MM: Which health insurance policy?

hoffse · January 2014

Alright MM folks - I just got insurance info from my new job. While I thought this would be an obvious choice, it isn't.

Here's the deal: my new firm covers $420/month in premium costs. Anything over that is paid by us. Anything under that can be sent to an HSA or to other things (dental, flex-spending account, etc.). We also get a $600/year reduction in our premiums for having an annual physical and "making a healthy choice." I have no idea what that means, but I will be sure to ask so I can qualify for it.

I'm trying to choose between two plans:

1) Silver/HSA - the premiums for this plan would be fully covered by the $420/month allowance. I would also end up with about $1450/year in HSA contributions from my employer when you take into account the allowance money left over and the $600 wellness benefit. My annual deductible would be $2,500. My (expensive) birth control would be full price, but it will count toward my annual deductible ($93/month). I would be inclined to pay for the birth control out of pocket so that I can invest the HSA funds (more on that below).

2) Gold - the premiums for this plan are almost covered by the $420/month allowance. I would end up paying $8/month out of pocket without the wellness benefit. With the wellness benefit I would pay nothing out of pocket for the premiums, and I would be able to put about $500 into a flex-spending account for medical expenses during the year. No HSA with this one. $1,000 annual deductible. My birth control would have a reduced co-pay ($45/month) but it would not count toward my annual deductible. I would pay for the birth control from my flex-spending account, since I would lose that money at the end of the year if I didn't use it.

Here's my dilemma. In a "normal" year the vast majority of my health costs come from the birth control I use. I'm on an expensive kind because I get bad reactions to other kinds. So I'm not going to change that. I also typically have an annual exam, and a dermatology screening once a year. The annual exam is covered in full under both plans as a physical. My dermatologist charges $110 for my annual screening, and it will not be covered by either plan (though it will count toward my deductible for both plans). Other than that, I typically don't go to the doctor. I haven't been to the Dr. for a sickness or injury-related issue in more than 5 years.

Under the Silver Plan, I will have an HSA which I can basically use as another Roth. Those funds can be invested and grow tax-free. They can be withdrawn in retirement and can be used for anything. I'm thinking to myself: "Sweet!" Because we all know how much I love Roth accounts. BUT I will spend about $1,226 per year out of pocket for routine health costs that I know I will consume to have that plan.

Under the Gold plan, I won't have an HSA. But I will only spend about $150 per year out of pocket for routine health costs that I know I will consume.

What would MM do?

brij2006 · January 2014

I would go with option #2. Because you would be money ahead on an annual basis.

Also look at the maternity coverage on each plan. Double check what the maximum OOP expense is. Especially since you've mentioned TTC in the next few years.

hoffse · January 2014

Thanks, Brij I think that's the direction I'm leaning.

I start on Tuesday, and we have two days of training so hopefully they will talk us through the maternity costs (it's a whole group of women starting on Tuesday). I'll definitely call the insurance people and ask about maternity coverage before choosing if their benefits people don't go over it with us. Unfortunately the family coverage is something like quadruple the single coverage.

Oddly enough, the family premiums at my H's firm would cost us the same OOP as the family premiums at my firm - even though we're getting a $420/month "allowance" through my firm. The family premiums are so much higher at my firm, that it ends up being about the same regardless of which employer we go with.

However, their basic paperwork implies that the $420/month can be applied toward a dependent care flex spending account also... I'm seriously hoping that's the case, because it could pretty much cut daycare costs in half for us if/when the time came. And then we could just do the health insurance option through my H's firm. That's serious savings.

Trying not to get my hopes up about that though!

brij2006 · January 2014

That's some great flexibility!

hoffse · January 2014

Well... I just confirmed with a friend of mine who works there that you CAN send that $420/month toward a dependent care FSA.... that's what she chose to do! OK, that is what I call un-freaking-believable!

But before I get ahead of myself....

I think my dilemma can be framed in this way:

Does it make more sense to pay $1226/year OOP to get a $1450 contribution to an HSA that can grow tax-free? Or does it make more sense to forego the possible investment and pay $150/year OOP?

Xstatic3333 · January 2014

Well, for me the Gold plan would make more sense. $90 a month would be a big budget impact for us. From what you've said about your situation, however, Silver might make more sense. You mentioned that you and your H will both have higher incomes, so the OOP costs won't be too rough to budget for. Plus, you LOVE Roth IRAs, so why not go for the bonus one?

This is assuming that the Silver plan is acceptable on maternity.

Once your H starts his job and you have kids, his plan plus the FSA is definitely the best option. We're in the same boat that there is no "couple" rate for our health plan, just "individual" or "family." It's a drag right now, but nice to know our rate won't increase once we have kids!

hoffse · January 2014

Oh Xstatic you are so right.... I LOVE Roth accounts. Sigh. And these are even better than Roths because your contributions are tax-deductible... and then they grow tax-free... so you basically get to double-dip. That never happens.

Honestly I'm now thinking Silver. I've had to budget for my birth control before - my currently policy has a $500 drug deductible I have to hit each year before insurance kicks in - so it won't be a super profound change for me.

And I guess that if it ever did become a burden I could switch prescriptions to something less expensive... though the one I'm on now is the first BC I've actually really loved. It doesn't make me crazy, I don't get migraines, it doesn't make me gain weight, it's kind of incredible. And it's truly a "splurge" of mine. Most other forms of BC make me feel so awful that I would have a hard time doing my job a couple times a month. Besides, my GYN always gives me at least 3 months free at my annual exam!

H and I won't be TTC until next spring at the absolute earliest - so I should probably find out when their open enrollment is to get a sense of when we might need to switch (if we do). I suppose accidents could always happen, but the odds of that are super low.

Mom987 · January 2014

HSA for sure

vlagrl29 · January 2014

I would totally go silver all the way! HSA and Roth...what more can you ask for. We have an HSA, but contribute to it ourselves because we are self employed. The HSA is a better tax deduction for medical expenses than deducting them off of the normal tax form (sorry sounds stupid but I can't think of the # of the form). I'm getting a little jelly of your insurance plan. Today I had to call my insurance company to figure out how much a hernia repair will run me. I'm waiting on the call back from the supervisor to get an "estimate". Are these silver and gold plans you are talking about part of the marketplace? we never had choices at the 2 corporate jobs I ever had.

hoffse · January 2014

Viagrl, I don't think they're part of the marketplace. We actually have three choices - Silver, Gold, and Platinum. Platinum is incredibly dumb because the surcharge for the premiums cost more than the OOP max on the deductible under the Gold Plan. And the drug costs are identical under both Platinum and Gold. That one doesn't make any sense at all - unless it covers some unusual things that are just entirely excluded under Gold/Silver. I could see that. Otherwise, I suspect it's a fancy name to trick people without calculators into paying extra...

Yes I think I'm going to do Silver. The more I think about it, the more I like it.

And actually to clarify, in case others are reading this: HSAs work like a Roth if you withdraw for qualified medical expenses in retirement - if you withdraw just to withdraw then they work like a 401(k) are just tax-deferred.

That said, if you keep track of your OOP medical expenses over your lifetime, you can "count" those as qualified medical expenses 20 or 30 years later when you retire. In other words, your withdrawals don't have to be taken in the same year as your OOP expenses. I read a Forbes article that estimates the average American couple would spend about $230K in qualified medical expenses through their lifetime (not counting end-of-life care), and so every bit of that could theoretically be withdrawn tax-free in retirement, as long as you keep records of it. So effectively, you get to double-dip for non-medical expenses in retirement, as long as your records indicate that you have paid OOP for a medical expense equal to that withdrawal amount at some point in your lifetime. Of course, that assumes the tax law doesn't change. I just wasn't really clear in my OP about that.

Anyway, even if I don't keep track of ongoing medical expenses, future medical expenses are a serious thing to plan for in retirement. The more I think about it, I'm inclined to lean toward investing in HSAs and paying OOP for ongoing medical expenses if I can afford to do so. It could mean the difference between in-home care versus going to a nursing home when I'm old. This is one component of my retirement plan that I haven't really considered until recently. I'm realizing it's definitely something I need to think about.

hoffse · January 2014

Oh and Viagrl, I think this employer's plan is so good for individuals because they are super health conscious. Apparently they will pay for gym memberships or memberships to weight loss programs... they feed you healthy snacks once a week... if there's enough interest, they will build gyms in individual office buildings.... and they will bring in trainers, yoga instructors, etc. once a week for a group fitness class if there is enough interest. I'm very excited about it, but it's definitely out of the norm. And honestly, I'm a little concerned about keeping up with these super fit people!

The trade-off, of course, is longer hours and a more intense work environment. So I will be paying for it indirectly.

Xstatic3333 · January 2014

Silver sounds like the right call for you! H's job had a ton of choices, but nothing really equivalent to the silver, just the "gold" and the "platinum" from a bunch of different companies. Agreed, the platinum version was ridiculous!

I would definitely keep your BC with a clear conscience. It's a drag that the cheap versions don't work for you, but nothing's worth feeling like crap like that.

cbee817 · January 2014

FYI- for the dependent care FSA, you can only put $5000/year in there so it'll be less than $420/month. I have $192.30 deducted from my paycheck every 2 weeks.

Definitely see about maternity coverage on both plans. Do they offer free well visits for kids to 19? Typically, a healthy baby will go 7 times in the first year (1 week, 1 month, 2 months, 4 months, 6 months, 9 months, 12 months) just for well visits. My plan also has free sick visits for kids to 19- not sure how standard that is in other states but definitely check it out if you're planning on starting a family soon.

hoffse · January 2014

cbee, I figure after we max out the dependent care FSA we can send it toward something like dental or a medical FSA. It's frustrating that dependent care is a $5,000/max but since this allowance will cover it in full I can't really complain! This allowance is use it or lose it, so we will put it toward SOMETHING else to maximize this benefit when the time comes.

I won't get to read the big book on all the policies until Tuesday, but their overview sheets implied that any preventative care is covered in full under all policies. That means all well baby visits and vaccinations should be covered. I don't think sick baby visits would be covered under the HSA (though it would count toward the annual deductible), so I could see us upgrading for a couple years until little immune systems are well-established. I'm not really sure how long that takes, but I imagine we would switch to my H's HSA option when we feel like sick visits are on the decline.

vlagrl29 · January 2014

hoffse said:

Oh and Viagrl, I think this employer's plan is so good for individuals because they are super health conscious. Apparently they will pay for gym memberships or memberships to weight loss programs... they feed you healthy snacks once a week... if there's enough interest, they will build gyms in individual office buildings.... and they will bring in trainers, yoga instructors, etc. once a week for a group fitness class if there is enough interest. I'm very excited about it, but it's definitely out of the norm. And honestly, I'm a little concerned about keeping up with these super fit people!

The trade-off, of course, is longer hours and a more intense work environment. So I will be paying for it indirectly.

sounds very health conscious which I'm all about. The policy at my last job was with Humana and it included free gym membership at 24 hour fitness or golds gym. As soon as I found out I signed up. It sucked though because the next year humana dropped that perk. It also sounds like you may need all those benefits with longer work hours. Good luck choosing the plan!

MommyLiberty5013 · January 2014

When I first read your OP, I leaned toward Silver too.

When you have a baby, your health insurance will give you an opportunity to change even outside the annual enrollment period since having a baby is a "qualifying life event."

The only caveat to doing one versus the other is how both plan options handle prenatal care for you....I know you are on BC, but things can happen.

MM: Which health insurance policy?

Re: MM: Which health insurance policy?

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