Author Topic: HDHP or Traditional when I have health concerns  (Read 1316 times)

Prodigal Daughter

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HDHP or Traditional when I have health concerns
« on: May 16, 2019, 03:42:02 PM »
I just started a new job and I need to decide between a High Deductible Plan or a Traditional Plan. I've tried running the numbers but I'm not confident in my calculations. Here is the info. Please tell me what I am missing. This is important to me not just because of the money, but because I had surgery earlier this spring to remove a mass from my kidney. I have (had?) kidney cancer and while it was grade 1, stage 1 and therefore a good prognosis (no follow up treatment) I do have to go in for yearly blood work and CT scans for the next five years. Therefore, I know my health care costs will be significant over the next five years. I am also anticipating that both of my kids will need braces (maybe $3000 oop for each of my two children).  Also, I am single, so these plans are Employee + Children.  Besides the braces, one child will need yearly audiology screenings which run about $200, I think. His CT came back fine, so as long as nothing changes, they should just be screenings.

                                              Traditional Plan                                     HDHP                         
Premiums                                $415 mon/$4980 year                              $201 mon/$2412 year
Ind. Deductible                          $1,000                                                $2,000
Family Deductible                       $2,000                                                $4,000
Ind OOP Max                             $3,000                                                $3,350
Family OOP Max                         $6,000                                                $6,650
Coinsurance %                            20%                                                    20%
My currently monthly Rx             $10 (Tier 1)              $189 (but contributes to deductible)
Yearly amount I would likely       $1440                                                  $4000
put into an FSA (traditional) or
HSA (HDHP)

Other info: there are other Rx Tiers of $35, $70, and 25% (max $150) on the traditional plan.
No copays. they all say Deductible, then coinsurance.
On the HDHP the family deductible is aggregate (I think that means I can hit the family deductible by myself).


The plans start June 1 for me due to new job (open enrollment in the fall for Jan 1 start)
My first blood work/doctor visit/CT scan is scheduled for the end of July. My EOB for my CT earlier this spring shows me a cost of around $2700 pre insurance. And that's just the scan, not the blood work, consult, etc.

Also, I don't know if the FSA is pre-funded like my last employer? Where it was available immediately. But my understanding is that my HSA is funded monthly, so the other sticky thing is that I would only have about two contributions before my CT scan at the end of July.

Thoughts?
« Last Edit: May 16, 2019, 08:48:47 PM by Prodigal Daughter »

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #1 on: May 16, 2019, 04:04:34 PM »
Or...am I looking at too many variables?

Is the simple equation to plan for the Max Individual OOP expense each year, and then just look at my FSA/HSA contributions. With higher premiums of the traditional, I can only afford to put $1440 into an FSA each year while likely owing $3,000. But with the HDHP premiums, I would owe $3350 but be able to put $4000 into an HSA?

Then cash/flow timing at the beginning is a thing, but my doctor did say that I can push my CT scan a few months if needed. No hard and fast rule, just sometime in the first 3-6 months post-op.

*minor edit for clarity*
« Last Edit: May 16, 2019, 08:06:45 PM by Prodigal Daughter »

MDM

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Re: HDHP or Traditional when I have health concerns
« Reply #2 on: May 16, 2019, 04:44:46 PM »
Or...am I looking at too many variables?

Is the simple equation to plan for the Max Individual OOP expense each year, and then just look at my FSA/HSA. With higher premiums of the traditional, I can only afford to put $1440 into an FSA each year while likely owing $3,000. But with the HDHP premiums, I would owe $3350 but be able to put $4000?

Then cash/flow timing at the beginning is a thing, but my doctor did say that I can push my CT scan a few months if needed. No hard and fast rule, just sometime in the first 3-6 months post-op.
Might be worth putting 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.  Don't know if either of those (or any of the readily available) tools will match your situation exactly, but one might be close enough to give you a good perspective.

frugaldrummer

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Re: HDHP or Traditional when I have health concerns
« Reply #3 on: May 16, 2019, 07:58:40 PM »
What's the difference in premiums?

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #4 on: May 16, 2019, 08:07:07 PM »
What's the difference in premiums?

Whoops! I don't know how I missed that. Added it to the original post!
« Last Edit: May 16, 2019, 08:13:54 PM by Prodigal Daughter »

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #5 on: May 16, 2019, 08:13:23 PM »
Or...am I looking at too many variables?

Is the simple equation to plan for the Max Individual OOP expense each year, and then just look at my FSA/HSA contributions. With higher premiums of the traditional, I can only afford to put $1440 into an FSA each year while likely owing $3,000. But with the HDHP premiums, I would owe $3350 but be able to put $4000 into an HSA?

Then cash/flow timing at the beginning is a thing, but my doctor did say that I can push my CT scan a few months if needed. No hard and fast rule, just sometime in the first 3-6 months post-op.

*minor edit for clarity*

The other thought I had was let's say we had a crazy year and we actually met the family OOP max. With the Traditional/FSA route, I could be "underfunded" by $4,560 (OOP - FSA) whereas with the HDHP/HSA route, I would only be "underfunded" by $2,650 (OOP - HSA)

Am I considering this correctly?

frugaldrummer

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Re: HDHP or Traditional when I have health concerns
« Reply #6 on: May 16, 2019, 08:31:57 PM »
And what's the medication coverage on the HDHP? Although you're likely in good shape re: your kidney tumor, you've had one cancer so you are at somewhat increased risk of a second cancer sometime. One problem with modern cancer treatment is that some treatments are oral drugs and they are not covered the same way that IV infusions are. You want to have good drug coverage for oral cancer drugs that can cost thousands of dollars a month.

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #7 on: May 16, 2019, 08:44:41 PM »
And what's the medication coverage on the HDHP? Although you're likely in good shape re: your kidney tumor, you've had one cancer so you are at somewhat increased risk of a second cancer sometime. One problem with modern cancer treatment is that some treatments are oral drugs and they are not covered the same way that IV infusions are. You want to have good drug coverage for oral cancer drugs that can cost thousands of dollars a month.

The prescriptions are just part of the deductible for the HDHP, until the deductible is met. Then as far as I can tell, 100% covered. I will clarify with HR.

frugaldrummer

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Re: HDHP or Traditional when I have health concerns
« Reply #8 on: May 16, 2019, 09:17:44 PM »
If it's true that meds are out of pocket but count towards deductible, and your meds are already $189 a month, then you are probably best off with the HDHP since meds alone will meet your annual deductible. However I would investigate because that seems weird, that you could meet your deductible with medication expenses alone.

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #9 on: May 17, 2019, 06:06:02 AM »
If it's true that meds are out of pocket but count towards deductible, and your meds are already $189 a month, then you are probably best off with the HDHP since meds alone will meet your annual deductible. However I would investigate because that seems weird, that you could meet your deductible with medication expenses alone.

That is definitely the case, that prescriptions count to deductible. Of course, in a ďgoodĒ year that means Iíll always meet my deductible in month 11. 🤣 Iím also going to call other pharmacies to check prices, I just know thatís what my current pharmacy quoted me when I asked how much it would be without insurance.

seattlecyclone

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Re: HDHP or Traditional when I have health concerns
« Reply #10 on: May 17, 2019, 01:12:52 PM »
The difference in annual premiums is about $2,500. This is more than the difference between the family deductibles, and more than the difference between the family out-of-pocket max.

Because the traditional plan has separate deductibles for each family member, it could end up being a better deal if only one of you needs much medical care and the other family members use very little (if any) of their deductible. If you think it's reasonably likely that two of you would each have over $1,000 in medical expenses this year, the HDHP starts to look better.

Also the math looks a bit different for this year than for a full year since you'll only be paying for seven months of premiums before the plan resets in January. Keep that in mind.

honeybbq

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Re: HDHP or Traditional when I have health concerns
« Reply #11 on: May 17, 2019, 01:56:32 PM »
It looks to me like it makes sense to do traditional.

When my H was diagnosed with cancer, he switched right away (well, next chance he got) from his HDHP to a regular plan. With the follow ups, imaging, medicine, etc. It always required him to max his OOP and it made more sense to get the family to the family max OOP right away then we just considered the rest of us "free" haha.

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #12 on: May 17, 2019, 02:50:00 PM »
It looks to me like it makes sense to do traditional.

When my H was diagnosed with cancer, he switched right away (well, next chance he got) from his HDHP to a regular plan. With the follow ups, imaging, medicine, etc. It always required him to max his OOP and it made more sense to get the family to the family max OOP right away then we just considered the rest of us "free" haha.


But the max out of pockets are SO similar. It's only a $350 (or $650 family) difference while the premiums are $2568

What am I missing? I'd get to the HDHP OOP faster, that's for sure. And I would likely get close to the family deductibles met by myself, while the family deductible on the Traditional likely would never/rarely be met? IDK...

I did think to run the numbers for this year since it's seven months. I feel like the Traditional maybe wins for the condensed time frame, but over 12 months (so when I sign up next year) the HDHP might win. The OOP costs are just assuming a $2700 CT scan meeting the deductible, then paying 20% of the rest.

   12 Mos                        Traditional      HDHP      7 Mos   Traditional      HDHP   
Premiums                               4980       2412                  2905             1407   
                             
Deductible                               1000       2000                  1000              2000   
Coinsurance/OOP costs             340          140                    340              140   
Rx                                         120          1210                     120              1210   
Yearly total (premiums + costs)      6440         5762                   4365            4757   
                             
FSA/HSA Contributions             1440      4000                840              2338   

What I would owe after using pre-tax accounts:
(Costs - FSA/HSA contributions) =    -20     +680               -600            -1012


(life would be easier if i knew how to do tables in here - haha)

« Last Edit: May 17, 2019, 03:03:07 PM by Prodigal Daughter »

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #13 on: May 17, 2019, 04:33:27 PM »
Ok - I kept researching and now I think I have been mistaken about the HDHP deductible. I thought because it listed an individual deductible, it had both individual and family. But my research made me realize that no, essentially I would be contributing to the full $4000 family deductible (but individually capped at $3350 - the OOP Max). I thought the individual would be met at $2000, but it looks like that is only in the case of enrolling an individual, not a family.

Screenshot of the article I just read that clarified that is attached!

wilderness

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Re: HDHP or Traditional when I have health concerns
« Reply #14 on: May 17, 2019, 05:53:15 PM »
Quote
My EOB for my CT earlier this spring shows me a cost of around $2700 pre insurance. And that's just the scan, not the blood work, consult, etc.

That's an important number for considering the high deductible plan. Don't you think the traditional plan would cover at least some of it, though?

DaMa

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Re: HDHP or Traditional when I have health concerns
« Reply #15 on: May 17, 2019, 09:03:01 PM »
The HDHP plan has only one deductible and OOP Max.  If itís a family plan you have to meet the family deductible even if they are all one personís claims. 

Hereís how I look at the numbers.

You have $2568 difference in premium.  That covers the $2000 difference in deductible.  The $568 remaining almost covers the extra $650 in OOP max.  You can contribute $7000 to an HSA and the tax savings on that make the HDHP the much better option.

Letís look at the situation where one person has all the claims.  With the traditional plan, you will have $11,000 in claims before you hit the $3000 OOP max ($1000 deductible + 20% of $10,000 = $3000).  So you are at $3000 paid on $11000 in claims, plus $4980 in premium, so $7980 total paid.  (Trad1 below) In the HDHP, you would pay $4000 deductible and $1568 coinsurance on $7840 in claims to get to the same $7980 total paid -- covering $11840 in claims. (HDHP below) Youíve covered more claims for the same amount.  Lastly, consider if another person in your family has $1000 in claims,and you hit the $2000 deductible.  You now can only cover $1000 coinsurance on $5000 in claims for the same $7980 total paid. (Trad2 below)

                                Trad1                HDHP      Trad2
Premium                   4980                  2412                4980
Deductible                 1000                 4000                 2000
20% coinsurance       2000 (10,000)    1568 (7840)      1000 (5000)
Total   spend               7980                  7980                7980
Total Claims             11000               11840                7000
Remaining OOP Max   3000                 1082                3000

One last point, the Rx spend will contribute to the deductible on the HDHP, but wonít on the Traditional plan, so you'll actually get to the $4000 faster than this calculation captures.

I would definitely take the Traditional plan for the partial year.  You donít have an entire year of premium savings to offset that $4000 deductible. 

ThatGuy

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Re: HDHP or Traditional when I have health concerns
« Reply #16 on: May 17, 2019, 09:16:58 PM »
When you check prescription prices check healthwarehouse.com and download the GoodRx app and check prices.  You'll be surprised.

chasesfish

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Re: HDHP or Traditional when I have health concerns
« Reply #17 on: May 18, 2019, 06:12:38 AM »
You've gotten great responses thus far.  One question:  Does the HDHP give you access to an HSA and can you put the full $7,000 away?

I think the two plans are a wash, but if you can get the full amount into an HSA you pickup savings on income tax and FICA which would swing me towards the HDHP.

freya

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Re: HDHP or Traditional when I have health concerns
« Reply #18 on: May 18, 2019, 08:05:48 AM »
When I get my health insurance options for the year, I break out the spreadsheet and run some scenarios based on my previous spending, a higher level of spending, hitting the out of pocket max etc.

My calculations showed that the HDHP was a HUGE winner under every possible scenario, mainly because of the HSA tax break.  In fact, if I have minimal medical expenses for the year, I end up making money on the deal.

For example, based on the numbers provided, here's a quickie calculation for a full year assuming you're in a 22% tax bracket with no state tax, and assuming you end up with exactly $4,000 in medical expenses (to hit the HDHP deductible).  For simplicity I'm ignoring prescription costs.

Traditional 1:  premium + deductible + copays = $6580 total cost
HDHP: premium + deductible - tax benefit = $4872 total cost

 You'll need to run your actual numbers of course, but the HDHP is likely to be the best option.  You should check whether you can make the full HSA contribution while holding an HDHP for only part year though.

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #19 on: May 18, 2019, 10:36:48 AM »
You've gotten great responses thus far.  One question:  Does the HDHP give you access to an HSA and can you put the full $7,000 away?

I think the two plans are a wash, but if you can get the full amount into an HSA you pickup savings on income tax and FICA which would swing me towards the HDHP.

No, I canít put the full $7000 into an HSA right now. My max OOP for my previous plan when I had surgery was $9000, so Iím expecting to need to pay that bill in the near future while still managing a family budget as a single parent.

ThatGuy

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Re: HDHP or Traditional when I have health concerns
« Reply #20 on: May 18, 2019, 07:20:06 PM »
When you check prescription prices check healthwarehouse.com and download the GoodRx app and check prices.  You'll be surprised.

I forgot to suggest when you check prescription prices check the prices with higher quantities as well.  Sometimes, (a lot of times), it's cheaper without using insurance.

seattlecyclone

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Re: HDHP or Traditional when I have health concerns
« Reply #21 on: May 18, 2019, 08:39:47 PM »
   12 Mos                        Traditional      HDHP      7 Mos   Traditional      HDHP   
Premiums                               4980       2412                  2905             1407   
                             
Deductible                               1000       2000                  1000              2000   
Coinsurance/OOP costs             340          140                    340              140   
Rx                                         120          1210                     120              1210   

Where are you getting these Rx numbers? It looks like you're using the same estimates for a seven-month period as a twelve-month period. Furthermore the $1,210 amount seems to line up pretty well with 7 times the $189 monthly amount you mentioned above.

With the HDHPs I've been on, prescriptions have a particular insurance-negotiated price (perhaps $189 in the case of your medication?). Before you meet the deductible you pay that full price (which then counts toward your deductible), but afterwards you just pay the coinsurance percentage of that price (which then counts toward your OOP max). If your HDHP works that way, you may be overestimating your OOP prescription costs. It may or may not actually work that way in your case. Seems worth looking into the specifics before you make a decision.

Prodigal Daughter

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Re: HDHP or Traditional when I have health concerns
« Reply #22 on: May 21, 2019, 12:12:08 PM »
Quote
Where are you getting these Rx numbers?

Rx numbers were adding up to my OOP costs - figuring I wouldn't be paying them after meeting OOP.


Anyway - thank you all for the questions and advice. I am going to take the traditional plan for the next seven months, which will also give me a better idea of what my health costs will be going forward with a yearly CT scan.

I will rerun the numbers in the fall during open enrollment.