Harveyspecter

Started my new job today (Yay) and so far so good. However on Thursday we have to pick our company healthcare plan and for those like me who have never done it before, they have asked us to research the basics as they won't have time to do that.

In summary, I have the choice of 2 high deductible (family) plans both with a Health Savings Account which the company contributes to ($1000/yr).
The only difference I see in the two plans is the deductible; both have 80% copay after the deductible. One has a $6000 deductible and the other has a $3000 deductible. I don't know any monthly rates yet but looking at the information I have and assuming they aren't hugely different I think we are best suited to the $3000 deductible plan but could I just get a bit of info/clarification from people who understand it way better than I? Thanks.

tom169

First off, congrats on the job.

The two things it comes down to is:
A) cost difference
B) do you expect to hit $3k in an average year?

If the cost difference is cents then it is probably worth it regardless. If we're talking a couple thousand over the course of a year then it's very questionable.

Twinkle0927

You need to think about your general health and lifestyle. How many times did you receive medical treatment each year, on average, over the past x years? Do you have any risk factors in your history and current lifestyle? If you are generally healthy and have only seen a GP once or twice for a course of antibiotics or something minor over the past years you could probably take the risk of the high deductible if it is a substantial cost saving on the monthly premium.

I had always been a huge fan of the NHS in the U.K. However since moving here and being in a country where I have to pay for healthcare again (I have also lived in Germany for 15 years) I do feel that there is a general tendency for people - certainly where I work - to be more pro-active in preventing illness and living a generally healthier lifestyle. The NHS is always a hot topic in the U.K. and especially now at election time. I'm hearing a lot of comments from friends back there that suggest they see the NHS as their safety net and because it costs them nothing at point of treatment they can do whatever they want and the NHS will sort it out. They don't seem to be as concerned with doing things to reduce the chance of them needing it. It's amazing how much healthier people seem to be once they have no paid sick days and have to pay for insurance directly.

Pulaski

If you don't have a history of significant healthcare usage then you are unlikely to reach the $3k deductible, so IMO paradoxically you would probably* be better off taking the higher deductible IF there is a meaningful saving in the premiums, which I would say would be about 10% of the premiums or $1,000 whichever is lower.

The reason being is that, in the event of a substantial claim, you can effectively add the premium savings to the lower deductible to get to your out-of-pocket cost. E.g. if you saved $3,000 on the premiums (of course you won't, but just for illustrative purposes), then taking the higher deductible would be a no-brainer because you'd save so much that the higher deductible would take care of itself.

* The risk you take is that your medical expenses exceed the sum of the $3k deductible + the savings in premiums for taking the higher deductible, but are still lower than the higher deductible.

Harveyspecter

Hi Guys,

Just wanted to quickly get back to you on this to say thank you for chipping in with advice.

Pulaski, you were pretty much on the money. I ended up going with the higher deductible plan as the deductible is double the other plan, but interestingly the maximum out of pocket expense is lower. Also, the higher deductible plan saved about $200 a month on premiums and that can go towards the Health Savings Account the company has which is tax free too, so I'm pretty happy with the choice and it was explained pretty concisely.

So, I expect to be posting more questions soon, but just once again wanted to say thanks for your advice to each of you who replied.

Pulaski

You're welcome.

I am glad to hear that you got your insurance sorted OK. Certainly savings of $200/mth in premiums aren't to be sniffed at, and is most of the difference between the lower and higher deductible. It'll also be effectively free money to put in your HSA.

Harveyspecter

Exactly. They were very good at explaining it and I'm happy I understand it enough. We can put $6750 into the HSA every year, and my employer adds and addition $1000! Can't sniff at that. I've set it up to put $3000 in for the remainder of the year just while I get settled and used to my ingoings and outgoings, but at the next enrollment I'll set it to the max.

I also got auto insurance tonight, $243 for 6 months which I was pleasantly surprised at. Only the retirement plan and ta thing (as in withholding calculations) to understand now!

Pulaski

Are you sure about that? The $6,750 is an IRS-set cap, and therefore the employer contribution is usually a subset of the $6,750.

Harveyspecter

Hmmm, maybe it;s $6750 inclusive of the employer contribution. I shall have to check that out. Either way I get $1000 from the company a year towards it, so all is good

tom169

You will need to ensure yours + employer contribution doesn't exceed the limit. It can take a little planning if your employer has numerous contributions.

My wife's for example will pay if she goes for a health checkup, completes a quiz, maintains a healthy weight, and more.

Mine pays a flat $300 twice a year.

Harveyspecter

Bringing this thread back up again, I wanted to review the HSA cap and you were right Pulaski, my employer contribution of $1000 means I 'only' have to put in $5750 a year.

While on the subject, I did want a bit of advice. Sadly we've been unlucky in the health department lately. I sliced my thumb open as you all know and my wife had some health concerns that needed checking out for her piece of mind if nothing else. Thankfully she is ok but we didn't know until we checked.

The downside of this is, being on a high deductible plan, that it has hit us hard financially. My wife has just started a full time job which she is enjoying so that is great, but due to being unemployed for a year and just setting up, things are a little tight and the medical bills haven't helped. I wiped out what I'd saved in my HSA in the 2.5 months since starting my job with my thumb bill, and with the checkups my wife had to have, it pretty much looks like we have hit our $6k deductible for the yr. She needed blood tests at about $700, an ultrasound at $1700 and an Endoscopy that she was brave and elected to take without general anaesthetic, but even so the bill is about $5k before insurance deductions (they are pending so i don't know what that is yet).

So firstly, do deductibles go by calendar year or from when you took up the policy? If the former, I'm debating about going for the lower deductible for next year purely because my wife and I are planning on starting a family, and that would almost certainly exceed the $6K deductible plan, let alone the $3k deductible plan.

My thinking is, that with the $6k deductible plan, what is gained by lower premiums would be lost in bills right away. However I do believe the maximum out of pocket amount in the $3k deductible is actually higher than the $6k deductible plan.

I would appreciate some advice, as I'm feeling quite stressed by the thought of potentially having $12k in medical bills for this yr and next and feeling like I'll never be able to build any substantial savings up in my HSA.

Dominic0012

Yes if you are having a kid its likely you want to be on the better plan for next year. Be wary though you want to make sure that you will get the coverage check with your employer.

some HMOs and PPOs do not provide maternity benefits for a set time period and you will have to potentially pay the whole cost out of pocket. This is precisely to stop members of other plans thinking I am going to have a kid next year so i want the better coverage (aka adverse selection).

HDHP is only better for those in excellent health and who do not go to doctor often. It is an excellent tool to save for retirement the only issue is most people use it all. an H.S.A. if started in early 20's though is a massive advantage if you do not use it often.

My advice, check the maternity coverage for the new plan and qualifying criteria. Don't plan to have the kid until after you fall into the coverage of the better plan.

Sadly its a lot cheaper to have a kid in the U.K.

Pulaski

It seems to me that you hit the "worst case scenario" .... which is that you used all your HSA and had nothing left to show for it. Which is EXACTLY what happens if you had regular health insurance and no HSA. In other words you spend a packet on insurance and have nothing to show for it at the end of the year, with the difference being that with traditional insurance that is the best, and indeed only possible outcome each and every year.

The revelation for us was realising that point: with high deductible insurance and an HSA the worst possible outcome was that we would be as badly off as of we had stuck with traditional insurance, but every year we used few medical services we would be streets ahead.

Harveyspecter

This is what I was thinking last night actually. We've just been unlucky and as you say, you pay either way. Either through higher premiums or a higher deductible. The difference is as you've pointed out, if you don't use it with a hsa you still have it, but with premiums you pay whether you use it or not.

My ins says for example for maternity services that there is a 20% copay. From what I've read this means there is a 20% payment after the deductible. However on my plan it says 20% copay. Not 20% copay after deductible like some of the other items do. The other thing is the maximum out of pocket threshold which for a family plan is set at $6000, so if I'm reading it right, I presume that that is the maximum we would have to pay regardless?

Either way, I'm guessing I just have to be braced for a lot of medical expenses to pay over the next few yrs.

tom169

If you're going to be keeping with the HDHP then try max out HSA contribution. That way at least the cash you're spending is tax free.

You have until next April (tax deadline) to contribute to this year's allowance.