverage. Family coverage costs more and the deductibles are higher, like your over $9k number. That would be too high for me. I'm looking at a plan with a $2,750 deductible for $153/mo on my state exchange (Minnesota). DH has an employer plan with a $3,000 deductible, $127/mo, and the employer funds an HSA with $1k for him, too. We compare plans every year and total up annual premium cost, deductibles, how much goes into the HSA, what our maximum out of pocket would be that wouldn't be covered by what's in our HSAs, etc. It's really exhausting and annoying, but ultimately has saved us thousands over the years, so it's worth it.

[bogart]

That deductible seems very high, but here's another thing to consider (please correct me if I've misunderstood this): depending on your tax bracket out if pocket medical expenses are deductible.

Based on what you've written, you have misunderstood that.  After they meet some threshold of your income (not sure if it's gross or adjusted), I think 7.5%, medical costs in excess of that amount are deductible.  So if, say, your income is $50K and you spend $4,250 then, sure, you can deduct $1K (assuming you itemize), that is the amount by which your expenses exceeded 7.5% of $50K, or $3,250. 

Obviously this CAN be a help with covering medical costs, but there are plenty of circumstances even with high medical costs where it doesn't help, or doesn't help much.

[jflo]

If you know you will have a large medical expense, you should probably expect to pay the out of pocket maximum, not the deductible.  In general, you'll be comparing your share of the monthly premium x 12 + out of pocket max and pick the cheaper.  The thread quoted before goes into more detail.

That said, the insurance world is changing a lot.  Unless your employer offers full coverage to both you and your spouse (guessing it's your wife that will be having the baby based on your name), does not offer a kickback if you take the cheaper insurance, and your spouse has no offer of employer coverage, you will want to look at all of your options and all possible configurations because generally, low users of health care will save by getting HDHP+HSA plans (provided you have a plan for how to pay when an accident or something happens) and high users (persons having babies, diagnosed with cancer, ms, whatever) save with full coverage.  The one caveat is sometimes childbirth services are separated from other types of hospital care, and when they are, it's often cheaper on those plans.  I'm expecting this option to go away though as plan services are being more and more regulated to allow for apples to apples comparisons.

You two don't have to be on the same plan.  I have a regular job with insurance and my husband does a combination of self-employment and part-time gigs.  I get my insurance through work (planning on having a kid) and we get my husband an HSA plan on the private market - the only time it made sense to have him on my plan was when my employer covered almost all of it.  Check both the regular market (e.g. ehealthinsurance) and your state's health exchange (though if your employer offers your partner insurance, you can't get a subsidy).  The two should be leveling out soon, but the products on the private market are changing quite a bit.  There are definite winners and losers w/ Obamacare (husband's premiums are increasing, but for the first time I can get insurance outside of my job should I need it), so find out how the numbers apply to your situation.

Finally, this time next year if there's no ragamuffin in sight and your feeling anxious about it, you might also want to compare fertility services on your plan options.  Coverage for this is pretty low so it could be a significant expense.

[Christiana]

For us, home birth with licensed midwives cost us about $4k per child, including prenatal care.  Some of our insurance plans over the years have covered the prenatal care part of the fee.   

[lisalisamc]

Funny - I signed up for the forum today (have been reading the blog awhile) to ask this same question. Kind of. I am trying to figure out the best plan for myself + kid-minion. I currently have a semi-high deductible HSA compatible plan ($2500 deductible per insured) that covers preventative care (ACA requirement) - but this plan has been ridiculously climbing in price. Started at $350 three years ago and is now at $600 a month. It's a major scam, but I'm kind of the lame layman who just thought, "well...what if something happens." I don't have a big enough nest-egg to not be thrown into bad debt for a bad medical issue.

SO - in shopping plans, found one on the Healthcare.gov exchange (finally worked), and the quote is $476 per month for a seemingly better plan ($1000 deductible per individual). That said, there are differences. Pharmacy/med coverage is worse ($250 deductible v. $1000 deductible). Office visits are $10 higher.

Being the nerd-in-training that I am, I started a spreadsheet where I could factor in the best outcome for me and the kid given my current medical conditions (asthma, eczema, allergies - thanks industrialized nation!!) and offered coverage. But then I thought.....Surely someone has done a spreadsheet like this?

Basically have editable cells for assumptions (i.e. "2" non-preventative dr's visits per year, "$350" monthly medication refill costs, "1" x-ray event costing "$500", "0" catastrophic events, etc). However, a quick google search revealed no such excel template.

Thus - I turn to the MMM community - has anyone done this? Or know of anyone/any site that has a non-biased version of this?

Thanks to all!

[rubybeth]

Funny - I signed up for the forum today (have been reading the blog awhile) to ask this same question. Kind of. I am trying to figure out the best plan for myself + kid-minion. I currently have a semi-high deductible HSA compatible plan ($2500 deductible per insured) that covers preventative care (ACA requirement) - but this plan has been ridiculously climbing in price. Started at $350 three years ago and is now at $600 a month. It's a major scam, but I'm kind of the lame layman who just thought, "well...what if something happens." I don't have a big enough nest-egg to not be thrown into bad debt for a bad medical issue.

SO - in shopping plans, found one on the Healthcare.gov exchange (finally worked), and the quote is $476 per month for a seemingly better plan ($1000 deductible per individual). That said, there are differences. Pharmacy/med coverage is worse ($250 deductible v. $1000 deductible). Office visits are $10 higher.

Being the nerd-in-training that I am, I started a spreadsheet where I could factor in the best outcome for me and the kid given my current medical conditions (asthma, eczema, allergies - thanks industrialized nation!!) and offered coverage. But then I thought.....Surely someone has done a spreadsheet like this?

Basically have editable cells for assumptions (i.e. "2" non-preventative dr's visits per year, "$350" monthly medication refill costs, "1" x-ray event costing "$500", "0" catastrophic events, etc). However, a quick google search revealed no such excel template.

Thus - I turn to the MMM community - has anyone done this? Or know of anyone/any site that has a non-biased version of this?

Thanks to all!

I have tried to do something similar (have never found something online) by just tracking our own personal costs (Rx, doc visits, chiropractor, etc.) each year, and figuring out based on our own experiences how things might play out. It would be impossible to make an Excel sheet for medical services costs like you suggest, because they vary wildly between providers and based on what type (brand) insurance you have and any agreements between providers and the insurers to offer price breaks. And sometimes you don't have a choice of the cheapest provider (example, you're in a car accident nearest a hospital that doesn't give your insurance any price breaks). You can definitely check to see if your doctor takes whatever insurance you're considering, but it will be difficult to find out the cost of various services with each insurer.

[bogart]

That deductible seems very high, but here's another thing to consider (please correct me if I've misunderstood this): depending on your tax bracket out if pocket medical expenses are deductible.

Based on what you've written, you have misunderstood that.  After they meet some threshold of your income (not sure if it's gross or adjusted), I think 7.5%, medical costs in excess of that amount are deductible.  So if, say, your income is $50K and you spend $4,250 then, sure, you can deduct $1K (assuming you itemize), that is the amount by which your expenses exceeded 7.5% of $50K, or $3,250. 

Obviously this CAN be a help with covering medical costs, but there are plenty of circumstances even with high medical costs where it doesn't help, or doesn't help much.

This was raised to 10% of your AGI, just an fyi. And it's post tax dollars used. So say you incurred $5k in medical expenses but paid $2k from an HSA only $3k count and only the amount of that over that 10% threshold

Thanks -- even less useful (on average) than I remembered!

[abhe8]

i say look at all the options. with my last dc, total cost was 2900 and i was able to use funds from my FSA for the first 2500 of that.

[lisalisamc]

Funny - I signed up for the forum today (have been reading the blog awhile) to ask this same question. Kind of. I am trying to figure out the best plan for myself + kid-minion. I currently have a semi-high deductible HSA compatible plan ($2500 deductible per insured) that covers preventative care (ACA requirement) - but this plan has been ridiculously climbing in price. Started at $350 three years ago and is now at $600 a month. It's a major scam, but I'm kind of the lame layman who just thought, "well...what if something happens." I don't have a big enough nest-egg to not be thrown into bad debt for a bad medical issue.

Thanks rubybeth - the more I dug into it, the more I realized it was an exercise in futility. You can get a rough estimate, but, you would really need to dig into each plan to understand at what level they cover certain meds, procedures, etc, before really knowing which plan bests another. Not exactly a capitalist utopia of informed consumers making sound decisions based on a thorough understanding of the product....but I digress.

SO - in shopping plans, found one on the Healthcare.gov exchange (finally worked), and the quote is $476 per month for a seemingly better plan ($1000 deductible per individual). That said, there are differences. Pharmacy/med coverage is worse ($250 deductible v. $1000 deductible). Office visits are $10 higher.

Being the nerd-in-training that I am, I started a spreadsheet where I could factor in the best outcome for me and the kid given my current medical conditions (asthma, eczema, allergies - thanks industrialized nation!!) and offered coverage. But then I thought.....Surely someone has done a spreadsheet like this?

Basically have editable cells for assumptions (i.e. "2" non-preventative dr's visits per year, "$350" monthly medication refill costs, "1" x-ray event costing "$500", "0" catastrophic events, etc). However, a quick google search revealed no such excel template.

Thus - I turn to the MMM community - has anyone done this? Or know of anyone/any site that has a non-biased version of this?

Thanks to all!

I have tried to do something similar (have never found something online) by just tracking our own personal costs (Rx, doc visits, chiropractor, etc.) each year, and figuring out based on our own experiences how things might play out. It would be impossible to make an Excel sheet for medical services costs like you suggest, because they vary wildly between providers and based on what type (brand) insurance you have and any agreements between providers and the insurers to offer price breaks. And sometimes you don't have a choice of the cheapest provider (example, you're in a car accident nearest a hospital that doesn't give your insurance any price breaks). You can definitely check to see if your doctor takes whatever insurance you're considering, but it will be difficult to find out the cost of various services with each insurer.

[mm1970]

I signed up for the HMO when I found out I was pregnant with #2.

$15,000 is a good estimate, for a regular birth.  Goes up for a C-section