[Eric]

Could you guys help me decide which insurance option is the best financial decision for my family? My wife and I are mid to late 30s. Kids 7 and 11.

We don’t go to the Dr. much but I am on a few medications.

This is for a new employer. It’s much more expensive than my last employer but it’s worth it with my new salary.

Thanks

[Toni]

I would choose the HSA. I see you’re asking about prescriptions, all plans are different. There’s a prescription that I have that has no generic substitution so I’m 100% responsible for it until I reach my deductible.

My other prescriptions with a generic sub I get at a discounted rate even before the deductible.

[Bryan]

Here’s the way I see it. In my mind there is a clear best choice and it’s the HSA.

You are guaranteed to pay your premiums based on your choice, you “might” have to pay the full deductible or max out of pocket.

Also, I would max out the HSA savings and invest that money in the low cost index funds option.

Pay your medical expenses out of pocket each year and the HSA is like a Roth IRA but better because they don’t tax the contributions or the investment gains.

This is THE BEST WAY to put away money… Just takes a little discipline.

Feel free to correct me if I’m wrong on any of the math, but this is how I compare my plans.

Best of luck to you in your new job and planning for your future

[Stef]

I’ve always wondered about this too. Right now we are staying with the PPO since my company still offers it and my spouse has a lot of medical issues we are getting through.

[Rebecca]

The fact that the deductible/oop max are embedded is also a great feature.

You would save over $6k on premium alone annually which can fund the entire deductible.

If you hit it, the 20% cost share is usually quite similar to what the copays would be on the other plan anyways aside from maybe an emergency room visit, but the embedded deductible protects from that a bit also.

If you have expensive rx, you’d pay for those until you hit the individual deductible and then they become tiered.

Some might even be without any cost share if they are considered preventative.

[Carolyn]

Just due to the difference in premiums the HSA is almost certainly a better deal.

Your premiums for the family OAP are over $6k more than the HSA premiums, which is more than the family deductible for the year on the HSA plan.

As long as you can float the initial cash outlay needed until you can save up funds in your HSA account, I would go with the high deductible plan.

[Marissa]

That is cheap insurance. The worst plan for my company, just me and husband, is $800/mo. Our deductible is $14k and insurance pays $0 on everything until our deductible is met.

I just paid for an entire surgery out of pocket 2 weeks ago on my Amex, $0 contribution from insurance.

And I work at a large “AmLaw 200” (200 highest grossing firms) law firm.

[Amy]

I would take the OAP insurance all day long. Your kids are getting to the age that if they play sports, they’ll break something.

Your appendix could burst etc etc.

We use healthcare a lot and would be screwed with a HSA plan.

[Logan]

The HSA is better than a 401K. I just stack money away in there and pay everything out of pocket. Save the receipts in case I ever need to pull out for cash.

[Jannie]

ALWAYS do high deductible with HSA. It’s a retirement savings account for health expenses.

You own the funds no matter where you work once they are there.

[Ada]

if you don’t go to the doctor much and you have a cheaper option with the HSA, I’d choose that. Max out the HSA if you can.

When I had an HSA option I funded it and paid out of pocket for all medical expenses, didn’t touch my HSA and 10 years later had it when I really needed it.

Usually after your account reaches a certain amount you can invest it so it’s growing tax free.

[Leslie]

Since ya’ll don’t go to the doctor often, it was me I would do the more affordable one.

[Dena]

Out of pocket max is so similar, I’d go with the HSA for sure and max it out!

[Shawntae]

It depends on your income bracket. An HSA will help with taxes but the deductible is higher.

Could you save that $5400 fast with you being on medications you would need to pay for those medications out if pocket until you meet that deductible.

[Tanya]

Most people seem to only consider deductibles, but I usually ignore those and only compare the out-of-pocket maximums (OOP max) and premium costs, because (if you stay in network for all services), that’s the max amount you’re going to pay in the event of maxing out your plan for the year.

You would pay a max of $14,639 (family OOP max of 10K + 12 months premiums) for the HSA (but would be able to get a bit of a tax break from contributing $8300 pretax dollars into an HSA, not sure if your employer offers HSA contributions to factor in?).

HSAs are great because they are the only triple tax advantaged retirement account in the US.

Tax free cobtributiins, tax free growth, and tax free withdrawals (if you pile up medical receipts over the years and make qualified withdrawals).

HSAs are portable (if you quit you take with you) and there is no time requirement to make withdrawals/use the funds like there is with an FSA.

You can usually invest the funds within you HSA plan (or roll funds to a free Fidelity HSA and invest there).

Or, you would pay a max of $20,090 for the non HSA plan (family max of 9K + 12 months of premiums).

You could likely do pretax contributions to an FSA account, but those need to be used by 4/15 the following year or they disappear.

Not sure if your employer offers any FSA or HRA contributions to factor in?

Keep in mind your premiums and OOP maxes likely change (increase) yearly… not sure when next open enrollment is for your employer.

In your case, I would choose the HSA plan, even if I had chronic medical issues, prescriptions, or feared a catastrophic event (like car accident or broken leg) because the HSA plan is like $5.5K cheaper overall and you get a bigger tax break contributing up to $8300 to an HSA (keep forever) than up to $3200 to an FSA (must use by followibg April 15th).

[Christopher]

If you choose the HSA, make sure you pick the investments you want in the account.

[Author]

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