Choosing My Health Insurance
It’s that time of year… benefits enrollment. Let me preface this post by saying how grateful I am to work for a company that provides comprehensive benefits, because that’s not always guaranteed when living and working in the United States. Health insurance in particular can be very expensive if you don’t have an employer to help subsidize the cost. I’m thankful that my company provides health insurance at an “affordable” cost.
So, the time has come to select my health insurance plan for next year, and I spent a couple hours yesterday comparing the costs to ensure I felt good about the plan I was choosing. The two plans I was debating between were a PPO plan and a Health Plus Savings Plan (HPSP). My company had recommended the HPSP, which includes a Health Savings Account (HSA), but this account had a higher deductible which concerned me a bit. They claimed the total costs would ultimately be lower, but I wanted to check out the details for myself. I ended up created a spreadsheet so I could compare all the costs.
So, there are a lot of details in that spreadsheet, but let me tell you the takeaways.
Even though the deductible is higher for the HPSP, overall the costs for the HPSP are lower.
With the higher deductible, there are more up-front out of pocket costs, but there are savings with the monthly / annual premium costs.
If you only spend the minimum each year (premium payments only), there are savings with the HPSP.
If you spend the maximum each year (out-of-pocket max), there are savings with the HPSP.
Where the HPSP seems to be more expensive than the PPO, is if you are paying your premium + deductible but haven’t yet hit your out-of-pocket max. But, in this scenario, there is a HSA that helps offset those costs.
The great thing about an HSA is that this is a pre-tax savings account where you and your employer can contribute money to cover health-care related expenses. In my case, my employer contributes $600 a year to my HSA for in-network care, and $900 to cover out-of-network expenses. Additionally, this money can be rolled over each year and the money doesn’t expire. I had a Flexible Spending Account (FSA) last year, which is a similar pre-tax health-care savings account, but only a portion of those funds will roll over each year, which is not ideal to manage.
When taking all of this into consideration, the savings for the HPSP seemed significant. I’m glad I went through the exercise to see all of the scenarios; I’m very data driven so I needed to see all of the numbers compared in detail.
This excel file can be used to plug in numbers for other health plan scenarios. If interested, I can share those details and a short tutorial on how to use. I’d also be happy to review any of this terminology, because I know it has been a learning process for myself. Let me know your thoughts!
