HDHP: Deductible Hit.

So back in open enrollment time for me early this year, I had a few health insurance plans to choose from: an HMO (an in-network only plan), a PPO (a combined network plan with a low deductible), an HRA (medium deductible and employer covers half of it), and an HDHP (high deductible plan with an HSA, which employer contributes some to).

Most of my friends have gone with the HDHP or HRA plans because “they’re healthy and only ever go to the doctor for a physical (if that)”. Seriously, the only guys I know who have ever used their health insurance had major sports injuries. What is it with twenty something guys and not using their health insurance??

Well, I seem to always end up with some reason to use my health insurance:

  1. ~$1,445 total: Minor issue ($335 two doctor’s visits, two prescriptions), talk therapy ($870 referral visit and then visits with therapist), and birth control ($240)
  2. ~$2,445 total: Birth control ($1,000), doctor’s visits ($365), talk therapy ($650), tests from annual check-up ($430)
  3. ~$1,965 total: Birth control ($1,365), doctor’s visits and tests ($200), talk therapy ($400)
  4. ~$3,525 total: Birth control (free!), talk therapy ($175), minor issue ($150 doctor’s visit and prescription), injury in September (total ~$3,200: $65 urgent care and x-rays while traveling, $160 my home doctor and tests, $290 specialist and tests, $1,200 specialist again and more tests, $80 specialist again, $1,400 estimate for physical therapy)

Note: these are the costs before my deductible / coinsurance / out of pocket maximum / co-pays kicked in. I didn’t actually pay anywhere near these amounts!

I thought this year was going to have no costs and it turned into my most expensive year yet for medical costs! And it’s not even over yet! I still have another 4 months to go. All of the times I’ve gone to the doctor were completely legitimate reasons to go. Do guys just not have reasons to go to the doctor? I don’t get that. Life happens.

In all of these years, the HDHP would have been the cheapest. Why? Because I’m only going to put as much money into a FSA as I know I’m going to spend since it’s use-it-or-lose-it. So in the past, I assumed I was paying for birth control and that was it and put enough into my FSA (Flexible Spending Account) to cover that, but I’ve almost always gone over and then paid for those costs with post-tax money. With the HDHP, however, I decided to contribute the maximum to the Health Savings Account. I’ve been using the account to pay for my out of pocket health costs, which has been amazing. None of the costs this year were expected. I’ve been withdrawing money out of the HSA like no tomorrow, but now that I’ve hit the deductible, that is definitely slowing down. I will most likely still have some money left in the HSA, which will leave a buffer for next year. My plan with the HSA was always to withdraw money to cover the expenses that I do incur and let the rest accumulate. I just hadn’t anticipated this amount of expenses! I may consider investing it once I have accumulated two full years of my out of pocket maximum ($6,000) as a buffer.

Why is the HDHP so much cheaper than the others? There are multiple reasons that make this plan so attractive:

  1. The difference in premiums between the HRA plan and the HMO plan is about equal to my portion of the deductible.
  2. After I hit the deductible with the HRA plan or the HDHP, I pay 10% of the cost of everything until I hit my out of pocket maximum. The HMO plan has no out of pocket maximum. You just keep paying.
  3. From all of the data that I’ve seen, 10% is almost always cheaper than the co-pay. The specialists I’ve seen so far have ranged in cost from $80 to $205. 10% of that range is $8 to $20. My co-pay with the HMO plan for seeing a specialist is more than $20. Seeing my doctor costs me about $145 or $14.50 if I’m only paying 10%, but the co-pay with the HMO plan is more than $15.
  4. With the HRA plan and the HDHP, prescription costs count towards both your deductible and your out of pocket maximum. This was really great when I had the expensive birth control prescription. (Prescriptions have co-pays that can add up forever with the HMO and PPO plans.)
  5. The premiums are the same on the HRA plan and the HDHP, but the HDHP gives me access to a HSA with great investment options.

When all is said and done, my after tax cost for health costs this plan year should come out to just under $600. (My premiums are incredibly cheap, but I’m also in a somewhat high tax bracket*.) The HMO plan would have cost me just over double that figure. So despite having over $3,500 in medical costs for the year, my HDHP wins out. I’m now wishing I’d picked the HDHP last year as well because it would have been cheaper and then I would now have more money in an HSA. Ah well, I now know!

Note: The math on your particular plans may be different, but I do encourage you to at least investigate! So many people are scared of the high deductible plans, but they can sometimes be cheaper, even with a ton of health costs. I actually am less scared of my health costs since my high deductible plan has an out of pocket maximum and the no/low deductible plans don’t.

* I am so close to the 33% tax bracket that I can (almost) taste it! It’s kind of cool to realize how close I am, but not actually be there since then I’m still “only” paying 28% as my marginal tax rate.

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8 thoughts on “HDHP: Deductible Hit.

  1. Coming from a guy in his early 30s… getting older though.. I’ll be 32 next week. I RARELY go to the Dr.

    I can say I am very athletic and fit. I work out 6 days a week and I’m often training for event specific activities. (Marathons, Triathlon / (Sprint thru Iron distance), Obstacle events, Tough Mudder, Spartan Race, or other) I downhill ski 3 days a week in the winter season and I’m on a race league there as well. I’m just TRAIN FOR LIFE and anything it throws at me..

    Yes with all my training I do get injured… most of the time things are minor and I work thru different cross training and other exercises to maintain fitness and heal my injuries thru self practices.

    I only go to the DR when I know or suspect that my condition absolutely requires it in order for my health to get back to normal. Things that will take care of themselves after a week or 2 I don’t even consider going.. The human BODY is absolutely amazing with its healing capabilities when given the proper time to heal.

    However yes there are circumstances where special testing, x-rays, or other things are necessary and require a Dr. visit. I’ve been there a few times but I’ve learned that I don’t need to go for things that my body can handle and heal on its own….

    My HSA has over $12K in it currently… Also nice that us doubles as an investment account too… I’ve only contributed about $9K the other 3K came from market gains.. :)

    My deductible is around $4K before I’m 100% covered… in the event a major injury occurs or I need surgery or other. I have 3 years worth of deductibles covered if I need to… For now I continue to contribute… I know I’ll use this up in retirement for sure… Unless I am blessed with great health in those years as well. Currently I believe these can be passed on to a spouse which could be an option in the future.. (but those rules could change also).

    I am a big advocate of staying FIT and Healthy… with way you pay for something.. I choose to pay mine in hard work and sweat and save the greenbacks… many others choose to pay up the greenbacks and not have to work so hard. to each their own!!

    • I am also very athletic. This current injury is the worst I’ve ever had in my life and before this, I was working out 3-5 days a week playing multiple different sports / running and a 4 mile round trip walk commute. Since I’ve started tracking my sleep, I don’t get sick as often. But the vast majority of my doctor’s visits have been for issues that weren’t going away.

      My deductible is $1,500 and then I pay 10% after that until I pay out another $1,500. So my stop gap is $3k.

      I’m sure that I will continue to use a HDHP and max out a HSA for several years to come, so at some point my balance will grow and I will consider investing some of it. For now though, it’s so small that it’s not worth worrying about it.

      • ALSO.. Never forget. Being Athletic and active is GREAT!!! GREAT for health.. but the most important thing an athlete / athletic person can do is get adequate sleep. More and more research shows sleep is the most important element of any fitness routine!!!

        I wish you a speedy recovery and back to GREAT health … esp. for the holidays and the NEW YEAR!

        I have some issues myself that I can say have not gone away in 3 plus years.. they probably NEVER will. I’ve accepted them as life changes now and I work thru them when I need to. :) small sacrifices in my opinion.

        And of course keep rocking the Net Worth rocketship!!

        • Thanks Tim! Yep, sleep is really important and one of the main reasons I don’t work crazy hours anymore. If I work past dinner, it takes forever to get to sleep and then I end up getting up later the next day.

  2. My husband hasn’t been to a physician in over 10 years. I’ve basically given up trying to talk with him about it.

    I go for yearly checkups and then as needed, maybe once a year for minor illnesses or complaints. Still, I hardly spend any money since visits are free and it’s usual for me to pay for a prescription. I’m glad to have the insurance there but I’m not really an expensive user. Thankfully I have not experienced any injuries!

    Also I just want to say good for you for putting out there that you’ve gone to talk therapy. I’ve wanted to write on our blog about my use of counseling services, but my husband has vetoed the content. His stigma is preventing me from lessening the stigma! So I’m glad you’re not self-censoring on that topic. Thankfully my use of the services was free so it didn’t have to show up in our monthly spending reports. :)

    • I find it funny that guys tend to urge me to go to the doctor and yet never go themselves. But at least you know that Kyle does have insurance in case something does happen. I’m sure if it was something really serious, he would go.

      I think that counseling can be really helpful! People talk about premarital counseling a lot, but not about individual therapy. Your friends can listen to your complain about small things, but when you need someone to talk through something bigger and remain an unbiased third party, it can be really, really helpful. Especially as we get older and don’t necessarily have many close friends, let alone local ones. I’ve found that journalling reduces my need for counseling, but it’s still helpful to talk to an actual person. Now that I know I’ve hit the deductible for the year, I may go back to counseling for a bit, to talk through some things that are bothering me. $15-20 per visit post-deductible is nothing to help with my peace of mind a bit.

      That’s so nice that counseling is free for you! It got a lot more expensive when my employer switched networks this year. Our premiums, deductibles, etc. were the same, but all the services I’ve seen have been more costly. That $175 for talk therapy this plan year was ONE visit. With our previous network, it was $90. That’s double. I was pretty upset about that and that definitely contributed to not going for a while. Now? It’s just the way it is.

      Thank you for voicing here that you also use counseling services! :)

  3. I also hit my deductible, for the first time ever, which is at $250. I had some blood work,x rays and CT scan for a kidney stone,…I never go to the doctor. My out of pocket max is like $2k, and I can’t imagine ever going near that unless I had frequent therapy….

    • I hope you’re okay! I had bloodwork, x-rays, and a MRI. It was pretty expensive, but now I’ve hit my deductible at least :) Yeah I’m pretty sure the only way I would hit my $1.5k out of pocket max is if I gave birth.

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