HSA v. PPO

if you are going to have another kid, go ppo bc of lower deductible and out of pocket maximum.

that HSA seed is solid... If ya'll are healthy, I'd go that route, max the HSA, but don't use it ...Save your HSA as another retirement vehicle.

New wrinkle....I read that during the open enrollment period I can make a contribution. Two questions:

1. Can I designate the contribution for 2014, or since the plan will not be in effect until 1/1/15 will it automatically be designated as a contribution for 2015?


2. I am self employed. If I make contributions to the HSA from my business accounts will I still be exempt from FICA or is this not possible because the HSA is provided through my wife's employer?

Thanks for this thread. It led me to look at our new options for 2015 and I am stoked at what I discovered.

$57 monthly premium (formerly $140)
$2000 deductible
$775 employer match on HSA

So I will be contributing $83/month (the difference) to essentially another investment vehicle while my employer invests $775 for me...and I get to put it in a fidelity fund rather than a .5% savings account.

This is essentially another Traditional IRA

quote:

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ETA: Also remember there is a yearly contribution limit. If you exceed that limit you will be charged income tax and a 6% penalty.

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$3350 for an individual
$6650 for for a family

ETA:
looks like he contributes $2400/year.
bwm14: any employer match on the HSA?

quote:

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This is essentially another Traditional IRA

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Except if it is used for medical related purposes it's actually like a Roth IRA as withdrawals are tax free.

That PPO doesn't look all that great.

When dealing with families with small children, generally I always suggest going away from an HDHP, because, kids get sick, fall out of trees, etc. But in your case, I'd look hard at that HSA, because the PPO doesn't look that much better, and the premium costs is 2.5 times as much. I don't think the PPO looks 2.5 times better benefits than the HDHP.

If you get the $1,500 in HSA money from your employer, and you put in your HSA the $147/biweekly that you are not spending on the PPO, that gives you HSA contributions of $5,322. You are well on your way to maxing out the HSA at that point. That's also enough to cover your entire deductible (if you needed to use that money and could not use outside funds) and a good chunk of your co-pays.

Look at your worst-case scenerio - you hit out of pocket max. With a PPO, that will cost you $4,000 on top of premiums. With the HDHP, the out of pocket max is $7,500, but, $5,322 of that is being covered by employer contributions and money you would spend on PPO premiums over and above the HDHP premiums. Thus, really, your OOP is only 7500 - 5322 or 2,178.

What sucks, and this happened to me a few years ago, is if you get caught before your HSA has a change to pile up cash. The only plan option we had was an HDHP, and two months into the plan, my kid had $3,000 of medical bills and we had a $3,500 family deductible. We had nowhere near that amount yet saved up in the HSA. If the situation had occured 3 months earlier when we had an HMO, our cost would have been $250.

That's the thing you need to watch out for with an HDHP - a expensive medical event before you've had a chance to pile up some HSA cash.