Health Savings Account

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Shorty
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Health Savings Account

Postby Shorty » Tue Oct 23, 2018 7:58 pm

For those of you who are State or UW employees, Friday, Oct 26 is the deadline for Health Insurance changes. Private sector employees can also get an HSA through their employer or on their own. They seems like a good deal to me so I encourage you to look into andconsider them. Here is a comparison I made showing how the High Deductible Health Plan (HDHP) with a Health Savings Acct (HSA) saves money over the regular plan using the State and UW employee program. In all scenarios you save money with HDHP. Correct me if any of my numbers or analysis are wrong.

Let’s say your family has a “good” health year with no health expenses (routine visits like physicals are free, so nothing more than that). With regular plan you would pay $2,628 in annual premium, but with HDHP the State would pay you $516. But a year this healthy is unlikely for most families.

Let’s say your family has a typical health year with enough health expenses to reach the deductible. With regular plan you would pay $3,128 in annual premium plus deductible, but with HDHP you would only pay $984.

Let’s say your family has a bad health year with enough health expenses to reach the OOPL limit. With regular plan you would pay $5,128, but with HDHP you would only pay $4,440.

So you would probably save about $678 to $2,144/yr if you went with HDHP and an HSA. There should be no difference in the medical care or coverage you get between regular and HDHP (ie, you can see the same doctors),

Plus, with HDHP and HSA, the health insurance payments are tax free and you can take your HSA with you if you change jobs. It requires more paperwork because you need to fill out an extra tax form and keep a copy of all health receipts. But the tax form is simple and most hmo’s have web portals with all your electronic billing receipts.

Family
a) Regular plan with dental – $219/mo premium = $2,628 per year. Deductible $500. Out of pocket limit $2,500.
Minimum cost is $2,628 per year.
Maximum cost not exceeding deductible will be $3,128 (premium + deductible).
Maximum cost is $5,128 ($2,628 + $2,500).

b) HDHP with dental - $82/mo premium = $984 per year. Employer contribution $1,500. Deductible $3,000. Out of pocket limit $5,000.
Minimum cost is -$516 per year. (You earn $516 because $984 - $1,500).
Maximum cost not exceeding deductible will be $984 ($984 premium + $3,000 deductible - $1,500).
Maximum cost is $4,440 ($984 + $5,000 - $1,500).


Single person
a) Regular plan with dental – $88/mo premium = $1,056 per year. Deductible $250. Out of pocket limit $1,250.
Minimum cost is $1,056 per year.
Maximum cost not exceeding deductible will be $1,306 (premium + deductible).
Maximum cost is $2,306 ($1,056 + $1,250).

b) HDHP with dental - $33/mo premium = $396 per year. Employer contribution $750. Deductible $1,500. Out of pocket limit $2,500.
Minimum cost is -$354 per year (You earn $354 because $396 - $750).
Maximum cost not exceeding deductible will be $1,146 ($396 + $1,500 – $750).
Maximum cost is $2,246 ($396 + $2,500 – $750).


Overview: https://www.wisconsin.edu/ohrwd/benefits/health/
Regular plan: https://www.wisconsin.edu/ohrwd/benefit ... an-design/
HDHP: https://www.wisconsin.edu/ohrwd/benefits/health/hdhp/
HSA: https://www.wisconsin.edu/ohrwd/benefit ... accts/hsa/
Premiums: https://www.wisconsin.edu/ohrwd/benefits/premiums/
Last edited by Shorty on Thu Oct 25, 2018 8:54 am, edited 2 times in total.

massimo
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Re: Health Savings Account

Postby massimo » Wed Oct 24, 2018 10:07 am

Thank you, Shorty, the $1500/yr HSA contribution from the UW System is something that I missed when looking into this. I'll be making our elections tomorrow or Friday, so this is very useful.

massimo
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Re: Health Savings Account

Postby massimo » Wed Oct 24, 2018 2:38 pm

Having thought about this some more, why would anyone who is eligible to elect the HDHP and contribute to a HSA elect not to do so? As you state, there isn't any typical scenario where a family would spend more with the HDHP/HSA.

Are there certain scenarios, like with specific illnesses or needed treatments, that would make it more cost-effective to choose the "regular" plan? HSA money rolls over year to year, so that's not an issue. I feel like there's a catch that I'm not seeing.

One issue Shorty: The OOPL for the regular plan (family) is $2500 not $5k. Still, the calculated max cost for that plan would be less than the max cost for the HDHP/HSA plan.

Shorty
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Re: Health Savings Account

Postby Shorty » Wed Oct 24, 2018 3:55 pm

Good catch. I fixed the regular OOPL which makes that plan less costly for worst cases scenario. However, it will still cost a family $1,188 more than HDHP with HSA.

As far as I know, there are no scenarios, like with specific illnesses or needed treatments, that would make it more cost-effective to choose the "regular" plan. The coverage looks identical to me between regular and HDHP plans. However, I am not a benefit specialist so check with your office benefit specialist.

To me it looks like all State and UW employees are better off with HSA. In talking with some I know, most of them haven't switched to HSA because they don't understand it, think there coverage won't be as good, or are afraid there is a catch. I think their concerns are not valid but I admit it is complicated and you want to make sure before you switch.

massimo
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Re: Health Savings Account

Postby massimo » Wed Oct 24, 2018 5:29 pm

One more quibble:
"Maximum cost is $5,628 ($2,628 + $500 + $2,500)"
That $500 deductible is included in the $2500 OOPL, is it not? i.e. the max cost should be $5128.

Shorty
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Re: Health Savings Account

Postby Shorty » Thu Oct 25, 2018 8:52 am

Good question. Looks like OOPL includes deductible so I will fix my numbers above. This reduces HDHP savings over Regular plan to $678 in worst case scenarios, but still worth it.

https://www.google.com/search?q=does+ou ... e&ie=UTF-8

Shorty
Forum God/Goddess
Posts: 4985
Joined: Mon Jun 02, 2003 12:53 pm

Re: Health Savings Account

Postby Shorty » Thu Nov 01, 2018 11:21 am

Here is a calculator that shows benefits of HSA with hdhp:
https://www.summitcreditunion.com/calcu ... mpaign=hsa


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