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Message
Open Enrollment Question: HDHP vs PPO
Posted on 11/8/22 at 7:53 pm
Posted on 11/8/22 at 7:53 pm
Hello All,
Open enrollment has started at my company and I am debating between maintaining my HDHP plan (with max contributions to my HSA) vs switching to a PPO plan for the year.
The primary driver behind this is due to the fact that I will likely have to have a "minor" surgery in 2023 and I'm not sure if it's worth switching out of my HDHP for the PPO.
In looking at both plans they both appear to cover 20%, after deductible for Outpatient Hospital Services - up to max out of pocket.
The HDHP has a $3K deductible with $5K max out of pocket and the PPO has a $2500 deductible with $5k max. What's the best way for me to further compare the two to determine which one I should sign up for given the fact I will likely have to have this surgery? Any other factors I need to take into account? My typical plan is to max out the HSA long term but not sure if it'd be worth switching up just for this year. TIA
Open enrollment has started at my company and I am debating between maintaining my HDHP plan (with max contributions to my HSA) vs switching to a PPO plan for the year.
The primary driver behind this is due to the fact that I will likely have to have a "minor" surgery in 2023 and I'm not sure if it's worth switching out of my HDHP for the PPO.
In looking at both plans they both appear to cover 20%, after deductible for Outpatient Hospital Services - up to max out of pocket.
The HDHP has a $3K deductible with $5K max out of pocket and the PPO has a $2500 deductible with $5k max. What's the best way for me to further compare the two to determine which one I should sign up for given the fact I will likely have to have this surgery? Any other factors I need to take into account? My typical plan is to max out the HSA long term but not sure if it'd be worth switching up just for this year. TIA
4
Posted on 11/8/22 at 8:12 pm to BigOrangeVols
I just did a spreadsheet to evaluate something very similar, except I compared an HMO vs PPO.
Do you know the estimated cost for the surgery? Will it hit the $5k out of pocket ($15k total cost)?
In general, the coverages are the same at 20% and the max out of pocket is $5k. So you will only have a difference of $600 at most for the medical expenses ($500 + 20% of $500). What is the total difference in premiums? Any company contribution to HSA?
The HSA tax savings could easily offset this $600 if you are maxing out the contribution.
However, one thing to keep in mind against other plans, while the HSA tax savings are nice, are you maxing all other available tax saving vehicles (401k, Roth, etc)? If you’re diverting funds from one tax vehicle to another, you can’t really consider the tax savings as “additional” savings that help offset the costs of the plan.
Do you know the estimated cost for the surgery? Will it hit the $5k out of pocket ($15k total cost)?
In general, the coverages are the same at 20% and the max out of pocket is $5k. So you will only have a difference of $600 at most for the medical expenses ($500 + 20% of $500). What is the total difference in premiums? Any company contribution to HSA?
The HSA tax savings could easily offset this $600 if you are maxing out the contribution.
However, one thing to keep in mind against other plans, while the HSA tax savings are nice, are you maxing all other available tax saving vehicles (401k, Roth, etc)? If you’re diverting funds from one tax vehicle to another, you can’t really consider the tax savings as “additional” savings that help offset the costs of the plan.
This post was edited on 11/8/22 at 10:56 pm
Posted on 11/9/22 at 12:00 am to BigOrangeVols
Stick with the HDHP as your premium is probably cheaper than PPO thus will cover some of the out of pocket expense.
Posted on 11/9/22 at 8:56 am to BigOrangeVols
If you factor in the premium cost and add it to the max out of pocket you will see your maximum exposure. HDHP is usually better financially even if it feels more expensive when you pay the doctor. And you get to keep the HSA contributions if not used.
Posted on 11/9/22 at 4:18 pm to LSUtigerME
Not yet, consultation is after open enrollment ends.. but curious, what do you mean by, “$15k total cost?”
Currently I max out my Roth, HSA, and employee match on 401K - any pay bumps in the future will result in increased contributions to the 401k.
quote:
Do you know the estimated cost for the surgery? Will it hit the $5k out of pocket ($15k total cost)?
Currently I max out my Roth, HSA, and employee match on 401K - any pay bumps in the future will result in increased contributions to the 401k.
Posted on 11/9/22 at 7:34 pm to BigOrangeVols
quote:
what do you mean by, “$15k total cost?”
You have a $2500 deductible with 20% co-insurance coverage.
To reach your out of pocket limits of $5k, the total cost of the operation would need to be $15,000.
$2500 + 20% x $12,500 = $5,000.
Posted on 11/9/22 at 8:00 pm to BigOrangeVols
If you have kids, you need to frame this in terms of understanding small children go to the Dr a lot.
Let me help you out...we had 23 office visits the first year of my son's life. That doesn't count all the additional lab work, shots, meds, etc.
That's $73.00 a visit and we had HDHP. We saved no money and did nothing but rack up a bill and all that HSA money got ate the frick up.
The PPO plan I'm on now is $245 a check for me and the kids...$0 for office visits.
If it's just you and the wife, you can probably slide with a HDHP. With small children or sick kids, it's a straight loser.
Let me help you out...we had 23 office visits the first year of my son's life. That doesn't count all the additional lab work, shots, meds, etc.
That's $73.00 a visit and we had HDHP. We saved no money and did nothing but rack up a bill and all that HSA money got ate the frick up.
The PPO plan I'm on now is $245 a check for me and the kids...$0 for office visits.
If it's just you and the wife, you can probably slide with a HDHP. With small children or sick kids, it's a straight loser.
Posted on 11/9/22 at 8:03 pm to DiamondDog
You also need to verify if the networks are the same.
The PPO BCBS network is not used for our HDHP and HMO plans. There's something called core and it drastically reduces in-network provider list.
The PPO BCBS network is not used for our HDHP and HMO plans. There's something called core and it drastically reduces in-network provider list.
Posted on 11/9/22 at 10:04 pm to DiamondDog
quote:
Let me help you out...we had 23 office visits the first year of my son's life. That doesn't count all the additional lab work, shots, meds, etc.
Not being hateful at all but did your kid have a significant health issue? My son had one visit outside of the regular well-checks his first year of life. Babies do have multiple doctor visits their first year but if they are the scheduled well-checks and vaccines, those are all covered at no cost as preventive care in an HDHP. Now if you have a lot of sick visits and need additional testing, labs, meds, etc, then yes it will add up quickly.
OP, does your employer contribute to your HSA at all? My company puts $1500 into every employee’s HSA every year, $2,250 if they have the family plan. That contribution would more than cover the difference in plans in your case, but not every company contributes.
This post was edited on 11/9/22 at 10:07 pm
Posted on 11/9/22 at 10:44 pm to Lightning
First time parents, day care and catching everything under the sun.
I just wanted to add some perspective to the discussion since we were on a HDHP and went to PPO
I just wanted to add some perspective to the discussion since we were on a HDHP and went to PPO
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