Is HSA worth it in this scenario

[Magilla]

Hello all,

My wife and I are currently covered under my work's health insurance (a non HDHP plan and thus no HSA).  My work doesn't offer any HDHP plans but I just found out that wife's work offers 2 HDHP plans with HSA option during this year's enrollment period.

I'm trying to determine if it's worth it for us.  The 2 plans offered are a $3000 deductible for family for ~$170 biweekly and a $8000 deductible for family for ~$110 biweekly.  Our current plan is about $170 biweekly with no deductible and $25 copay for any doctor.  If it were just me I would switch as I rarely need to go to doctors etc, however the wife sees several doctors on a semi regular basis. I looked over our medical expenses and if this year is any indication we would have about $3000-$3500 per year expenses out of pocket expenses with a HDHP plan whereas it's probably <$500 now.  The full HSA $6750 deduction would probably save us about $1500 in taxes but that still leaves a ~$1500 deficit.

My current thinking is that it's not worth it to switch to the HDHP plans.  Am I missing anything?

Thanks

[ShoulderThingThatGoesUp]

I don't think you mentioned how expensive your current plan is. If it's more than $60 more than it's worth it.

Also, check if the cost is truly biweekly. My workplace does biweekly paychecks but on the 3-paycheck months we only get two charges taken out for health insurance.

[kendallf]

Hello all,

My wife and I are currently covered under my work's health insurance (a non HDHP plan and thus no HSA).  My work doesn't offer any HDHP plans but I just found out that wife's work offers 2 HDHP plans with HSA option during this year's enrollment period.

I'm trying to determine if it's worth it for us.  The 2 plans offered are a $3000 deductible for family for ~$170 biweekly and a $8000 deductible for family for ~$110 biweekly.  Our current plan is about $170 biweekly with no deductible and $25 copay for any doctor.  If it were just me I would switch as I rarely need to go to doctors etc, however the wife sees several doctors on a semi regular basis. I looked over our medical expenses and if this year is any indication we would have about $3000-$3500 per year expenses out of pocket expenses with a HDHP plan whereas it's probably <$500 now.  The full HSA $6750 deduction would probably save us about $1500 in taxes but that still leaves a ~$1500 deficit.

My current thinking is that it's not worth it to switch to the HDHP plans.  Am I missing anything?

Thanks

It doesn't sound like it would be based on the data you've provided.  One thing you might check is whether the employer offers a "premium pass through"; in other words, do they contribute some amount to the HSA from your premiums.  If, for example, they contribute $1500 to the HSA out of your premiums, it would be closer to a wash. 

It pays to look at the details of the coverage also; what are the co-pays after the deductible is met, how is in-network coverage in your area, etc.

[Magilla]

Thanks for the replies guys.

@ShouldThingThatGoesUp the premium on current plan is ~$170 biweekly for both of us. And yes for both of us the medical insurance premium is take for every paycheck (biweekly).

@kendallf For the $3000 deductible plan there is a $300 contribution to the HSA.    Both HDHP plans have 20% coinsurance after the deductible up to $2000 more past deductible (so $5000 and $10000 max OOP for the 2 plans).

[RangerOne]

The $8000 deduct - $10000 MOO is a really narrow insurance window. That pretty much means any major surgery or event like a pregnancy is going to mean you will pay the MOO that year.

If your current plan has no deductible for such a $50 bi-weekly price increase that's almost too good to pass up.

Granted if having a large HSA in anyway will help you coupe with medical after your wife gives up her current job then maybe it would still be worth it if the average cost is similar.

[BlueLesPaul]

Yeah, I just did a rough calculation (wasn't sure on the Co-insurance on your Traditional plan, so I assume 20% as a worse case scenario or at least to match the HDHPs) and even with the generous assumptions for the HDHP that (1) the $3500 would be out of pocket and not eligible for the Co-pay, (2) you don't have FSA at your work to pay for out-of-pocket expenses or Co-Pays and (3) you get the maximum tax benefit from socking away $6750 next year (assuming a total  marginal federal and state rate of 20%), you still come out about $180 ahead with the traditional plan.  Milk that traditional plan for all it is worth!

[Magilla]

Thanks guys it's pretty much what I figured but it's good to get confirmation.

While I've been doing the usual pre-tax accounts (401K), reading MMM, gocurrycracker and madfientist last 1-2 months has opened my eyes to the kinds of tax optimizations I had never thought of before.