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  1. #1
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    High deductible insurance plan?

    The company I work for is being switched over to our parent companies insurance plans. We now have an EPO, PPO, HRA PPO option which are all fairly similar and even the best one is ~half the price of what I am paying now. But... there is another option I never heard of and it is a high deductible plan. It cost $20/month. It's a $2500 deductible which is crazy high.

    I am pretty healthy and never have to go to the doctors. Minus my freak appendectomy a couple years back, I haven't needed any service that would cost more than the deductibles of any of the plans anyway. Hell, had I been saving the money I spent on the insurance, I would have saved well over the deductible by now.

    Soo, does it make sense to take this $20 plan, up my monthly automatic withdrawal to my high yield savings account to save for emergency and hope not to have anything major come up? At least I will be paying me and accruing interest instead of the insurance company I very seldom have to deal with.

    And it does meet MA health insurance requirements. It was the first thing I asked.
    Last edited by systemoverblow'd; 04-26-2013 at 09:40 AM.
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  2. #2
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    How much are the other plans? What does the cheapo plan offer for catastrophic, cancer, etc?

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  3. #3
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    From what I understand most companies that offer high deductible plans should also have a Health Saving Account where you can throw money in pre-tax to account for paying out of pocket deductibles. If you go with it definitely look into that.

    Assuming you are single, with no ongoing medical issues a high deductible plan may make sense for you.

  4. #4
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    I've an HDHP. Deductible is 3/5 of the plan you're quoting with a larger monthly draw. Works out well if you see a doctor infrequently. One unexpected visit could cash out the HSA, depending on how much is contributed. I try and pay the cash rate using the HSA card if the service is small in dollar value.

  5. #5
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    High deducible + HSA has been the way to go for us. You are WAY more flexible with spending on your HSA account anyway, as you can do things most insurance plans would never cover. It's quite liberating actually to not be constrained by your health insurer's crappy network or coverage. SO nice not having to deal with the usual billing nightmares.

  6. #6
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    The other plans are all 120-140 which again, is great compared to what I was paying. I will look at the plans more closely this weekend and see about the catastrophic thing.

    We do have an FSA account which we can put money into currently pre-tax. Do they have to offer HSA with high deductible? Can this be from outside source or is it definitely through work? Does the money expire like FSA?

    I am single, zero medical issues. We have to enroll in a program by next week to continue our coverage and have another open enrollment come November should I change my mind.
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  7. #7
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    Nevermind... the google just answered my HSA vs FSA question. Damn, that seems like the way to go. Dumpa bunch of money in for emergency and just pay the lower high deductible payments monthly.
    Last edited by systemoverblow'd; 04-26-2013 at 10:22 AM.
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  8. #8
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    Make sure the catastrophic plan is a QHDHP. If so, open an HSA and don't look back. It will cover preventative services at no cost and you get to save money tax free that rolls year to year. At age 65, you go on Medicare and pull that money out for whatever (you will pay some taxes at that point).

    Sounds like you are going to save $100-130/month so put that in the HSA and you are already at least $1,200 ahead. If you have other income you can save, put that in there too. Don't see the doc for a year or two and you've now got enough to cover the deductible. Other than poor education on how insurance works, I don't know why more people don't do this. It doesn't work for everyone, but someone like you, yeah, it's a good deal.

  9. #9
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    Quote Originally Posted by Conundrum View Post
    Make sure the catastrophic plan is a QHDHP. If so, open an HSA and don't look back. It will cover preventative services at no cost and you get to save money tax free that rolls year to year. At age 65, you go on Medicare and pull that money out for whatever (you will pay some taxes at that point).

    Sounds like you are going to save $100-130/month so put that in the HSA and you are already at least $1,200 ahead. If you have other income you can save, put that in there too. Don't see the doc for a year or two and you've now got enough to cover the deductible. Other than poor education on how insurance works, I don't know why more people don't do this. It doesn't work for everyone, but someone like you, yeah, it's a good deal.
    Did they change HSA rules? Used to be you had to use it w/in the calendar year and you lost what was not spent
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  10. #10
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    Another advantage with plans that include an HSA, is you can use the HSA card for dental, vision, and Rx bills. I believe the end result for most (our bills aren't high enough to meet an income tax deduction threshold), is that you're effectively getting a 28+% discount.

  11. #11
    Hugh Conway Guest
    Quote Originally Posted by EZB View Post
    Another advantage with plans that include an HSA, is you can use the HSA card for dental, vision, and Rx bills. I believe the end result for most (our bills aren't high enough to meet an income tax deduction threshold), is that you're effectively getting a 28+% discount.
    Doesn't that defeat the purpose of an HSA account to cover the large bills you'll get in the end?

    Conundrum - simple, plenty of people still have the employer pay a decent chunk of the premium. That and risk/management transference.

  12. #12
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    Quote Originally Posted by irul&ublo View Post
    Did they change HSA rules? Used to be you had to use it w/in the calendar year and you lost what was not spent
    No, that is an FSA. HSA can will be rolled over indefinitely.
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  13. #13
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    Quote Originally Posted by irul&ublo View Post
    Did they change HSA rules? Used to be you had to use it w/in the calendar year and you lost what was not spent
    That's FSA which is really a prepaid loan. Let's say you have an FSA for $3000 and you spend the $3000 in January and then quit your job. The company eats the amount you didn't pay in to fund your loan.

  14. #14
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    You are thinking of the FSA. HSAs roll year to year and are portable. FSAs are the use it or lose it. You can use FSA for med, dependent care (daycare) and individual plan premiums but it has to be sponsored by an employer. HSAs can be set up with a qualified employer plan or a qualified individual plan.

    Also, on the FSA, it use to be calendar year but some companies are extending that a couple months past the calendar so worth checking.

  15. #15
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    Quote Originally Posted by Hugh Conway View Post
    Doesn't that defeat the purpose of an HSA account to cover the large bills you'll get in the end?
    I dunno. We all kinda hope for no large bills later either, but my post is very open to discussion and expertise from others.

    One way I look at it is, how else would I be able to discount the dental bill? I don't think there's any other better way.

  16. #16
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    Quote Originally Posted by Hugh Conway View Post
    Doesn't that defeat the purpose of an HSA account to cover the large bills you'll get in the end?

    Conundrum - simple, plenty of people still have the employer pay a decent chunk of the premium. That and risk/management transference.

    Not if you view it as a long term strategy. I know guys that have $50k in their health savings accounts. They could cover years of medical bills and use it for other things such as dental which they do. I personally will have my deductible and out of pocket covered for two years at the end of this year. After that, I'm starting to save for lasik. Nothing wrong with basically getting a gov bro deal of 28% off corrective eye surgery by planning ahead and saving.



    On the second point. In many cases, the employer isn't educated. In many instances, an employer can give someone some seed money for an HSA and pay the premium and it will come in less than what the original employer paid plan costs the employer even with the employee paying part of the premium. Take me for example, my employer offers a low deductible plan and it would cost me $100 per month. Or, I can take a QHDHP that I pay nothing for and they give me $500 per year in HSA money and it costs them less to do that than paying the premium on the rich benefit plan. I'm basically at $1,700 in my HSA, the employer has a lower cost to insure me, and I'm happier because they gave me an option of what is right for me...not was is right for some of the employee population. HR departments don't always seek answers out and consultants don't always create more work even if it's the proper thing for the client.

  17. #17
    Hugh Conway Guest
    1 - yeah, if you've a big balance, definitely makes since
    2 - my experience was fellow employees (and me) didn't like the QHDP. This may just boil down to ideology and me not working in insurance/financial services

  18. #18
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    Like any health insurance, the devil is in the details. What's covered and for how much varies considerably, so be careful what you purchase. We started with traditional deductibles, and have steadily migrated to higher and higher deductibles. It helps to keep things affordable. We have pretty Cadillac insurance, which we rarely use, but is there should disaster strike, and the only way we can afford it is with a high deductible. It did allow me to go to the knee surgeon of my choice, and not the hacks in the regular plan, so it was worth it for that alone.

    I agree it is a constitutional right for Americans to be assholes...its just too bad that so many take the opportunity...
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  19. #19
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    Quote Originally Posted by Hugh Conway View Post
    1 - yeah, if you've a big balance, definitely makes since
    2 - my experience was fellow employees (and me) didn't like the QHDP. This may just boil down to ideology and me not working in insurance/financial services
    1. Having a big balance comes with actually saving...something Americans are not good at. If given a choice of $100 per month in premium savings that could be put in an HSA or as disposable income, how many people save it for future medical expenses? Under IRS guidelines, someone can't just dump $50k into an HSA. That came with over 10 years of consistently saving and living a healthier lifestyle. The couple I'm using in this example take care of themselves and seek care when necessary but they also built that fund up over many years.
    2. Did the employer start your HSA with funds? If the numbers work, employers can do this but most insurance people don't sell employers on long term strategy and higher future ROIs. Most insurance brokers sell the higher premium up front because it's higher commission and they don't like the extra work of educating and appropriately setting up the initial plan. People don't like HSAs because they lose their upfront Rx copay and doctor's office visit copay. They see the true cost of healthcare. So, they gripe and the HR department puts a rich plan back in place that then sees much higher utilization on things like HBP and cholesterol meds. Many people could save money on maintenance meds just by eating more salads and walking more but it's easier to go to the pharmacy.

    I'm definitely not saying HSAs are for everyone. But they could be for more people if they were given an honest look and used as a multiyear strategy vs a silver bullet that won't be deemed effective if it doesn't offer instant cost savings in less than 12 months. That and people need to be accountable for their own health to a point and have a better financial plan than "wow, my HSA is cheap so I can spend that money I saved on a trip to Mexico". People want insurance but they don't want to pay for it. They don't understand that as we get fatter and older as a country we use more healthcare per person so it will cost more. They don't understand that the best way to save money on healthcare is to use less of it by living a healthier lifestyle. Sure, accidental ACL tears happen but so do smoking related heart attacks.

  20. #20
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    Quote Originally Posted by hutash View Post
    Like any health insurance, the devil is in the details. What's covered and for how much varies considerably, so be careful what you purchase. We started with traditional deductibles, and have steadily migrated to higher and higher deductibles. It helps to keep things affordable. We have pretty Cadillac insurance, which we rarely use, but is there should disaster strike, and the only way we can afford it is with a high deductible. It did allow me to go to the knee surgeon of my choice, and not the hacks in the regular plan, so it was worth it for that alone.
    For an early 30's guy, single, no kids, and in perfect health, sure you can go with the worst case scenario plan, but in Advres case, I think hes better off the with 20 a month plan. Theres no need for Cadillac insurance (which by the way your description makes no sense - high deductibles and Cadillac plans usually aren't mutual) in his situation.

    Save the coin and use the HSA. The thoughts mentioned previously where an HSA carries from year to year is not always true. With my previous employer, you had to use the funds by the end of the year. Never got into the details as we already had one through my wife, but I thought it was bullshit.
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  21. #21
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    Quote Originally Posted by AdironRider View Post

    Save the coin and use the HSA. The thoughts mentioned previously where an HSA carries from year to year is not always true. With my previous employer, you had to use the funds by the end of the year. Never got into the details as we already had one through my wife, but I thought it was bullshit.
    That was either an HRA or FSA. ALL HSAs carry year to year and that is true. Part of the problem is too many acronyms that sound alike.

  22. #22
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    My Dad had something similar for years for the family pre-HSA days. He liked it, and you do seem to get a bit of a discount as it's more a "disaster only" plan with the added benefit of procedure reductions by the insurance.

  23. #23
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    Do the high deductible w/ the HSA. You don't lose the HSA money and it's taken out pre-tax so you likely won't miss it from your paycheck either. The deductible is payed out of the HSA so again, you won't miss it. The only way you come out paying more than the other plan is if you almost, but don't quite have enough expenses year to year to meet the deductible. That almost never happens, and it's not a big difference so it's worth the risk if you want to call it that.

    Run a couple of scenarios out using a spread sheet to ease your mind. You'll see the real budget item is the monthly premium. Go with the high deductible plan and load up the HSA until you have a comfortable balance the back off your contributions if you like. Remember the HSA covers any medical expenses so you can even use it as a pre-tax, "kids braces savings plan". Pretty sweet if you think about it.

  24. #24
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    Sep 2010
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    Thanks for all the info everybody. It definitely sounds like the way to go. HR glazed over this option in yesterdays meeting and I was the only one asking questions about it. Seems like they aren't pushing it like the PPO and HRA PPO.
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  25. #25
    Hugh Conway Guest
    slight hijack:
    conundrum - what are the rollover/other options if you change jobs and don't have an HSA option at the next employer?

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