Author Topic: HSA When Employer Covers Premium?  (Read 2186 times)

ejchis

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HSA When Employer Covers Premium?
« on: January 13, 2016, 03:05:52 PM »
Removed.
« Last Edit: July 30, 2018, 12:01:00 PM by ejchis »

JLee

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Re: HSA When Employer Covers Premium?
« Reply #1 on: January 13, 2016, 03:20:07 PM »
Does your employer contribute to your HSA as well?

Our plans are structured so all employee costs are lower when going with a HDHP/HSA, regardless of usage level (don't use it at all, it's cheaper - hit max out of pocket, it's still cheaper). We get $500 annually in employer HSA contributions.

AlwaysLearningToSave

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Re: HSA When Employer Covers Premium?
« Reply #2 on: January 13, 2016, 03:30:41 PM »
Welcome to the forum.  At least as a first-time poster. 

It is hard to make any sort of assessment as to which is best for you without more details on the policies.  What are the deductibles, coinsurance percentages, out of pocket maximums and premium costs on the policies? 

As I understand your post, your salary remains the same regardless of which policy you choose and you pay no portion of the premium regardless of which policy you choose.  Did I get that right? 

You may not be eligible to deduct contributions to an IRA considering your salary.  See https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits  Are you single?

You should consider posting a case study in "Ask a Mustachian" to get feedback on how to attack your student loans.  Full details regarding balances, interest rates, current repayment terms, etc., will help forum members assist you with choosing the best strategy.  It could be better for you to ignore investments and slay the student loan dragon, but it is hard to know without more information.

jorjor

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Re: HSA When Employer Covers Premium?
« Reply #3 on: January 13, 2016, 04:24:25 PM »
If you have medical claims, you might be leaving money on the table because you will be on hook for more of the cost with an HSA plan. The best plan for you would be the HMO plan with almost no cost sharing.

If you are healthy and don't expect medical claims (and then end up not having claims) then you leave money on the table not choosing the HSA plan since it provides the extra tax advantaged saving space.

I could see someone wanting a richer plan but not the restrictions of a closed-network plan, and would therefore choose the PPO Gold. I have no idea why someone would choose PPO silver under that type of arrangement.

seattlecyclone

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Re: HSA When Employer Covers Premium?
« Reply #4 on: January 13, 2016, 04:34:10 PM »
This is where my struggle comes in. It feels as though I am leaving money on the table by not taking a better health plan when that upgrade will cost me nothing.

Well, it doesn't literally cost you nothing. By removing your HSA eligibility, the fancier health plans will cost you $3,350 x (your marginal tax rate) in extra income taxes this year. Maybe the other plans are enough better that it's worth paying an extra several hundred dollars (or more) per year to have that coverage. Maybe it isn't. You'll have to decide for yourself based on just how much better the other plans are, as well as your overall health.

AlwaysLearningToSave

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Re: HSA When Employer Covers Premium?
« Reply #5 on: January 14, 2016, 09:04:44 AM »
If I were you I would probably go with the PPO gold plan. 

HDHPs with HSAs are good deals when you pay a significant portion of the insurance premium.  You accept higher financial risk in exchange for the tax benefit of the HSA and the potential that you can save money if you incur no significant medical expenses.  Worst case scenario, you incur large medical bills, hit the out of pocket max, and you likely aren't out any more than you would have been had you had a pricey traditional insurance plan. 

But yours are an unusual case where you pay none of the premium costs.  To get the tax benefits of the HSA you have to accept significantly higher financial risk but you get no premium savings in return to offset the risk.  Sure, you can get a small tax benefit but in the unlikely event you incur significant medical expenses, you are on the hook for significantly more.

Odds are, you are young and healthy and will consume a relatively little healthcare.  With the HDHP, even if you go to the doctor once or twice for minor ailments, you will be paying hundreds of dollars because you get no help from insurance until you hit the deductible.  Any tax savings you gain by having the HSA could quickly be erased by even minor medical expenses.  With the Gold plan, though, you pay a $10 copay for an office visit and get generic prescriptions for free. 

I'd take the Gold plan, count my blessings, and find other ways to save on taxes.  Remember that taxes are the tail of the dog that is your financial well being.  Don't let the tail wag the dog. 

The best plan for you would be the HMO plan with almost no cost sharing. 
. . .
I could see someone wanting a richer plan but not the restrictions of a closed-network plan, and would therefore choose the PPO Gold. I have no idea why someone would choose PPO silver under that type of arrangement.

I completely agree with this assessment.  HMO is best financially speaking, but I am wary of the restrictions imposed by HMOs.  But there is a good chance my wariness is irrational and based only on the horror stories of HMOs from yesteryear.  Investigate the network of available care providers and the likelihood that you would end up out of network.  If you are comfortable with the availability of covered care, then by all means take the HMO, but buyer beware.