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Open Enrollment and HSA options
This thread has 29 replies. Displaying posts 16 through 30.
Post 16 made on Sunday October 29, 2017 at 11:33
Fins
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On October 29, 2017 at 10:27, Trunk-Slammer -Supreme said...
I see this as a result of the ACA, and all the free healthcare given to others.

I agree, but that’s not the only factor. There’s also the issue of insurance companies have been ripping off customers for years and screwing up the medical system with shady tactics like refusing to pay doctors until they submit an invoice at least 3 times and deciding what to pay after services are performed.
Civil War reenactment is LARPing for people with no imagination.

Post 17 made on Sunday October 29, 2017 at 12:10
imt
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I have had both. My benefits come from my wife. There are pros and cons to both.

If you are young and single it is a no brainer. If you don't need an prescription drugs, especially non-generics, its a no brainer. I'm also going to go out on a limb here and say maybe depending on where you live it makes sense due to probably lower costs of medical care. There are many aspects though that need to be looked at if you are more then a young single person. Premium differences between a standard PPO vs HSA. Deductible amounts of both, Coinsurance of both, Out of pocket max, etc.

We are a family of 4. The first time I was exposed to an HSA option was like 4 or 5 years ago. Back then when I was comparing plans it "seemed" like the difference in premiums of an PPO vs HSA was paying up front in a PPO plan vs. putting the difference in my pocket. We typically went for routine preventative physicals and then I accounted for the typical other visits we might make during a year. Allergist, kids sick, etc. With an HSA, I would bee well ahead of the game with $$ in my pocket. We also elected to sock away the max allowable amount into the account. My thinking was if we go 2 years with normal Dr. visits etc then we would have more then enough $$ put away in the HSA to being fully covered for the worst case scenario of 2+ people needing serious medical care within the same year (out of pocket max). With an HSA, since its your own $$, you tend to be more vigilant with running to the Dr. A child gets a cold, you wait several days vs running to the Dr, under a PPO, since its only a $15 or $20 copay. But, there is a balance that needs to be struck since you can find yourself ignoring things, which should be looked at, for the sake of not wanting to spend the $$ growing in your acct.

So... Shit happens.

That first year of our HSA, my daughter sprained her wrist, which ate up a nice sum (Hospital, X-rays, Durable Medical equip, etc). Luckily it was while at camp and a more rural area with much cheaper medical costs. Then she fractured it. So... More X-rays, hospital visits, durable medical equip, and now back to Dr's in my neck of the woods with high rates. An pediatric orthopedist, more scans, waterproof cast etc. Well, that blew through a huge chunk of the dollars right there in the 1st year. This is also where I became exposed to the dark secret of medical care that there is no way to know what stuff costs. No real way to "shop" around on most things. Call a Dr. to ask what the costs will be for a given procedure and like 99% of the time they can't tell you. For one they don't handle the billing and many times they don't know "your" costs until bills are submitted to insurance. Call the insurance Co and get the same run around. Depends on the order of codes submitted, etc. It's complete BS. Prior to HSA's you never really had exposure. My wife had switched jobs after that HSA year and then we were back to only a PPO option. This time, it wasn't just co-pays. There was a co-insurance component (80/20) for things like hospital visits, out patient procedures, now diagnostics like X-rays, MRI's, etc. So, still have the frustration of trying to make educated medical decisions on things but no way to really know up front what something might cost. Some things are online, like MRI costs and I can see one provider charge $1,400 vs another non-hospital affiliated center at $400. So, I can shop around. But, a Dr. orders a diagnostic test to monitor a certain function and we are back into the abyss of trying to ascertain what this procedure costs and is it possible to do it cheaper through a different trusted provider, who is in-network.

There are also pro's and cons with FSA vs HSA Spending accounts as well. The FSA is use it or loose it vs the HSA which just rolls over each year. HSA's "typically" allow more $$ to be put in the acct vs FSA in a calendar year. I say "typically", since the amount is capped by what you employer will allow. With an FSA you get access to your election on day 1 vs. an HSA which accrues over the 12 months. For example, if you put 3K into an FSA, your contributions are taken out each pay period over the 12 months, but you get access to that 3K on Jan 1. With an HSA, you only get access to the funds at that are currently contributed into the acct at the time you need them. So, if you knew you needed an expensive medical procedure, you can get access to the funds right away in an FSA to pay vs. possibly having to pay out of pocket, under and HSA, and then get reimbursed throughout the year as your contributions hit your HSA account. The latter is what happened to me under the scenario above, when I was under the HSA with my daughters injuries. While an FSA is use it or loose it, the flip side is that if you left you job or got fired you are not on the hook for repayment. Thus, if you had a procedure on Jan 30th, in which you used your entire 3K balance in your FSA account but only contributed $250.00 thus far, then left your employer shortly after, then you don't have to re-pay those funds. I have been here too. A couple of times. This is why employers cap what you are allowed to put in to minimize exposure. Although I don't think the employer takes a hit unless its large and is self funded. Its the company that runs the FSA component. On the flip side, they keep the $$ forfeited that weren't spent within the cal year. An HSA also can charge maintenance fee's, which eat into your balance. Depends on the plan and your employer. We had no fee's when employed but when my wife switched jobs we then started getting assessed annual maintenance fee's.

I am in the middle of doing this again, since we are in open enrollment and have an HSA option. Probably not going that route, given the past and present medical needs in the family. Plus, what is being offered is a head scratcher compared to PPO.
OP | Post 18 made on Sunday October 29, 2017 at 22:46
Mario
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Guys, what a great discussion.
I'm glad I brought it up -- all educated decisions are awesome learning tools.

I would only like to add; don't be ignorant and ASSume that one plan is better than the other.

I don't know your personal situation, so I can't tell you exactly what it'll be like.
I have 'helped' several others with different employers, plans and medical circumstances.
Here is what I have learned: In most, not all but most cases, HSA was better.

For illustrative purposes, lets take a look at my own situation.
Some numbers will be rounded.

- On regular plan, my yearly contributions would be $4,800.
- $25 co-pay per visit.
- Dental and eye care are seperate and not part of this discussion.
or
- HSA plan. First $3,400 I'm responsible 100%. From $3,401-xxx I'm responsible for 40% up to max of $5,000

Based on that, it looks like I could be saving $200/yr with regular insurance.

Here is the kicker though:
- If I don't use doctors at all in a given year, I still put out $4,800 and got 'nothing' in return.
- If I do use a doctor, I have to pay $25 co-pay each visit. 8 doctor visits is my break even point. 9th visit, I'm loosing money again.
- HSA with 5-10 visits a year with average cost of $150/visit is still only ~$750-$1,500 per year, vs. standard insurance $4,800+(10*$25)=$5,050.
- HSA in my above example allows $6,900 contribution with max out of pocket expenses of $5,000 means that I will have a positive balance of $1,900 each year.
- Any balance over $1,000 can be invested.
- As long as HSA and it's investments are used for medical expenses (today or during retirement), contributions and distributions are tax free.
- Remember I said that dental and eye wasn't part of my medical plan? It's true, it's not. But guess what? It is a medical expense, which means I can pay for it with my HSA credit card.
Post 19 made on Sunday October 29, 2017 at 22:57
Fins
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But what happens when those surprises that we all always think only happen to other people pop up? Say, like when you had your accident, if you only had the HSA for a few years, would you have been covered? This seems like a pretty big gamble, at least until you get the investment part built up to a sizable amount. Like at least $200k.
Civil War reenactment is LARPing for people with no imagination.

OP | Post 20 made on Sunday October 29, 2017 at 22:59
Mario
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Someone mentioned that they switched to HSA and had medical event before HSA balance could cover it all.
As it happens, so did we.
We switched to HSA in Jan. and in Feb. my wife needed her first back surgery.
That surgery would max us out for the year, meaning anything else during that year was going to be covered 100%.
Great, but what about that surgeon that's asking for a bunch of money that we won't have until HSA contributions catch up (about 8+ months).
No problem. I called doctor's billing department, explained that IRS won't let us make any additional contributions due to yearly maximums and that the money would be regularly deposited every 2 weeks. They were more than fine with setting us up on automated payment plan. No negative feedback to credit bureau, no penalties or interest charged.


I have since learned that I could have simply lied to my HSA people and tell them that my paycheck is changing from bi-weekly payment to a monthly one (salary), or even quarterly one.
Since they calculate maximum yearly contributions paycheck deductions based on number of paycheck a year, stating that I only get 12 paychecks a year vs. 26 (biweekly) ones, means that my paycheck deductions can be higher, I max out sooner, my investments are funded that much sooner.
Now, I do have to remember to change/stop my deductions when I reach yearly maximum, although this year they stopped it for me automatically, so there is that.
Post 21 made on Sunday October 29, 2017 at 23:30
Fins
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I’m not following you. What’s covering you for the rest of the year after you max out the HSA?
Civil War reenactment is LARPing for people with no imagination.

OP | Post 22 made on Monday October 30, 2017 at 02:39
Mario
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On October 29, 2017 at 23:30, Fins said...
I’m not following you. What’s covering you for the rest of the year after you max out the HSA?

For MY 2017 health plan:
Max out of pocket for MY HDHP plan is $5,000. Anything over $5k is covered at 100%, with no deductibles, no co-pays, etc.
Max allowable contributions for 2017 is $6,750.
For my plan there is no way to max out HSA and still be out.
As long as my plan doesn't change, I will always have money left over.
Best case scenario I'm banking all $6,750 each year.
Worst case scenario I'm banking $1,750 ($6750-$5000), and that's before any RoI kicks in.

I get that may not be a situation for everyone.
According to this website: [Link: shrm.org] some plans may have family HDHP max out of pocket at a whooping $13,100.
With max allowable IRS contributions of $6,750 you're absolutely right, you could be in the red.
Post 23 made on Monday October 30, 2017 at 09:31
highfigh
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Insurance companies negotiate with doctors and hospitals and we can as individuals, too. They don't need to charge so much, but negotiations and the staff to handle the admin cost so much they're forced to ask for more and accept a lower settlement. A regional radio talk show host told of a doctor who does carpal tunnel surgeries and, rather than charge the rate shown to the insurance companies, he accepts far less if the patient pays out of pocket. The savings can be in the ~60% range.

This whole thing isn't about health care; we can all get that but it's about paying the insurers to cover our medical needs- that's why I have huge problems with it.

And to think people bitch about us, as the 'middle man', making a profit on what we sell..... We make money and it puts food on our table, they insurance companies make a profit and pay their investors, build new headquarters and pay huge bonuses. No wonder it costs so much.
My mechanic told me, "I couldn't repair your brakes, so I made your horn louder."
Post 24 made on Monday October 30, 2017 at 15:53
imt
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On October 30, 2017 at 02:39, Mario said...
For MY 2017 health plan:
Max out of pocket for MY HDHP plan is $5,000. Anything over $5k is covered at 100%, with no deductibles, no co-pays, etc.
Max allowable contributions for 2017 is $6,750.
For my plan there is no way to max out HSA and still be out.
As long as my plan doesn't change, I will always have money left over.
Best case scenario I'm banking all $6,750 each year.
Worst case scenario I'm banking $1,750 ($6750-$5000), and that's before any RoI kicks in.

I get that may not be a situation for everyone.
According to this website: [Link: shrm.org] some plans may have family HDHP max out of pocket at a whooping $13,100.
With max allowable IRS contributions of $6,750 you're absolutely right, you could be in the red.

Mario,

One thing I see missing from your previous comparison of PPO vs HDP/HSA is the premium cost for the HDP/HSA in the first place.

You mention in your previous post that for "paycheck" amounts you instruct your HSA people how your pay periods are. Since you are on your own I believe, no employees, I assume you aren't getting a paycheck correct? If so, it would be the payroll company that would then handle the deduction and couldn't fudge it anyway. Yes if you changed to monthly or quarterly, your amounts would be larger but you wouldn't get you $$ faster. If anything you would get them slower. Pay is never in advance. Its always in arrears (after you worked the hrs, week, bi-weekly, month etc.) Getting paid weekly means you get contributions into your HSA on a weekly basis, although smaller. Monthly means you have to wait 4-5 weeks for the $$ to be in the acct and will be larger (but basically equal to what you would have put away on a weekly paycheck). Now it also depends on if your health dollars are in a fixed acct or some type of investment option. If the latter, you are better off with weekly or bi-weekly, smaller payments, to dollar cost average. Since our contributions are done via my wife's corp employer, the premiums and HSA or FSA contributions are all pre-tax $$. I assume the same is the case with your premiums and HSA $$?
OP | Post 25 made on Monday October 30, 2017 at 22:21
Mario
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On October 30, 2017 at 15:53, imt said...
Mario,

One thing I see missing from your previous comparison of PPO vs HDP/HSA is the premium cost for the HDP/HSA in the first place.

You mention in your previous post that for "paycheck" amounts you instruct your HSA people how your pay periods are. Since you are on your own I believe, no employees, I assume you aren't getting a paycheck correct? If so, it would be the payroll company that would then handle the deduction and couldn't fudge it anyway. Yes if you changed to monthly or quarterly, your amounts would be larger but you wouldn't get you $$ faster. If anything you would get them slower. Pay is never in advance. Its always in arrears (after you worked the hrs, week, bi-weekly, month etc.) Getting paid weekly means you get contributions into your HSA on a weekly basis, although smaller. Monthly means you have to wait 4-5 weeks for the $$ to be in the acct and will be larger (but basically equal to what you would have put away on a weekly paycheck). Now it also depends on if your health dollars are in a fixed acct or some type of investment option. If the latter, you are better off with weekly or bi-weekly, smaller payments, to dollar cost average. Since our contributions are done via my wife's corp employer, the premiums and HSA or FSA contributions are all pre-tax $$. I assume the same is the case with your premiums and HSA $$?

My standard PPO premiums would be $4,800.

HSA administrator talks to payroll company about how much they want to take per paycheck.
Telling HSA that I get paid monthly vs. bi-weekly means that they (HSA admin) take my max (because I told them I want to contribute max) allowed amount, in my case $6,750 for 2017 and divide it by # of paychecks.
So bi-weekly paychecks = 26
Monthly paychecks = 12
$6,750/26=$259.62
$6,750/12=$562.50

Telling them I get paid monthly expedites my deductions/contributions.
Since I'm investing my 'excess' balance, the sooner I can make deposits, the sooner the money is there to grow.

BTW, in my case, I maxed out my yearly contributions early. HSA admin contacted payroll and asked them to stop making contributions due to max being reached. Same thing happened for 401K, which is managed by another company.
This is something that apparently happens regularly with companies that pay out performance and/or quarterly bonuses.
Amounts are figured at beginning of the year with regular paychecks being the only things figured in. Extra deposits/bonuses/expense reimbursements that are not attached to regular paychecks speed up deposits and people max out their IRS allowed contributions somewhere in late Oct. or Nov.
Post 26 made on Tuesday October 31, 2017 at 00:17
Fins
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On October 30, 2017 at 02:39, Mario said...
For MY 2017 health plan:
Max out of pocket for MY HDHP plan is $5,000. Anything over $5k is covered at 100%, with no deductibles, no co-pays, etc.
Max allowable contributions for 2017 is $6,750.
For my plan there is no way to max out HSA and still be out.
As long as my plan doesn't change, I will always have money left over.
Best case scenario I'm banking all $6,750 each year.
Worst case scenario I'm banking $1,750 ($6750-$5000), and that's before any RoI kicks in.

I get that may not be a situation for everyone.
According to this website: [Link: shrm.org] some plans may have family HDHP max out of pocket at a whooping $13,100.
With max allowable IRS contributions of $6,750 you're absolutely right, you could be in the red.

OK, now I follow you. You still have to pay for the HDHP also. You just get to bank the deductible if you don’t spend it.
Civil War reenactment is LARPing for people with no imagination.

OP | Post 27 made on Tuesday October 31, 2017 at 03:11
Mario
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On October 31, 2017 at 00:17, Fins said...
OK, now I follow you. You still have to pay for the HDHP also. You just get to bank the deductible if you don’t spend it.

Yes & No. It's only costing you money if you go to the doctors.
You still get the same buying power with lower negotiated rates.

If you have a unicorn year and don't got to a single doctor, with PPO you're still paid premiums and didn't get to keep anything.
With HSA, every dime you put in the account is yours to keep, invest or spent on Motrin or condoms, tax free going in and coming out. (yeah, I know what I did there :-) )
Post 28 made on Tuesday October 31, 2017 at 14:57
Fins
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On October 31, 2017 at 03:11, Mario said...
Yes & No. It's only costing you money if you go to the doctors.
You still get the same buying power with lower negotiated rates.

If you have a unicorn year and don't got to a single doctor, with PPO you're still paid premiums and didn't get to keep anything.
With HSA, every dime you put in the account is yours to keep, invest or spent on Motrin or condoms, tax free going in and coming out. (yeah, I know what I did there :-) )

But aren’t you still paying a premium for the HDHP?
Civil War reenactment is LARPing for people with no imagination.

OP | Post 29 made on Wednesday November 1, 2017 at 00:26
Mario
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On October 31, 2017 at 14:57, Fins said...
But aren’t you still paying a premium for the HDHP?

Nope.
If I don't go to a doctor, any and all contributions made to HSA, 100% IS mine.
In other words, if I was stupid enough, I could put $0.00 into my HSA, and as long as I and my family didn't see any doctors that year it would be literally free.

I realize that this is on corporate plans where the employer pays into the program and as such may not be available to small, one man shops.
In my experience, the switch from whatever premium you'll pay into PPO are lateral into HDHP, with additional bonuses of USA options.
The reason insurance companies do it, and it was mentioned by someone else above, it's to empower people to make smarter (less expensive) decisions about not rushing to ER with a headache or a cough.

Last edited by Mario on November 1, 2017 00:58.
Post 30 made on Wednesday November 1, 2017 at 13:32
imt
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On October 30, 2017 at 22:21, Mario said...
My standard PPO premiums would be $4,800.

HSA administrator talks to payroll company about how much they want to take per paycheck.
Telling HSA that I get paid monthly vs. bi-weekly means that they (HSA admin) take my max (because I told them I want to contribute max) allowed amount, in my case $6,750 for 2017 and divide it by # of paychecks.
So bi-weekly paychecks = 26
Monthly paychecks = 12
$6,750/26=$259.62
$6,750/12=$562.50

Telling them I get paid monthly expedites my deductions/contributions.
Since I'm investing my 'excess' balance, the sooner I can make deposits, the sooner the money is there to grow.

BTW, in my case, I maxed out my yearly contributions early. HSA admin contacted payroll and asked them to stop making contributions due to max being reached. Same thing happened for 401K, which is managed by another company.
This is something that apparently happens regularly with companies that pay out performance and/or quarterly bonuses.
Amounts are figured at beginning of the year with regular paychecks being the only things figured in. Extra deposits/bonuses/expense reimbursements that are not attached to regular paychecks speed up deposits and people max out their IRS allowed contributions somewhere in late Oct. or Nov.

The $4,800 is the annual cost of the PPO (Non-HSA Plan) correct? What is the annual cost of the HSA plan? Does the HSA have both in Network and out of network benefits?

Monthly would get you a little additional dollars in their sooner. Well at least for the first few months. Then you will start catching up as the year progresses with Bi-weekly or weekly. Since some months have 5 weeks, it sort of catches things up every few months and then repeats.

Are you solo (no employees)? If on your own, you then "should" be able to do a lump sum if you really wanted and put all the $$ in there on Jan 1. You should ask. Maybe just send them a check vs. having to have it deducted through your paycheck. Doesn't matter where the $$ come from as long as you don't exceed the IRS limits for the year.
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