Author Topic: Insurance and HSA question.  (Read 1015 times)

diesel

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Insurance and HSA question.
« on: November 08, 2017, 11:37:04 AM »
I am currently in step 2 of the investment order (from the investor alley sub forum).  I am working on paying down debts in the 6-6.8 percent range.  I now have the option to opt into a high deductible plan at work which would allow me to open an HSA.  I am trying to decide if it is the right time to do so or if I should continue to put extra money towards debt.

In step 2 of the investment order "~5% or more above the 10-year Treasury note yield".  Could anyone explain or point me in the direction of something that could explain why that was chosen? - That is how the treasury note affects debt and  why 5% over that was chosen for step 2?  Like I said, the debts I am currently working aggressively on are in the 6-6.8% range and with the current treasury note at ~2.3% that means I am under the 5% threshold.

Any info you could show me to help me decide would be great.

Thanks

diesel

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Re: Insurance and HSA question.
« Reply #1 on: November 08, 2017, 11:47:12 AM »
I guess after thinking about it a little background may help.

I am 28 years old.
The last three years my medical and Rx bills have been as follows:
2015:  $1500
2016:  $650
2017:  $550


A quick summary of the plans I am choosing between are below

                                   Plan A                 Plan B                      Consumer Driven                       HDHP (HSA)
                                                                                                  Plan (HRA)
Annual Deductible           600.00                 800.00                 1,500.00                                   2,700.00
            
Company Funding?              N/A                   N/A                           300.00                                      0.00
            
Annual OOP Max          3,200.00               4,200.00                   5,000.00                                   6,000.00

Monthly Premium               129                          82                              67                                           12




Thanks again for all your help!




« Last Edit: November 08, 2017, 12:12:36 PM by diesel »

MDM

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Re: Insurance and HSA question.
« Reply #2 on: November 08, 2017, 06:27:43 PM »
In step 2 of the investment order "~5% or more above the 10-year Treasury note yield".  Could anyone explain or point me in the direction of something that could explain why that was chosen? - That is how the treasury note affects debt and  why 5% over that was chosen for step 2?
It's not the effect of the treasury note on debt - there is none if you have a fixed rate loan.

The "X% above 10 year treasuries" are rough proxies for what one might call "high" or "medium" interest rates, and used for comparison between "paying off debt vs. investing."

Quote
Like I said, the debts I am currently working aggressively on are in the 6-6.8% range and with the current treasury note at ~2.3% that means I am under the 5% threshold.
Under, but very close.  Thus you are in coin flip territory.  Given that, flip the coin, listen to the voice in your head saying which way it hopes the coin lands, and follow that path no matter what the coin did.

MDM

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Re: Insurance and HSA question.
« Reply #3 on: November 08, 2017, 06:29:00 PM »
I guess after thinking about it a little background may help.
Is there a clear answer if you put your numbers into a couple of comparison tools, e.g., Health Savings Account (HSA) vs. Traditional Health Plan and the 'HDHP Analysis' tab of the case study spreadsheet?

diesel

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Re: Insurance and HSA question.
« Reply #4 on: November 09, 2017, 12:20:17 PM »
Thank you both for the advice.  After running numbers last night for what seemed like hours I decided on the HDHP.

Now to jump in to the HSA world for my first time....