HSA Advice Needed please for Health Savings Account vs. PPO

My employer is forcing us to make a choice and I'm a little bit of a loss as to how to run this analysis so I turn to some of you brilliant FW whiz kids to help:

Choices (in each case for Family coverage, 2 adults, 2 kids):

HSA:

Deductible/Out-of Pocket Max - $2500/Individual/$5000 Family
100% coverage after Calendar Year Deductible Met

PPO:

Deductible - $1000 indv/$3000 Family

Other details - Doc. visits with $25 copay; drugs with $20-$50 in copays
Most services - covered at 100% after cal yr deductible is met

THE NUMBERS:

HSA PPO

Monthly Prem: $569 $840
MoEmployerContrB toHSA $140 $0

Annual Totals $6828 $10080

Difference
(Premuiums + Employer contrib) = approx. $4950

Other factors:
In any full calendar year we would expect to use north of $3500 (or higher in visits to doc. between two young kids who see the doc when sick).

I'm really lost on how to go about evaluating one vs. the other...thanks for any help here.

I do not understand your issue here what does Health Spending Account has to do with PPO insurances plan?

My work place has Flex Spending Account with HSA and other acount and this is not related to PPO insurances plan.

Maybe I am misunderstood your questions here so please explain what these two has got to do with each other?

OP, If I understand you correctly, here's what you're telling me

Option 1: A high deductible health plan (HDHP) that allows you to participate in an HSA
Option 2: A non high deductible health plan thus you can't participate in an HSA

We'll call option 1 HSA and Option 2 PPO ok?

So, let's figure out the maximum it could cost you, okay?

HSA

Premium 6,828
MOOP* 5,000
Employer contribution (1,680)
--------
10,148

PPO

Premium 10,080
MOOP* 3,000
Employer contribution (0)
--------
13,080

* Maximum Out Of Pocket

Looks like a no brainer to me, take the HSA option. In addition to about $3000 in savings by going the HSA route, you will also have an opportunity to sock away another 3320(5000-1680)to the HSA. This means a tax deduction of 3320 * your tax rate. Let's say your tax rate is 20%. So, that equals $664. So, deduct another $664 off of 10,164 = 9500. If you don't use all the money in your HSA by year end, you do NOT lose it. In fact, any appreciation on it is tax free. You keep it indefinitely. You can even use it to pay medicare premium when the time comes, that would be very cool.

Thanks a lot for that analysis - I live in Texas so no state income tax.

So the High Deductable plan will save you $3252 in premiums for the year, and it will cost you a max of $3000 more from the differences in deductables. PLUS your employer will kick in an extra $1680 in HSA contributions? Seems like a no-brainer to me (assuming the coverage is the same for both plans, the only difference being the deductable).

OP,

The premium for your HDHP seems awfully high for an employer sponsered plan. I thought employers typically paid for about 1/2 to 3/4 of the premium, with the balance being paid by the employee. My question to you, would your employer allow you to opt out, and take the cash equivalent? I would think you could buy your own insurance, get the same coverage and save yourself some money. If you're fairly young, healthy, and take a HDHP with an HSA, you should fare well. I buy my own insurance, and I have to tell you it's a little more work up front, but less red tape over all.

savvyshopper2000 said: Here's what's complicating the situation for me - there is a 50% chance that I leave this employer in the next 12-15 mos. and go out on my own. At that point I would definitely want to continue on their COBRA plan and obviously they would stop kicking in the $140/mo. that they contribute to the FSA for employees. I'm not sure if I can continue making my own contributions to FSA while on COBRA. Error, error, error. When did a FSA come into play? I assume you meant the HSA, which is entirely different than a FSA.

The difference in premiums is more than the difference in the difference in deductable, so even without the HSA contribution, the high deducable plan is still 'cheaper'. And yes, you can contribute to the HSA on your own (Even with the $140/month employer contribution, you can still contribute an additional $3300 on your own). It functions much like an IRA, only you can use it to pay any medical expenses without penalty.