Possibly dumb question but here goes: when is a HDHP + HSA a better value than alternative plans?
I'm about to on-board with a new firm. They offer a few health care options, two of which are HSA compatible and the firm contributes $1000 towards the HSA. Here's the glitch: My wife is a student expected to graduate in May and I don't want her to have a gap in coverage while she's out of school and hunting for the right job. If it were just me, I'd dive into an HDHP + HSA model because I consume very little in health care. My wife, however, relies on multiple prescriptions, sees doctors regularly, and can be expected to have an ER visit once or twice a year. If I'm buying coverage for the both of us, does HDHP + HSA still make sense or does a higher premium lower deductible/coinsurance/oop max plan make more sense? I've used the HDHP Analysis tab in the case study spreadsheet and it gives me a crossover point where HDHP + HSA begins to cost more, but I feel the spreadsheet oversimplifies the analysis. Any thoughts?
This is really a very individualized question that depends on your plan offerings and your medical expenses. Different employers subsidize their medical insurance plans differently. In some companies, the HDHP may be a no-brainer for most people, while in other companies perhaps they offer a big enough subsidy for the fancier plans that those may be more appealing to more people.
As to your medical expenses, take a look at the explanation of benefits forms that your partner currently gets from her insurance. That should give you a pretty good idea. The new insurance company will likely have slightly different negotiated rates for the services she needs, but it should be in the same ballpark.
I've got the majority of my HSA (around $7,000) with HealthEquity. I've noticed a lot of people say that health equity is pretty bad. Curious as to why or if they are doing something hidden with fees? The only fees I've visibly seen are investment fees but these are all vanguard funds so it's only .03%. Please advise on what makes them bad.
HealthEquity is terrible because they have the highest fees I've seen, both a monthly dollar fee and an investment wrapper fee. Often a company will pay some or all of these fees while you're employed, but staying with them after you leave would cost you a lot more than moving to any of the low cost providers.
Every HSA provider charges fees. HealthEquity's aren't the best, but they aren't all that terrible either. With their
Index Investor plan, there's an account fee of $36/year plus 0.24% of assets, in addition to the underlying fund expenses. For a $20k HSA balance invested in their 0.02% S&P 500 fund, that comes out to 0.44% overall expenses.
That Lively option mentioned above looks like a nice alternative though. Assuming you want to invest, you'll pay a $2.50/month fee for the TD Ameritrade account, and you can invest in some commission-free ETFs like a 0.04% iShares S&P 500 fund. For a $20k HSA balance that comes out to 0.19% total expenses. Definitely better than HealthEquity.