First, I'm glad the investment benefits of an HSA were mentioned. Many of my coworkers over the years have had HSA accounts and were surprised when I told them they can invest in mutual funds through their HSA and potentially grow, tax free, any "extra" cash that they don't spend on medical expenses that year (although most HSA operators require a minimum amount, like $2K, in order to invest). Second, I can attest to what Sarah said about a HDHP causing behavior change where you resist getting medical treatment. I've been on HDHP plans through my employers for the past 10 years or so and many times, whether I've had strep or a severely sprained ankle, I've intentionally not gone to the doctor because I expected that I'd be looking at a $200-$400 bill to tell me what I already knew. If I had a $20 co-pay, I would have definitely gone to the doctor, just to make sure I didn't incorrectly self-diagnose. Obviously this creates some unhealthy habits and would be even worse if I were living on a tight budget. Long story short, HDHPs and HSAs together are a cost-effective option and have saved me a lot of money in the long run, but only as long as you don't have any health issues and avoid needing medical care. It's worked well for me, but I still hate it. *Side note, I'm annoyed when people say "the hospital billed me $5,000 for an MRI", but when you look at what your insurance company actually paid, they usually refuse to pay what the hospital charges and end up paying like $500. What a dumb process our country has for medical bills. Can you imagine getting the check for dinner and it's $800, but you tell the waiter "I never pay that much for that meal, I'll give you $120" and they say "fine, we were expecting that amount anyway"?
I had a low premium high deductible plan with an HSA for one year. My employer even seeded the HSA account with a generous wellness benefit. A couple trips to urgent care, regular allergy shots and two pharmacy meds cleared that account by the end of the year. Paying high premiums can be painful but it’s so nice to have access to healthcare when I need it without financial worries.
Hi Madeline! Thanks so much for sharing about your experience. Just a few trips can really wipe out any progress, so I really agree that it's nice to have access when we need it... if only there was a better way ;).
I have had a great experience with a HDHP. What I did was take the total amount I put into my PPO not including co pays and that allowed me to max my HSA every year. Your argument of care being expensive. In my PPO I had a 30 co pay to see a Dr. I would then receive bills for additional costs form my DR which made managing my expenses difficult. In the HDHP it cost me 89 to see my PCP with no additional bills. I had a heart bypass and my wife has had a kidnet transplant while on this plan. I am on medications as is my wife, the majority are covered and I only hit the deductible twice in the last 10 + years. On the HSA I now have 10's of thousands of dollars built up that would have went to premiums in the PPO. My thought is I kept money in my pocket that would have went to those premiums and that is not factoring in co pays and additional bills from doctors. To my the HDHP was financially better to me.
Thanks so much for sharing about your experiences, Bob! Really glad to hear that has worked out for you so well long-term and glad you and your wife are doing well. It really comes down to your plan options and crunching the numbers!
I don't entirely agree with the idea that using HSA money in the same year isn't advantageous. Yes it doesn't get to grow but you're still saving yourself money on the front end from taxes. This is especially true (but very niche) for fertility treatments that aren't typically covered by ANY insurance policies and are 100% OOP. Maxing out the HSA and using it for that will save hundreds
Thanks, Stacie! That's a great tip for anyone looking at fertility treatments -- it's important to run the numbers AND your healthcare needs to see which is best.
I had a choice between Kaiser, an HDHP PPO, and a PPO. I decided to go with Kaiser - I like the simplicity of everything being in one roof, and living on a world where I walk in and out of the doctor’s office and not thinking about cost. If I switch to a HDHP, I will do math and run numbers, but it seems like a more complicated approach. There’s uncertainty on how much you will pay for the year. With Kaiser the cost is most predictable. That $8k o would have invested in the HSA - I can put it in Betterment. It’s not triple tax savings but it’s still making money at the end of the day - and it’s liquid.
I think this great! Benefits are confusing and most people need more education to effectively use their benefits. A few things though. That is an old view of HMOs, most HMOs especially on the one of largest medical providers - UHC - do not function that way anymore. Now HMO typically means there is no out of network coverage. You are free to see anyone in network without permission. As a benefits manager I spend a lot of time trying to educate employees about HMOs not having referrals. Also, its not typically co-pay vs coinsurance. Most plans have both. In the case of PPOs, POSs or HMOs copays will apply before the deductible. Thats important, you are not without insurance prior to meeting your deductible. The view that copays come after the deductible typically only applies to HDHPs.
Another great episode! I've been purchasing health insurance for many, many years, and I still get confused when confronted with the options. Thanks for shedding some light on this subject and making me feel a bit more comfortable in my decision-making.
My high deductible plan has a $0 premium and my family deductible is less than what I would pay if I was on the PPO on plan. (HDHP Deductible is $3500, PPO premium $300 monthly). So it seems to make more sense to me to just spend the money upfront on the deductible rather than paying it towards the premium and now putting the $300 away each month in the HSA. The true struggle I have at the moment is my baby is due Jan 11 and I have no idea what is covered or not during the birth process.
Hi Faith! I can understand -- that makes a lot of sense! There are so many plans out there that it's always hard to know unless we run the numbers upfront for ourselves and it seems like you may have made the right decision! I would give your insurance provider or employer rep a call and ask for specifics on costs re: birth (and congratulations!).
You'd have to run the numbers to see what the Healthcare Marketplace offers you but otherwise most of this advice would be the same -- really comes down to your coverage options!
First, I'm glad the investment benefits of an HSA were mentioned. Many of my coworkers over the years have had HSA accounts and were surprised when I told them they can invest in mutual funds through their HSA and potentially grow, tax free, any "extra" cash that they don't spend on medical expenses that year (although most HSA operators require a minimum amount, like $2K, in order to invest).
Second, I can attest to what Sarah said about a HDHP causing behavior change where you resist getting medical treatment. I've been on HDHP plans through my employers for the past 10 years or so and many times, whether I've had strep or a severely sprained ankle, I've intentionally not gone to the doctor because I expected that I'd be looking at a $200-$400 bill to tell me what I already knew. If I had a $20 co-pay, I would have definitely gone to the doctor, just to make sure I didn't incorrectly self-diagnose. Obviously this creates some unhealthy habits and would be even worse if I were living on a tight budget.
Long story short, HDHPs and HSAs together are a cost-effective option and have saved me a lot of money in the long run, but only as long as you don't have any health issues and avoid needing medical care. It's worked well for me, but I still hate it.
*Side note, I'm annoyed when people say "the hospital billed me $5,000 for an MRI", but when you look at what your insurance company actually paid, they usually refuse to pay what the hospital charges and end up paying like $500. What a dumb process our country has for medical bills. Can you imagine getting the check for dinner and it's $800, but you tell the waiter "I never pay that much for that meal, I'll give you $120" and they say "fine, we were expecting that amount anyway"?
I had a low premium high deductible plan with an HSA for one year. My employer even seeded the HSA account with a generous wellness benefit. A couple trips to urgent care, regular allergy shots and two pharmacy meds cleared that account by the end of the year. Paying high premiums can be painful but it’s so nice to have access to healthcare when I need it without financial worries.
Hi Madeline! Thanks so much for sharing about your experience. Just a few trips can really wipe out any progress, so I really agree that it's nice to have access when we need it... if only there was a better way ;).
I have had a great experience with a HDHP. What I did was take the total amount I put into my PPO not including co pays and that allowed me to max my HSA every year. Your argument of care being expensive. In my PPO I had a 30 co pay to see a Dr. I would then receive bills for additional costs form my DR which made managing my expenses difficult. In the HDHP it cost me 89 to see my PCP with no additional bills. I had a heart bypass and my wife has had a kidnet transplant while on this plan. I am on medications as is my wife, the majority are covered and I only hit the deductible twice in the last 10 + years. On the HSA I now have 10's of thousands of dollars built up that would have went to premiums in the PPO. My thought is I kept money in my pocket that would have went to those premiums and that is not factoring in co pays and additional bills from doctors. To my the HDHP was financially better to me.
Thanks so much for sharing about your experiences, Bob! Really glad to hear that has worked out for you so well long-term and glad you and your wife are doing well. It really comes down to your plan options and crunching the numbers!
I don't entirely agree with the idea that using HSA money in the same year isn't advantageous. Yes it doesn't get to grow but you're still saving yourself money on the front end from taxes. This is especially true (but very niche) for fertility treatments that aren't typically covered by ANY insurance policies and are 100% OOP. Maxing out the HSA and using it for that will save hundreds
Thanks, Stacie! That's a great tip for anyone looking at fertility treatments -- it's important to run the numbers AND your healthcare needs to see which is best.
I had a choice between Kaiser, an HDHP PPO, and a PPO. I decided to go with Kaiser - I like the simplicity of everything being in one roof, and living on a world where I walk in and out of the doctor’s office and not thinking about cost.
If I switch to a HDHP, I will do math and run numbers, but it seems like a more complicated approach. There’s uncertainty on how much you will pay for the year.
With Kaiser the cost is most predictable.
That $8k o would have invested in the HSA - I can put it in Betterment. It’s not triple tax savings but it’s still making money at the end of the day - and it’s liquid.
I think this great! Benefits are confusing and most people need more education to effectively use their benefits. A few things though. That is an old view of HMOs, most HMOs especially on the one of largest medical providers - UHC - do not function that way anymore. Now HMO typically means there is no out of network coverage. You are free to see anyone in network without permission. As a benefits manager I spend a lot of time trying to educate employees about HMOs not having referrals. Also, its not typically co-pay vs coinsurance. Most plans have both. In the case of PPOs, POSs or HMOs copays will apply before the deductible. Thats important, you are not without insurance prior to meeting your deductible. The view that copays come after the deductible typically only applies to HDHPs.
Another great episode! I've been purchasing health insurance for many, many years, and I still get confused when confronted with the options. Thanks for shedding some light on this subject and making me feel a bit more comfortable in my decision-making.
Happy this was helpful, Scott! I really appreciate you taking the time to watch.
My high deductible plan has a $0 premium and my family deductible is less than what I would pay if I was on the PPO on plan. (HDHP Deductible is $3500, PPO premium $300 monthly). So it seems to make more sense to me to just spend the money upfront on the deductible rather than paying it towards the premium and now putting the $300 away each month in the HSA. The true struggle I have at the moment is my baby is due Jan 11 and I have no idea what is covered or not during the birth process.
Hi Faith! I can understand -- that makes a lot of sense! There are so many plans out there that it's always hard to know unless we run the numbers upfront for ourselves and it seems like you may have made the right decision! I would give your insurance provider or employer rep a call and ask for specifics on costs re: birth (and congratulations!).
@@MoneywithKatie I did.. they truly cannot tell you. Just adds to the issues with our healthcare system. Lol. Appreciate your content and response!
Excellent information. Thank you.
Thank you, Leslie!
Are you going to talk about this for people who’s employer doesn’t offer healthcare plans? Or does this all still apply?
You'd have to run the numbers to see what the Healthcare Marketplace offers you but otherwise most of this advice would be the same -- really comes down to your coverage options!
FYI, we do not live in a democracy. The United States is a Constitutional Republic.