Author Topic: My Wife is pregnant Am I crazy for Switching to my companies HDHP?  (Read 7717 times)

davef

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My wife and I are young and healthy but she is expecting.
My company offers 2 plans,  both through BCBS
PPO plan at $446 per month out of my pocket
HDHP at $116 per month out of my pocket

The PPO has a deductible (in network) of $500 per individual or 1500 total
The PPOs has copays of 30$ costs of $350 per admission plus 20% of hospital services.
The PPO offers partial drug coverage.
with the HDHP all of that is 100% out of pocket until you hit the out of pocket maximum.

The PPO has a out of pocket max of 2,000 per individual or 6,000 total.
The HDHP has  out of pocket max of 3,000 per individual or 6,000 total.
Bonus, If you choose the HDHP the company Creates a health spending account for you and deposits the first $1,000

Here is my thinking.
The HDHP saves me $3,960 per year in premiums.
The company pays that bonus of $1,000 per year
So I start the year out 4,960 ahead if I do that HDHP
Worst case scenario I pay back that 4,960 I saved plus another $1040 and I've hit my out of pocket limit! 


So in any scenario where my medical bills are under 5k the HP is the better route. Any more than that its pretty much a wash. Am I missing something?


Dicey

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #1 on: December 08, 2015, 03:17:03 PM »
Pregnancy is one time where anything that goes even the slightest bit wrong will eat up that savings in the blink of an eye. Waiting until next year to switch might be more prudent. Anything less could be penny wise and pound foolish.

Not sure if you're missing anything, just offering my two cents.

davef

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #2 on: December 08, 2015, 03:40:37 PM »
Diane, I hear what you are saying. That is the reason I am asking. The 5 years my wife and I have been together we have never had more than 2-3k worth of total medical expenses.  So on any other year the HDHP is a huge win.

However, unless I am missing something, its not much of a gamble. In fact the PPO seems like more of a gamble because premiums don't count toward the out of pocket maximums.
In fact. With the PPO plan my total out of pocket (premiums plus costs) Worst Case Scenario is 11,352. (446X12 + 6000)
With the HDHP is 6392 (116X12 -1000 + 6000)


lets say we have 10k in total health care bills this year.
With the PPO I spend $5352 on premiums + $1500 on deductibles we'll say +$250 in copays and +$250 in prescriptions and are still left with 20% of the remaining 5k or so in bills. That's 8,352 out of pocket!

In the same scenario with the HDHP I pay 1392 in premiums, pay the next $6,000 all out of pocket (minus the 1,000 HSA) and I'm done.  I reach my out of pocket max with only 6392 outlay.

MoonShadow

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #3 on: December 08, 2015, 03:44:11 PM »
Yeah, it's not really that much of a gamble. I'd wager your HD insurance plan also has a clause for birth related expenses anyway.  Most do.  Do what you feel best for your family.

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #4 on: December 08, 2015, 03:46:12 PM »
In case you didn't know... the deductible for an HDPD insurance works different than PPO. Since you are on the family plan, the family deductible would need to be met by one or more people before insurance starts paying. It would probably be the same for OOP max. The "individual" in an HDPD plan usually refers to the plan itself meaning is it an individual plan or a family plan. Check before making the decision.

sisto

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #5 on: December 08, 2015, 03:49:41 PM »
When covering more than just yourself the HDHP almost always wins via the math. I had a very hard time choosing to switch several years ago, but when I did the math like you I realized that I was in more control and knew my worst case OOP expenses up front. It's also great when if you do end up hitting the deductible requirements because you can go get your expensive treatments free.

davef

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #6 on: December 08, 2015, 03:59:20 PM »
SKL. the HDHP does not have deductible. Its all out of pocket until you hit the out of pocket max.

Dicey

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #7 on: December 08, 2015, 04:33:46 PM »
Diane, I hear what you are saying. That is the reason I am asking. The 5 years my wife and I have been together we have never had more than 2-3k worth of total medical expenses.  So on any other year the HDHP is a huge win...However, unless I am missing something, its not much of a gamble.
Uh, davef, has she ever been pregnant before? Sorry, but this is a complete game-changer. Just ask anyone who's been there. There are curve balls to spare during pregnancy and delivery. Until your child is born healthy and safely, you are taking a larger risk than is absolutely necessary.

davef

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #8 on: December 08, 2015, 04:50:52 PM »
No, she has not.
Please explain with the math. The way I see it if my expenses are under 5k the HDHP wins. If they are 5-6k its a wash, and if they are more than 6k the HDHP wins yet Again!

La Bibliotecaria Feroz

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #9 on: December 08, 2015, 05:09:15 PM »
I am too tired to wrangle with the math, just throwing in another possibility--you might be able to use the "life event" window to change plans. Not all employers permit this; ours did when our kids were born.

We had a more expensive, covers-more plan when I was pregnant (he changed jobs the first time; second time I happened to get knocked up during open enrollment); once I was safely delivered of a healthy infant (no NICU stays or bed rest in the hospital or anything $$$ like that), we used the life event window to downshift.

ulrichw

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #10 on: December 08, 2015, 05:13:11 PM »
[...]
So in any scenario where my medical bills are under 5k the HP is the better route. Any more than that its pretty much a wash. Am I missing something?
Yep - the HDHP is also way ahead if you exceed the plans' OOP limits.

Basically, the maximum you'll spend per year on the HDHP (assuming you hit the family OOP max) is:
6000 + 116 * 12 - 1000 = $6392

The most you'll spend on the PPO:
6000 + 446 * 12 = 11352

(Even if the only medical expenses on the PPO are for mother and child, meaning OOP max of $2000 per individual applies, or $4000 total, you will still be on the hook for $9352).

In general, this is how PPOs and HDHPs, compare. The HDHPs tend to be ahead for low spenders and high spenders, where the PPOs can be ahead in the middle of the road numbers.

In your case, your HDHP has very low OOP numbers, and the company's kicking in with an additional $1,000 so it's a basic no-brainer - there's no spending level where the PPO comes out ahead. ACA plans often have much higher limits (around $6K per person/ $12K family), so it would be less clear-cut.

EDIT: I see you already computed these numbers - but I'll leave my calculations for context.

Gen Y Finance Journey

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #11 on: December 08, 2015, 05:20:27 PM »
I did the math several years ago when my company first started offering a HDHP. I made a spreadsheet with various scenarios and stressed way too much over it. I sent my spreadsheet to my father and he said "you're talking about a worst case scenario of coming out ~$2000 behind over the course of a year, stop stressing and do the HDHP."

I'll be having my first child next year and I have no worries staying on the HDHP.

But another thing to consider is whether you have the cash reserves to cover the cost of delivery. If your company is like mine, they won't put that $1000 into your HSA on January 1, they'll spread it out over the course of the year. So if your wife is giving birth in January, you'll have to pay most of the costs out of pocket, and then later in the year you can reimburse yourself from your HSA.

You may also want to check with your hospital/birthing center and find out what the cost of a normal delivery is. My hospital estimates $18,600 for a normal delivery. Based on your plans' details, that would come out to around $4500 on your PPO, and the full $6000 OOP max for the HDHP, which makes the HDHP better when you factor in the premiums. Plus, any subsequent doctor visits you incur (beyond the basic well baby visits that should be covered on both plans), will be completely covered on the HDHP because you already hit the max. Not so on the PPO, you're still on the hook for your cost share.

TL;DR - Please don't listen to the commenter saying there are too many risks with the HDHP, there aren't. Your math is correct.

MoonShadow

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #12 on: December 08, 2015, 06:41:45 PM »
Diane, I hear what you are saying. That is the reason I am asking. The 5 years my wife and I have been together we have never had more than 2-3k worth of total medical expenses.  So on any other year the HDHP is a huge win...However, unless I am missing something, its not much of a gamble.
Uh, davef, has she ever been pregnant before? Sorry, but this is a complete game-changer. Just ask anyone who's been there. There are curve balls to spare during pregnancy and delivery. Until your child is born healthy and safely, you are taking a larger risk than is absolutely necessary.

I have five kids.  There are, indeed, curve balls; but his math is likely correct.  Any competitive HDHP will either match or win compared to any competitive PPO policy.  The overhead imposed by the 3rd party payment process used by a regulated PPO, alone, will end with this result.  I did the math as well, using both forward estimates and historical health care costs with myself, my wife & my first two kids.  There was never a condition that the HDHP didn't win, but some theoretical situations that it could have lost by about $200 in a given year.

KittyFooFoo

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #13 on: December 08, 2015, 08:35:43 PM »
To clarify--lots of talk about "risks," but is anyone suggesting that OP may have to pay more than his HDHP premiums plus his OOP max of $6k?  I think that is what OP really wants to verify.

If you think that is a risk, can you please explain how it might happen?

thd7t

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #14 on: December 09, 2015, 06:00:21 AM »
My wife and I have been having the same discussion this week. We have a couple of variations from your situation, but I may bounce our analysis off this discussion when we have our information together.

davef

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #15 on: December 09, 2015, 08:55:25 AM »
Kittyfoofoo,
Right on.
That is the big question.
I have never hit the out of pocket maximum on any plan. If the worst case is truly $6392 its a done deal. And yes I have $6000 set aside cover it plus I plan on maxing out my HSA this year.

What I want to know is, Is there any way the insurance company can try and make you pay more after you have hit the out of pocket maximum?

AlwaysLearningToSave

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #16 on: December 09, 2015, 11:39:16 AM »
What I want to know is, Is there any way the insurance company can try and make you pay more after you have hit the out of pocket maximum?

Your two biggest things to be concerned about are (1) expenses not covered by the plan; and (2) out of network expenses.  Some plans have completely separate deductibles/OOPMs for in network vs. out of network expenses.  So if you meet your OOPM in-network, go on a trip and incur out-of-network expenses, none of your previous expenses count toward satisfaction of the out-of-network OOPM. 

There is probably no difference in the risks between the PPO and HDHP, other than the dollar limit if you incur both high in-network and out-of-network expenses.  Even then, the likelihood of that occurring is probably not high enough that it should affect your calculus in choosing the plan.  And if you end up in that situation, it is probably a serious enough situation that I'm guessing money would be among the least of your worries. 

Edited to correct typo.

MoonShadow

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #17 on: December 09, 2015, 11:58:08 AM »
What I want to know is, Is there any way the insurance company can try and make you pay more after you have hit the out of pocket maximum?

Not really, unless you get sick while on vacation out of the US.  Everything else is in your policy contract, or it's something that a PPO could also do to you.

boarder42

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #18 on: December 09, 2015, 12:11:44 PM »
you're also missing the maxing of your HSA and saving 40% or so in taxes from FICA and the govt. in your calc.

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #19 on: December 09, 2015, 01:02:01 PM »
What is the coinsurance once you have hit the deductible on the PPO? Also I couldn't tell if the OOPM for the HDHP is the same as the deductible or are they different numbers? (Noticed this was answered in a previous response)  If you know the typical amount the hospital you want to deliver at charges for a normal delivery you can then run the numbers to see which one is actually better.
« Last Edit: December 09, 2015, 01:05:33 PM by Proud Foot »

boarder42

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #20 on: December 10, 2015, 05:52:29 AM »
[...]
So in any scenario where my medical bills are under 5k the HP is the better route. Any more than that its pretty much a wash. Am I missing something?
Yep - the HDHP is also way ahead if you exceed the plans' OOP limits.

Basically, the maximum you'll spend per year on the HDHP (assuming you hit the family OOP max) is:
6000 + 116 * 12 - 1000 = $6392

The most you'll spend on the PPO:
6000 + 446 * 12 = 11352

(Even if the only medical expenses on the PPO are for mother and child, meaning OOP max of $2000 per individual applies, or $4000 total, you will still be on the hook for $9352).

In general, this is how PPOs and HDHPs, compare. The HDHPs tend to be ahead for low spenders and high spenders, where the PPOs can be ahead in the middle of the road numbers.

In your case, your HDHP has very low OOP numbers, and the company's kicking in with an additional $1,000 so it's a basic no-brainer - there's no spending level where the PPO comes out ahead. ACA plans often have much higher limits (around $6K per person/ $12K family), so it would be less clear-cut.

EDIT: I see you already computed these numbers - but I'll leave my calculations for context.

you're missing the 40% savings on that 6000 out of pocket.  so really if he puts it in an HSA like he should (assuming his work has one otherwise its just 30% depending on your state)  but he's acutally saving an extra 2K-2.5k being on the HDHP. IF he maxes his HSA.   Making it even better.

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #21 on: December 10, 2015, 08:16:48 AM »
Definitely the HDHP as long as you verify that your hospital and ALL providers are in-network if your HDHP has a separate OOP max for in/out of network. If they do, do NOT assume that just because the hospital is in-network that all providers within the hospital are. Crazy, yes, but a few around here have gotten hit with surprise bills because a shift Doctor during their hospital stay wasn't in-network despite the hospital itself being in-network.

What's your cashflow situation? If you can max the HSA and then cover bills out of pocket (requesting a payment plan if needed), leave the money in the HSA. As long as you have access to decent investment options (or do an in-service rollover annually to a provider that does) you should keep that money invested if at all possible. HSAs are the ultimate retirement account!

ulrichw

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #22 on: December 10, 2015, 07:04:42 PM »
Kittyfoofoo,
Right on.
That is the big question.
I have never hit the out of pocket maximum on any plan. If the worst case is truly $6392 its a done deal.

I know it seems to good to be true, but it really works this way. I ruptured my right Achilles tendon two years ago. One surgery was plenty to max me out (and more). The rest of my healthcare that year was picked up by the insurance company.

Just make sure you're using in-network providers and following your plan's preapproval process when necessary and you'll be fine.

ves

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #23 on: December 10, 2015, 08:00:19 PM »
I completely agree with ulrichw numbers.
recently we delivered baby, and we hit the HDHP plan OPM of $5000. I posted the same question 6 months back here, and concluded to take HDHP. Thats the good one. my ppo is more than HDHP in delivery sceneario. you can also get benefited of tax through HSA.
and Congrats.

davef

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #24 on: January 04, 2016, 03:29:51 PM »
Thank you all for you help.
yes my company offers an HSA and yes I maxed it out.
That's a great tip on verifying all providers within the hospital are in network. Thank You.

Spondulix

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #25 on: January 05, 2016, 01:57:59 AM »
Uh, davef, has she ever been pregnant before? Sorry, but this is a complete game-changer. Just ask anyone who's been there. There are curve balls to spare during pregnancy and delivery. Until your child is born healthy and safely, you are taking a larger risk than is absolutely necessary.
Not to be a downer, but I'm going to spell this out cause I wish someone had laid this out for me before my first pregnancy.

When you're talking about the reality of pregnancy risks (and the costs involved) you also have to talk about the costs of pregnancy loss. No one tells you how common miscarriage and stillbirth is until you have one - and it can happen at any point in an otherwise healthy pregnancy. Last year I had a loss in the late second trimester and had absolutely no idea how much of an ordeal it would be. I had an ER visit, surgery (D&C), blood and tissue tests (some we paid out of pocket cause the insurance doesn't cover for first pregnancy loss), time off/recovery (I couldn't walk for days), post-op doctor visits... PLUS there's extra testing, possible meds, etc needed when you get pregnant again. That's just a "simple" pregnancy loss, too. For mine, the bills in the end were over $15k (pre-insurance). It happened to me when I was out of town (out of network) - all I can say is that I am glad beyond belief to have stuck with my low deductible insurance.

JR

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #26 on: January 05, 2016, 01:37:04 PM »
We had my employers HDHP plan when my son was born which has a $3,600 deductible and $6,800 OOP maximum. When taking everything into consideration (including the 26% total tax savings of maxing our HSA and the $1,000 my employer deposits in it) it was actually the cheapest (almost break even with the next plan) option even though we hit the OOP maximum.
« Last Edit: January 05, 2016, 01:39:15 PM by JR »

jorjor

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #27 on: January 06, 2016, 07:32:25 AM »
you're also missing the maxing of your HSA and saving 40% or so in taxes from FICA and the govt. in your calc.

The extra PPO premiums are also tax-free (and FICA-free if through a Cafeteria plan), so that should be considered as well. If you are maxing the HSA, it is still a net tax savings in this case, just not as much of a tax savings as HSA contribution*40%.

Dicey

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #28 on: February 04, 2016, 05:24:39 PM »
Oh Spondulix, I am so sorry for your loss!
 
It happened to my sister at about the same time in her first pregnancy, too. The reason I mention it is because she was helping me scrape rubber-backed carpet off the concrete floor in the kitchen of my very first house (a huge fixer-upper and I was working on pennies). She very fit and wasn't doing anything overly strenuous. We enjoyed working together and took a lot of pictures that day. At five and a half months, she was so cute! The next day at her regular appointment, she was told the baby had no heartbeat. Ultimately, she had four healthy boys, who are all grown up now, but I still remember the hurt of that first loss.

I know you'll always remember the pain of losing your first baby, but I hope that these memories will soften in time and will be nudged into the background by new, happier experiences in the very near future.
~ Diane C

Merrie

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #29 on: February 05, 2016, 10:43:58 AM »
I plan to stick to a high-deductible plan when/if I get pregnant again. In my case, my company's plan isn't a true HDHP because we have first-dollar coverage on a couple of things, and I consequently don't have access to an HSA, so I just need to think about how much to put in my FSA, which will be more if I'm having a baby. The HDHP is a win as long as you can front the money while in the deductible phase, from either your HSA or FSA or other personal funds. It's mostly an issue for people who live paycheck to paycheck and can't afford to pay for care while in the deductible.

Spondulix

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Re: My Wife is pregnant Am I crazy for Switching to my companies HDHP?
« Reply #30 on: February 12, 2016, 02:33:56 AM »
I know you'll always remember the pain of losing your first baby, but I hope that these memories will soften in time and will be nudged into the background by new, happier experiences in the very near future.
~ Diane C
Thank you Diane :)