YA HDHP v. PPO Thread

[Adam8281]

If you'd care to input on my choice between a HDHP w/ HSA and PPO (I've got until tomorrow to decide), I'd love to hear it. Here are the details, and note, my wife will be having a baby during the coverage year:

Family Ages
Me: 31
Wife: 31
Child #1: 3
Child #2: 1
*Child #3: Will be born in mid-2013

Plans

HDHP + HSA
Premiums: $4548/year
Family Deductible: $4000/year
Max OOP: $4000/year (the deductible counts towards the max OOP)
Coverage before deductible: I pay 100% of everything, including prescriptions, except for preventive care/immunization/screening I just make a $20 co-pay
Coverage after deductible: Plan pays 100% of everything, including Rx (though i still pay $20 co-pay for immunizations/screenings)
HSA: my employer contributes $1000/year, so really I'll only be footing $3000 out of the $4000/year deductible. I would fund the HSA first of the year with at least $3000.

PPO
Premiums: $5404/year
Family Deductible: $1000/year
Max OOP: $3000/year (the deductible counts towards the max OOP)
Coverage before deductible: $30 co-pays for pretty much all doctor visits, preventive care/screening/immunization; $10 co-pay for generic Rx and $35 co-pay for preferred brand drugs
Coverage after deductible: continue making co-pays (even if I hit OOP max); pay 10% co-insurance on pretty much everything except routine doctor's visits (e.g. 10% co-insurance on facility fees, surgeon fees, ER transportation, hospital stays, prenatal and postnatal care, delivery of baby, etc.)

Some Analysis
Scenarios on the margins are easy; it's the middle ground (which is also most likely) where the calculation is harder.

Hypothetically, if we had NO health costs this year, the HDHP would be better, because our premiums would be $756/lower, plus I'd be getting the $1000 my employer contributes to the HSA.

On the other end, if we had catastrophic medical bills, say $50,000, the HDHP would also be better. Our absolute out-of-pocket max on the HDHP would be $4548 (premiums) + $4000 (OOP max) - $1000 (employer-contributed funds) = $7548. This is in contrast to the PPO, which would be $5304 (premiums) + $1000 (deductible) + $2000 (amount of co-insurance payments after the deductible to reach the $3000 max OOP) + tons of office visit and prescription co-pays, let's say $1000 = $9304.

But in the middle it's more complicated. It's seems guaranteed that under the HDHP, I will hit my OOP max this year due to the childbirth. So I'm basically guaranteed to pay $7548 this year under the HDHP. But it seems plausible that my PPO costs might be somewhere between $6304 (premiums + deductible) and $7500, depending on the number of $30 office co-pays and $10 Rx co-pays I incur, and the amount of childbirth bills I'll pay a 10% co-insurance on.

So Anandtechers, any 11th hour thoughts on what's the better value?

 

[Jadow]

I had about this same choice, and the 2 options were both pretty close.

I chose the HDHP + HSA for myself, but you may wan to go the PPO route.

 

[Codewiz]

I am on a HDHP + HSA. Best decision ever. This is my situation. Once you get enough in your HSA for one year's deductible, it is all gravy after that.

I put the difference in premium between my HDHP and PPO into the HSA. Additionally, my plan puts half of my insurance premium into the HSA. It is far more than the yearly deductible.

Your only confounding issue is a child birth. I still laugh to myself when I seeing people paying double the premium I pay for health insurance just so they only have to pay $20 copay for a doctor visit instead of $70 that I pay.

My HSA has over 9K in it in 2 years since I switched.

It is my wife, son(4 years old) and me.

 

[Aharami]

how healthy are you guys?

 

[HybridSquirrel]

PPO for me, but that's because it works better as a secondary under my wife's better insurance.

 

[sactoking]

Without commenting on either plan, I'm assuming the open enrollment period is now for coverage to begin 1/1/13. If that's true, you might want to check those copay amounts for preventive/screening/immunizations, those should be no copay/coinsurance now due to ACA market reforms.

 

[darkxshade]

HDHP are sort of more suited for singles who are healthy and want to save more. Children get sick all the time. Does your wife work? If so one of you can go the PPO route and have the children covered while the other goes HSA.

 

[Adam8281]

Thanks guys. In response to several questions:

-My wife and I are very healthy. With the kids, at least monthly they're at the doctor for cold, congestion, rash, the usual kid stuff.

-My wife doesn't work.

-Yes, this plan would be effective January 1, 2013. On our firm's conference call today, I confirmed that under the HDHP there is a $20 co-pay for preventative/wellcare exams and screenings (but the remainder is paid by the HDHP plan, even before you've hit the deductible). I also confirmed (contrary to my OP) that immunizations are actually covered at 100% under the HDHP, with no deductible. Additionally, cervical and prostate exams are covered at 100% with no deductible.

 

[Dirigible]

Darkxshade: which is better for families/singles depends on the plan details. In my case, the hdhp is better for families. The access to health care is the same, and there is no scenario where the hdhp costs more.

OP: My experience with hdhp is that my health care is very cheap if everyone is healthy. Barely use the HSA account money, with the benefit that the unused HSA funds act like another retirement acct. When one of my sons broke his arm, we blew through the spending limit quickly and hit the spending max.

Some of the engineers here made a little program that let us see the difference in plans for any scenario, which was helpful. But without running the numbers, my experience is a shot at a sizable extra chunk of retirement (hdhp wins), plus the likelihood of any real medical expenses blowing through to the edge case where spending limits are hit and hdhp wins again outweighs the chance you could save a little by going ppo.


But if I were you I'd make a chart showing various scenarios and expenses so you know the numbers before making the call. I'm too lazy to do that.

 

[SphinxnihpS]

Kids, PPO just because of the deductible. Seems like an easy choice.

 

[yuchai]

You are missing a few things that I think should be considered in your analysis:
1. You are mixing tax-free versus non-tax free funds. Your premium and HSA dollars (whether employer provided or your contributions) are tax free, but out-of-pocket costs are after tax. If you do intend to contribute $3,000 to the HSA account, this helps the HSA look better because you are essentially able to convert a lot of your out-of-pocket costs to a tax free status.
2. You did not list it but I assume there is a single deductible as well for the PPO (likely to be $500 but you should find out). The difference between a PPO & HSA is that for a PPO, the plan starts paying for an individual within the family when that person exceeds the single deductible. So under the PPO, if your wife is incurring all the claims, the real deductible might be only $500. With the HSA, the plan doesn't pay anything until the family deductible is reached, even if your wife is incurring all the claims.
3. About "middle cost" level analysis, let's look at the best case scenario for the PPO, which is if you have exactly $4,000 in total claims. Your total for HSA remains the same, about $7,500. For the PPO, it would become $6,604 (w/o copays) if I did the math correctly (ignoring the issue I just described in 2 for a moment). If you still think you have $1,000 in copays (that sounds really high but I'll use this number for now), you are still no better off under PPO, even if we disregard the tax issue.
4. You didn't specify how the prescription drug plan works. But, it's required that an HSA has the same deductible applies for both medical and prescriptions. For the PPO, it is very likely that there is no deductible (you may want to find out). So, you have to factor in how much drugs (non-preventive only, as those are required to be 100% covered under health care reform) you are using as well.

2 & 4 don't as much matter though if you are certain that you will meet the $4,000 deductible anyway, which I sounds like you would due to the newborn.

Based on what I know so far, it seems that the HSA is likely to be the better deal.