The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: dodojojo on July 09, 2014, 03:41:54 PM

Title: Help with health care comparison
Post by: dodojojo on July 09, 2014, 03:41:54 PM
I started a new job and am in the benefits election stage.  My benefits go back to my start date in June so therefore my premium pay period is 7 months for the rest of the year.

My previous health care plan was a monthly/high deductible 120/5,000 plan just to give you an idea of what my health care usage is.  Though I have held off on some things (not urgent) for when I would get back on a fully-loaded health plan.

So with that in mind, I trying to figure out financially the best plan possible.

Plan 1: total premium cost/deductible of $70/1181.

Plan 2: total premium cost/deductible of 518/150

Plan 3: total premium cost/deductibleof 0/2,338.  I can put up to 2,800 in an HSA.  The company will contribute 500 to the HSA too.  With my AGI, I figure I will save $700 in federal income taxes on the 2,800.

All three plans offer the same health services and access, the only differences are the deductibles and post-deductible pay ratio.  For 1 and 2, it's 20/80 to me/plan.  For #3, it's 30/70.

On the face of it, the HSA plan saves me the most money.  And it may make sense if I go with this plan and not schedule any health visits or procedures this year.  In January 2015, I can switch to Plan 2 if I want/need a lots of healthcare.  Preventive care visits are $0 across all 3 plans.

Does my logic compute?

The spanner in the works is if I should need lots of healthcare in the next 6 months.  If that's the case and I max out the deductibles, Plan 2 makes the most sense while the high deductible Plan 3 would be the most costly. 

Total Cost if I max out deductibles

Plan 1:$1,251
Plan 2: $668
Plan 3: $2,338*

Again, am I approaching this comparison the right way?

*Can be counted as 1,138 when I factored in the company's $500 contribution and my $700 tax savings.  But my post-deductible pay rate is 30% opposed to 20% to Plans 1 and 2.
Title: Re: Help with health care comparison
Post by: kite on July 09, 2014, 04:25:51 PM
You have a better grasp of your health than I do.  But for me, even the max out of pocket for us is lower than the other options with the tax benefits of an HSA.  For what you are planning,  will you max out the deductible?   I'm thrilled to have those HSA contributions in the market,  effectively boosting my retirement savings.   Wouldn't want to give up the chance to keep adding to that pile if at all possible.
Title: Re: Help with health care comparison
Post by: dodojojo on July 09, 2014, 04:40:52 PM
Kite, I agree it's not bad but I've edited my initial post more accurately reflect the cost.

If I can stay clear of any health issues, the HSA is definitely the way to go.  And I'm leaning towards it. I wanted to 'show my work' to see if I setting up the comparison correctly.

The issue is if there's a problem, one little diagnostic adds up quickly.  I had an EEG last year and my deductible was $400.  Six months later, the doctor's accounting office sent me a bill for another $700 since they received $0 from my healthcare company.  My (now ex) healthcare company told me they determined my max out of pocket is $400 and that's all I should pay.  But the doctor's office is saying the EEG cost a lot more and since the healthcare company didn't pay, someone (me) owes them the $700.  It's a mess.  I know that fully loaded healthcare plans aren't very mustachian if you're in fine health.  But the ease of mind of a very low deductible plan is so enticing at times.
Title: Re: Help with health care comparison
Post by: kite on July 09, 2014, 04:52:05 PM
Next question is,  do you have the $2800?
If yes, I'd go with the HDHP and HSA, otherwise,  pick #2 and schedule everything sooner.
Personally,  I strongly lean towards HSA because I wouldn't want to forgo investment opportunity,  and the distant future is certain to have health care expenses.     
Title: Re: Help with health care comparison
Post by: dodojojo on July 09, 2014, 04:57:52 PM
Yep, the 2,800 isn't a problem at all.  I would love to invest another 15K pre-income tax so I would then qualify for a traditional IRA and stash another 5.5K pre-tax.  The 2,800 unfortunately won't help in this area but I would save 25% in taxes on it.