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Company Changing Health Ins options - help me decide

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rated:
My company is changing our health insurance options to three all new choices. We also had three choices previously - lower cost option that had an HSA option, medium HRA with FSA option, and premium, also with FSA option. Cost-wise, it's always made more sense for my family to do the middle-ground HRA with FSA option. With the new options, I'm not so sure this is the case.

Here's a breakdown of stats for the new plans:
  CDHP PPO PPO +
Coverage per year per year per year
       
Cost Employee + Family 0.00 4102.80 6764.40
       
Deductable Family 3000 1000 0
Out of Pocket Max  8000 6000 5000
       
Plan Pays after Deductible 80% 90% 100%
       
Expenses to reach max OOP 25000 50000 NA
       
Payroll Cost + Max OOP (year)      
Employee + Family 8000 10103 11764

 
PCP 80% 30 25
Specialist 80% 60 50

Copays and specialist visits are similar enough across that I'm not including them. The CDHP plan has an HSA (IRS limit of $6900) option with company contribution of $700 or has FSA option (IRS limit of $2600). The PPO and PPO+ also have FSA option. On the plan will be me, wife, and our 4 kids (ages 7-11). We are all generally in good health and the only expected expense for 2018 will be braces for our 11 year old.

Assuming actual coverage (not expense-related, but what medical services/professionals that we are covered to visit) is the same across all three, I'm thinking it makes the most sense to go with the lowest tiered plan. As well, I'll plan to contribute to HSA (the ~$3600/year I'm currently paying for medical insurance + $2500 for FSA) for total $6200 for the year.

For the CDHP, best case is $0 for the year and carry over $6900, worst case being an additional $1100 out of pocket. Best case for the other plans being $4100 and $6700 out of pocket. Like many others, I hate paying for insurance that we don't (typically) use. 

Maybe I'm missing something, but seems it makes the most financial sense to put money into HSA that 1) reduces taxable income 2) can be rolled over year to year and 3) can be taken with me if I leave the company rather than pay for a 'higher' plan. What am I overlooking here?

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Yes, all from the same provider.

evercl92 (Jun. 27, 2017 @ 6:28a) |

It doesn't specifically say yes, nor does it say no. There's a separate section in the back of the pamphlet that shows H... (more)

evercl92 (Jun. 27, 2017 @ 6:32a) |

Be very careful about both the IRS rules and your employer's rules if you decide to sign up for multiple "types" of acco... (more)

puddonhead (Jun. 27, 2017 @ 11:29a) |

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rated:
You should add the employer HSA contribution to your chart.

I agree, the CDHP seems like a clear winner; the max OOP for the CDHP of $7300 (when you take into account the employer contribution) is only slightly higher than just the premiums from the other plans. The HSA is a tremendous value.

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doveroftke said:   You should add the employer HSA contribution to your chart.

I agree, the CDHP seems like a clear winner; the max OOP for the CDHP of $7300 (when you take into account the employer contribution) is only slightly higher than just the premiums from the other plans. The HSA is a tremendous value.

  Of course paying out the $3000 first is rough on the mind.  It definitely is a better plan especially since it is free.

OP did you look at Obamacare and see what a silver plan would run you?

rated:
doveroftke said:   You should add the employer HSA contribution to your chart.

I agree, the CDHP seems like a clear winner; the max OOP for the CDHP of $7300 (when you take into account the employer contribution) is only slightly higher than just the premiums from the other plans. The HSA is a tremendous value.

  What's CDHP mean as compared to PPO?  Zero coverage if out of network ? (I can only find generic definitions in quick googling, that look like HR's descriptions to go with HMO/EPOs, and no mention of a required network or not )

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>> OP did you look at Obamacare and see what a silver plan would run you?

I would pay a bit extra to be in a large-pool self insured plan over and above an individual insurance market plan.
Too many incentives for the insurance company to play games. And no - I don't think ACA mandates will cover you against all kinds of games that can be played!

For the OP: the zero premium plan is the best one of the lot.

I'd also be interested in how big your employer is, and how much are they paying as the employer share of the cost. If the employer is already paying a lot - expect 100% of healthcare inflation cost to be passed on to you every year. e.g. my employer (with 100k+ insured employees in the USA) pays ~$19k/employee per year - and is unlikely to shoulder any part of the healthcare inflation in future.

Someone like the big 4 (average age < 30) will have a lot more discretion w.r.t. the cost increases.

I "think" (based solely on < 5-6 anecdotal data points) that the large corporations start passing on the cost 100% after employer portion of the healthcare benefit cross $15k/year/employee.

rated:
I have a pretty similar choice at my employer. The HDHP / HSA plan is $0 premium with similar deductible. Its a no brainer to go that route. I've been on the plan for a few years and it has worked fine, no hidden gotchas yet. I think they do it that way to push us all into a high deductible plan to try and make us mroe accountable for our spending.

rated:
I do not think you can leave out Co-pays from the mix, there a multiple reasons for this...
1. CDHP probably has no co-pays.
2. PPO+ has co-pays but with NO Deductible and 100% coverage it will likely be VERY difficult to hit the OOP max. How many doctor visits per year x copays?

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forbin4040 said:   
doveroftke said:   
 

  Of course paying out the $3000 first is rough on the mind.  It definitely is a better plan especially since it is free.

OP did you look at Obamacare and see what a silver plan would run you?

  I did not look into obama care. Prob worth a look-see. Yes, $3000 up front would be a heavy hit. 
Bend3r said:   What's CDHP mean as compared to PPO? Zero coverage if out of network ?
  
    I'll look when I get home this evening. I'm not sure off hand.
puddonhead said:   I'd also be interested in how big your employer is, and how much are they paying as the employer share of the cost.. If the employer is already paying a lot - expect 100% of healthcare inflation cost to be passed on to you every year. e.g. my employer (with 100k+ insured employees in the USA) pays ~$19k/employee per year - and is unlikely to shoulder any part of the healthcare inflation in future. 
  We have ~2000 US-based employees with about another 6000 in Europe/Middle East. I could see that being the case.
jerosen said:    I think they do it that way to push us all into a high deductible plan to try and make us mroe accountable for our spending.
  That's the impression that I'm getting - make people 2nd guess going to the doctor. 
dobby10 said:   
I do not think you can leave out Co-pays from the mix, there a multiple reasons for this...
1. CDHP probably has no co-pays.
2. PPO+ has co-pays but with NO Deductible and 100% coverage it will likely be VERY difficult to hit the OOP max. How many doctor visits per year x copays?


  If you think that would be beneficial, I'll add those in too. 

Thanks for the input so far. 

Edited to correct formatting/clarity. 

rated:
I would take the CDHP plan, and then enroll to the HSA with payroll contributions to max it out every year. Do you not have at least 3k in savings? When I first got on the HDHP and got hit with a 3k bill in January, I thought it was a pain to. But once you get used to it, and realize that you are saving a decent amount of money, and you have opened up the option of one of the best retirement vehicles in an HSA, it makes it palatable. The only people I tell not to get a HDHP are people who dont know how to save money. If you are good at saving money, and have enough savings to cover a large expense early in the year, then you will be fine.

Normally the only other reason to get the PPO (at least the way most organizations structure it) is if you have a condition that requires a number of expensive medications, but you dont have to go to the doctor often to get them.  One lady I work with has a rare blood disorder for which she only see's the doctor twice a year, but she spends over $500/month on medication.  For her the numbers work better to be on the PPO due to the fact that you dont have separate deductibles for prescriptions on the HDHP.  I think the deductible on the PPO plan for prescriptions at our company is like $25, but she would have to spend $3000 to hit the HDHP deductible.  So there is a few special cases where you could come out ahead on the PPO, but its rare.

Two years in a row we have hit the out of pocket max on our HDHP which in my case is 6k. Last year we hit it the first week of February. At first it seemed rough, but doing the math showed I saved 2.5k last year over the PPO plan, not counting the tax savings of the HSA.

rated:
Also, be aware, presuming the high deductible plan uses the same deductible for prescriptions and medical: If you use any of those expensive medications like Epipens or dermatological meds that have coupons, the coupon portion will eliminate your deductible without costing you money. Example, if the Epipen costs $600 with a $300 coupon, you pay $300 but consume $600 of your deductible, saving you $300 cash.

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Bend3r said:     What's CDHP mean as compared to PPO?

It's likely the same PPO network and in-network requirements as the other plans, but with a high deductible.

rated:
Are all 3 plans from the same insurer with the same networks?

I assumed as so but its not a given.

rated:
Take the $0.00 annual cost plan. Even if you got hit with a series of bills or one big one, medical bills can be easily vanquished or vastly reduced and in practice many of them won't even bother to attempt to collect small amounts because it's simply not worth the effort involved. They can't even report medical debt for 6 months and even after that if they turned it over to a collection agency you can typically get them on a technicality. Even under a worse case scenario if it ever hit your credit report the new scoring models reduce the impact and most creditors overlook it.

rated:
There are relatively few situations where spending $4k-$7k extra on the PPO premiums, plus the copay will be less than what you would spend on the CDHP. The CDHP with the HSA is better if you spend very little, and better if you go all the way to the out of pocket max. If someone in your family has predictable healthcare costs the other plans could save some money.

rated:
Agreeing with the others that you should go with the high-deductible plan.

You also mentioned an FSA and the fact that you have a kid who will need braces next year. Have you asked your employer if you can have a limited-purpose FSA along with the HSA? That's what we do through my husband's employer. The limited-purpose FSA can only be used for dental and vision because you're expected to use your HSA for medical. We used the max in the FSA the last 2 years on dental/orthodontic, and next year will use on Lasik.

rated:
LOOPHOLE said:   Take the $0.00 annual cost plan. Even if you got hit with a series of bills or one big one, medical bills can be easily vanquished or vastly reduced and in practice many of them won't even bother to attempt to collect small amounts because it's simply not worth the effort involved. They can't even report medical debt for 6 months and even after that if they turned it over to a collection agency you can typically get them on a technicality. Even under a worse case scenario if it ever hit your credit report the new scoring models reduce the impact and most creditors overlook it.
  
So your rationale is to not pay your bills? Don't think that's going to get a lot of traction here.

rated:
doveroftke said:   
LOOPHOLE said:   Take the $0.00 annual cost plan. Even if you got hit with a series of bills or one big one, medical bills can be easily vanquished or vastly reduced and in practice many of them won't even bother to attempt to collect small amounts because it's simply not worth the effort involved. They can't even report medical debt for 6 months and even after that if they turned it over to a collection agency you can typically get them on a technicality. Even under a worse case scenario if it ever hit your credit report the new scoring models reduce the impact and most creditors overlook it.
  
So your rationale is to not pay your bills? Don't think that's going to get a lot of traction here.

  
My rationale is to keep the most money in my pocket especially given the fact that these high deductible plans have been foisted upon us! It's all a game and people need to understand how to play...

rated:
Is your company hiring OP?  I pay ~ $1,200/mo for a $5k deductible (per person) 80% co-insurance, $12k max OOP (for the family) plan.  I have considered quitting my job over it, but it's only temporary until my wife returns to work in a couple of years.  

If they hire me, I'll go with the CDHP plan   If you max your HSA, you'll have some funds available to meet your deductible and that can carry over from year to year.  That's a great deal!  Keep in mind, that even with the CDHP plan, you get the insurance company's negotiated rates from providers, so it's not like you're going into medical offices with "no insurance," you'll still save a significant amount just by flashing your card.

rated:
Let's reframe what Loophole is saying, because he's right even if you aren't a deadbeat. Recently my wife had some blood work sent out from an in-network doctor to two out-of-network labs without her realizing it. I got a EOB showing about $1,500 being my responsibility. I naturally called up these providers, being super unhappy about this development. They both said they had an agreement with the doctor. One of them said they would accept whatever the insurance paid, even if it was zero, plus $25 from me. The other said they would accept whatever the insurance paid, even if it was zero, plus $45 from me. Part of it was deductible, part not, but in that scenario, I could have potentially extinguished $1,000+ of deductible for $70. These opportunities only exist in the high deductible situation, which counts as a huge extra plus.

rated:
evercl92 said:   
Copays and specialist visits are similar enough across that I'm not including them. The CDHP plan has an HSA (IRS limit of $6900) option with company contribution of $700 or has FSA option (IRS limit of $2600). The PPO and PPO+ also have FSA option. On the plan will be me, wife, and our 4 kids (ages 7-11). We are all generally in good health and the only expected expense for 2018 will be braces for our 11 year old.

Assuming actual coverage (not expense-related, but what medical services/professionals that we are covered to visit) is the same across all three, I'm thinking it makes the most sense to go with the lowest tiered plan. As well, I'll plan to contribute to HSA (the ~$3600/year I'm currently paying for medical insurance + $2500 for FSA) for total $6200 for the year.

Typically you cannot have both a HSA and a medical FSA too. With an HSA you can have a limited FSA for dental and vision expenses. Since FSA is use it or lose it, make sure your expenses after dental insurance reimbursement (for braces especially) do not exceed what you want to contribute to it.

I'd say the CDHP plan with HSA makes the most sense. Effectively it's max cost is $7300 due to employer contribution of $700. That's very close to the premium for the PPO+ plan in worst case scenario for CDHP vs. best case scenario for the PPO+. Middle of the road plan saves you $2000 on max OOP but premium wipes that away by a good margin.

Add to that the fact that you can contribute more to an HSA than a FSA and thus save your tax marginal rate on the difference and it seems like a clear winner.

The only caveat is to not skimp on getting care you need. When it's out of pocket, people tend to delay getting care, you are saving money already with contributing to the HSA, don't hesitate to tap it if you need (but feel free to not use it if you can afford to pay med expenses out of pocket since HSA money grows tax-free).

rated:
Rajjeq said:   Also, be aware, presuming the high deductible plan uses the same deductible for prescriptions and medical: If you use any of those expensive medications like Epipens or dermatological meds that have coupons, the coupon portion will eliminate your deductible without costing you money. Example, if the Epipen costs $600 with a $300 coupon, you pay $300 but consume $600 of your deductible, saving you $300 cash.
 I have noticed this too, but is that how it's supposed to work, or a bug/fluke? 

rated:
While I don't think the numbers will support this, check also on the combo of coverage for you through work and buying a plan outside work for the rest of the family. Or possibly you + kids and wife separate. It's worth running those numbers.

rated:
BrianGa said:   
Rajjeq said:   Also, be aware, presuming the high deductible plan uses the same deductible for prescriptions and medical: If you use any of those expensive medications like Epipens or dermatological meds that have coupons, the coupon portion will eliminate your deductible without costing you money. Example, if the Epipen costs $600 with a $300 coupon, you pay $300 but consume $600 of your deductible, saving you $300 cash.
 I have noticed this too, but is that how it's supposed to work, or a bug/fluke? 

  Well, the coupons are essentially secondary non-coordinating insurance that picks up the tab for you after your insurance pays, so your insurance can't see it. It's probably not possible for your insurance to do anything about it.

rated:
AAlison said:   Agreeing with the others that you should go with the high-deductible plan.

You also mentioned an FSA and the fact that you have a kid who will need braces next year. Have you asked your employer if you can have a limited-purpose FSA along with the HSA? That's what we do through my husband's employer. The limited-purpose FSA can only be used for dental and vision because you're expected to use your HSA for medical. We used the max in the FSA the last 2 years on dental/orthodontic, and next year will use on Lasik.

  Of course, you could just use the HSA to pay for dental expenses.

rated:
jerosen said:   Are all 3 plans from the same insurer with the same networks?

I assumed as so but its not a given.

  Yes, all from the same provider. 

rated:
AAlison said:   Agreeing with the others that you should go with the high-deductible plan.

You also mentioned an FSA and the fact that you have a kid who will need braces next year. Have you asked your employer if you can have a limited-purpose FSA along with the HSA? That's what we do through my husband's employer. The limited-purpose FSA can only be used for dental and vision because you're expected to use your HSA for medical. We used the max in the FSA the last 2 years on dental/orthodontic, and next year will use on Lasik.

  It doesn't specifically say yes, nor does it say no. There's a separate section in the back of the pamphlet that shows HSA, limited FSA, and FSA and what plans they are available for. HSA / limited FSA for CDHP, and FSA for the PPO and PPO+. But that's it.

rated:
Be very careful about both the IRS rules and your employer's rules if you decide to sign up for multiple "types" of accounts.

For a midsize company like your employer, the "employer's rules" will likely be decided by the benefit provider (e.g. paychex/ADP etc).

In your case, it may make financial sense to sign up for both:
1. HSA
3. Limited purpose FSA.

If you do, please make sure you don't trip up on IRS "first dollar" rules for HSA for dental/vision care. Also, what happens with the limited purpose FSA when you have unused funds? You lose it? Or it rolls over? How does the rolled over funds interact with HSA eligibility?

You don't want a situation where $500 set aside tax free in FSA makes you ineligible for HSA - making you pay a lot of extra taxes.

<edited to add> Fair disclosure - we have a setup with a HRA that pays first 60% up to the $(OOP max)X(0.6), and then an FSA that pays the rest of the 40% up to the amount set aside. Making sure, and documenting, that this setup is legal and allowed took me a lot of effort and phone calls. However, the initial hump/headache is totally worth the savings we are reaping now </edited to add>
 

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