Health Care Option: When you have a chronic condition

[Insanity]

All -
This is my first year I have tried an HSA.  In discussions with a family member (who pretty much follows most of the MMM lifestyle before hand - i.e: watch what you spend, invest wisely, enjoy life), we decided to try the high deductible plan.

The problem is, we have a family (and just had a baby) and I have a chronic illness which requires high priced medicine (thankfully they have deductible and co-pay assistance).

The Family deductible is $9000, $3000 per individual.  The cost per month is more, but my employer contributes $200 per month to the HSA.  Now, the non HSA plan isn't exactly employee friendly either (our hospital stay for the baby - c-section - was over $2K which while not horrendous isn't exactly cheap either).

Basically, the conversation that I had when comparing the plans was that our initial out of pocket will be higher, but in the end the payments will be lower + we'll get the tax break advantage (both cases the cost for the health care comes pre tax, but we have more taken out + contribution = lower take home income)..  I'll have to look for the specifics.

So I guess the question I'm asking is: 
Does someone with a high medical cost expectation get the benefits, financially, from an HSA is they have to either (a) continue to hit the HSA or (b) never have enough in the HSA to cover the deductible until the end of the year (i.e.: they lose the ability to invest the money they do have because they have to wait for it.

I hope this made sense...

Thanks for the help.

[icefr]

It really depends on the numbers and the other plans that you have available to you. I stuck with the HRA plan that I had with my employer last year because of some expensive prescriptions, but I don't have that expense anymore, so now the HSA makes sense.

I would evaluate:
1) The maximum out of pocket cost for each plan
2) The expected out of pocket cost for each plan
(This includes premiums, co-pays, tax savings, etc. If you know you would put $X into a FSA, then count the tax savings on that too.)
And then pick the cheapest one.

[CorpRaider]

I agree with the above.  One thing I would point out to consider in your analysis is all of the co-pays and other out of pocket expenses you are hit with in the traditional plan are likely to be paid in after tax dollars because you have to exceed the floor on those deductions that is a percentage of your AGI (7.5%, right now, I believe) before you can get any benefit from itemizing.  Unless you also stick money in an FSA to cover those expenses those are likely to be paid in after tax dollars.  Not sure how that impacts your analysis.

[Insanity]

Thanks for the pointers.

We did have co-pays on the other plan, plus co-insurance.  It was a nightmare trying to evaluate what was what.  I think the maximum out of pockets were roughly the same, it was more a matter of how it was distributed. 

It is no wonder our medical industry is a mess with all the calculations going on.

[twinge]

1) The maximum out of pocket cost for each plan

Also grill the plan representatives about care connected to your particular condition.  Underwriters often have differing ideas about what counts as appropriate medical care and if your doctor recommends something that is not covered under a particular health insurances medical plan and you choose to get that treatment, the cost for that treatment may not get added to your deductible nor your maximum out of pocket cost.  This doesn't come into play in all chronic conditions--but some pediatric developmental disorders and some cancer treatments are notorious for being sources of battles.  Also, if your condition is one where there is a lot of research (say for instance MS), you want to make sure that the plan is one that adapts quickly to research findings and covers well-researched treatments that emerge.  If I had an expensive chronic condition where there was considerable research progress being made I think I would opt out of the HDHP/HSA plans, or at least know the ins and outs of what they cover and their process for deciding what they cover but YMMV.