My employer is finally offering us a high-deductible health insurance plan (HDHP) with a health savings account (HSA) this year. I am strangely excited about this! Now let’s figure out if this makes sense or not.
I’ve definitely ruled out the HMO and the PPO – they are way more expensive than the consumer-driven health plan (CDHP) or HDHP and the premiums just keep going up every year…
I’m still not completely convinced that my birth control pills will actually be free come August 1st, so I’ll do the math both ways.
Here are the commonalities between the CDHP and HDHP choices:
- Premiums are $X per month on both (same monthly premium).
- Employer will pay the first $500 of my deductible.
- Projected total costs for the plan year (not including premiums and before any deductibles or coinsurance amounts kick in) are between $1,000 and $2,300 (higher end assumes paying for birth control pills past August 1st and lower end assumes that stops then, plus taking some other projections off).
- Past the deductible, I pay 10% in-network and 30% out-of-network.
- There is a deductible and an out-of-pocket maximum on both plans.
And the differences between the two plans:
- Both the deductible and the out-of-pocket maximum are $1,000 on the CDHP, but $1,500 on the HDHP. (So the total stop-loss for me is $1,500 on the CDHP and $2,500 on the HDHP – $500 is covered by my employer in each case.)
- With the CDHP, the portion my employer covers of the deductible ($500) rolls over from year-to-year so long as I stay with the company and disapparates into thin air if I leave. On the other hand, with the HDHP, the portion my employer covers of the deductible ($500) is really that money being put into my HSA, which I can keep if I change employers.
- With the CDHP, I would put some money into a FSA to cover my base level of forecasted expenses for the year. All of those funds and all of the funds my employer will pay to cover their portion of my deductible are available immediately. With the HDHP and the HSA, however, the funds aren’t available until they have actually been contributed.
Total financial bottom line is as follows for the year, including premiums, deductible, and coinsurance:
- The CDHP will cost me between $790 and $870.
- The HDHP will cost me between $1,000 and $1,300.
- The HDHP will cost me between $210 and $430 more for the year over the CDHP.
Wow! I hadn’t expected the cost difference to be quite that high, but I suppose that is because I am projecting my total costs to be close to or above the deductible, which is $500 higher with the HDHP while the monthly premiums remain the same. With the above numbers, it looks like my best bet is to stick with the CDHP for another year and re-evaluate if the math makes more sense to switch to the HDHP next year.
Since I plan on using my employer’s full $500 contribution if I go with the CDHP, the benefit of them contributing to a HSA on my behalf is null and void. And since I don’t plan on leaving my company within the next year, I think that the CDHP/FSA route is better for me than putting a bunch of money into an HSA. Though the HSA could be cool since I could stock it up this year and then whatever I don’t use rolls over and I wouldn’t have to put as much money into it the following year (versus ending up way underestimating my FSA contributions), but I don’t think that’s worth the extra $500 on the deductible and $500 increased out-of-pocket maximum level.
Readers, does the CDHP choice look like a no-brainer again for me?