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Started By
Message
Confused on best medical plan and HSA investing.
Posted on 12/4/23 at 1:33 pm
Posted on 12/4/23 at 1:33 pm
Hey everyone. Yall have been extremely helpful with opinions and analyses.
I started an exciting role with a new company and open enrollment is underway. I have my first kid due at the end of January (less than 2 months away). In your opinion, what is the best medical plan for my family (me, wife, and baby in January).
$1,000.00 PPO Plan (in-network)
- Deductible: Individual = $1,000.00 Family = $2,000.00
- Out of Pocket Max: Individual = $2,5000.00 Family = $5,000.00
- Biweekly premium: Family = $439.00
$3,000.00 HSA Plan (in-network)
- Deductible: Individual = $3,000.00 Family = $6,000.00
- Out of Pocket Max: Individual = $5,000.00 Family = $10,000.00
- Biweekly premium: Family = $226.00
$6,000.00 HSA Plan (in-network)
- Deductible: Individual = $6,000.00 Family = $12,000.00
- Out of Pocket Max: Individual = $6,000.00 Family = $12,000.00
- Biweekly premium: Family = $0.00
The company does not contribute to an HSA. Should I max my own contribution?
I started an exciting role with a new company and open enrollment is underway. I have my first kid due at the end of January (less than 2 months away). In your opinion, what is the best medical plan for my family (me, wife, and baby in January).
$1,000.00 PPO Plan (in-network)
- Deductible: Individual = $1,000.00 Family = $2,000.00
- Out of Pocket Max: Individual = $2,5000.00 Family = $5,000.00
- Biweekly premium: Family = $439.00
$3,000.00 HSA Plan (in-network)
- Deductible: Individual = $3,000.00 Family = $6,000.00
- Out of Pocket Max: Individual = $5,000.00 Family = $10,000.00
- Biweekly premium: Family = $226.00
$6,000.00 HSA Plan (in-network)
- Deductible: Individual = $6,000.00 Family = $12,000.00
- Out of Pocket Max: Individual = $6,000.00 Family = $12,000.00
- Biweekly premium: Family = $0.00
The company does not contribute to an HSA. Should I max my own contribution?
8
Posted on 12/4/23 at 1:35 pm to MoistureintheOyster
What are the coinsurance rates?
Posted on 12/4/23 at 1:39 pm to MoistureintheOyster
If you can afford to contribute to HSA and pay medical expenses out of pocket that's ideal way to go. Keep HSA invested as it is triple tax advantaged. Save reciepts and withdraw tax/penalty free tears from now.
Posted on 12/4/23 at 1:41 pm to MoistureintheOyster
quote:
The company does not contribute to an HSA. Should I max my own contribution?
You should always max and should also try not to use the HSA, just keep the receipts.
Posted on 12/4/23 at 1:47 pm to MoistureintheOyster
What do you mean by the $3,000 vs $6,000 HSA plan? I see your company doesn’t contribute (most don’t), but absolutely yes you should max it out.
The max for family is $8,300 next year (so $319 biweekly). Seems like a lot, but your contributions are tax free and you can use them immediately to pay for your medical expenses.
Someone correct me if I’m wrong, but the tax laws for HSAs state that you have to have the HSA open by the time the medical expenses are incurred. Not necessarily funded. This means that if your HSA is open through your work on January 1st, and you incur a $5,000 medical bill for your child’s delivery January 15th, you’d be able to set up a payment plan with the hospital and pay the expenses as you contribute to your HSA throughout the year.
Again, I’m not totally confident in that. Please do your research.
The max for family is $8,300 next year (so $319 biweekly). Seems like a lot, but your contributions are tax free and you can use them immediately to pay for your medical expenses.
Someone correct me if I’m wrong, but the tax laws for HSAs state that you have to have the HSA open by the time the medical expenses are incurred. Not necessarily funded. This means that if your HSA is open through your work on January 1st, and you incur a $5,000 medical bill for your child’s delivery January 15th, you’d be able to set up a payment plan with the hospital and pay the expenses as you contribute to your HSA throughout the year.
Again, I’m not totally confident in that. Please do your research.
Posted on 12/4/23 at 2:24 pm to MoistureintheOyster
quote:
$3,000.00 HSA Plan (in-network) - Deductible: Individual = $3,000.00 Family = $6,000.00 - Out of Pocket Max: Individual = $5,000.00 Family = $10,000.00 - Biweekly premium: Family = $226.00 $6,000.00 HSA Plan (in-network) - Deductible: Individual = $6,000.00 Family = $12,000.00 - Out of Pocket Max: Individual = $6,000.00 Family = $12,000.00 - Biweekly premium: Family = $0.00
Looks like the lack of premiums for the $6k plan more than pays for the $3k increase in deductible
Posted on 12/4/23 at 2:27 pm to MoistureintheOyster
If you have a qualified health plan that allows you to contribute to an hsa, you’ll get that money contributed as a tax deduction (3850 for 2023)
Look up the limit for 2024 hsa deductible. I think it was 1500 for an individual in 2023. Your hsa 3000 plan sounds like it qualifies.
Personally, I use lively as my hsa. My Contributions get deposited with each pay check. Lively allows me to set a limit of how much I want to keep in the account and the rest gets sent to a Schwab Hsa investing account.
Pretty simple. Just keep your out of pocket maximum in the Hsa and invest the rest. Might take a few years to get there but smooth sailing after that.
Look up the limit for 2024 hsa deductible. I think it was 1500 for an individual in 2023. Your hsa 3000 plan sounds like it qualifies.
Personally, I use lively as my hsa. My Contributions get deposited with each pay check. Lively allows me to set a limit of how much I want to keep in the account and the rest gets sent to a Schwab Hsa investing account.
Pretty simple. Just keep your out of pocket maximum in the Hsa and invest the rest. Might take a few years to get there but smooth sailing after that.
Posted on 12/4/23 at 3:11 pm to whiskey over ice
quote:
Looks like the lack of premiums for the $6k plan more than pays for the $3k increase in deductible
This- take the $226 premiums you would have been charged, and use them to fund the HSA.
The downside is that you'll more than likely NEVER hit your deductible except for a major medical event, but the baby's check ups and shots will all be covered under well visits, and any sick visits run $100 or less.
ETA: This is assuming you and your spouse are healthy people and don't have multiple doctor visits to treat/manage a chronic illness. If this is the case, you might go with a higher tier so you can take advantage of hitting a lower deductible.
This post was edited on 12/4/23 at 3:14 pm
Posted on 12/4/23 at 3:48 pm to horsesandbulls
quote:
Just keep your out of pocket maximum in the Hsa
Ideally, invest it all and pay any out of pocket from personal funds just keep reciepts for future use.
This post was edited on 12/4/23 at 4:19 pm
Posted on 12/4/23 at 3:50 pm to MoistureintheOyster
At first glance, given that your wife is having a baby next year, the $6,000 HSA will almost surely be the best financial choice.
Posted on 12/4/23 at 4:20 pm to MoistureintheOyster
Do you have $6,000 - $12,000 available to pay for the birth in January?
Posted on 12/4/23 at 4:24 pm to TorchtheFlyingTiger
quote:
Ideally, invest it all
Oh of course but with a kid on the way he’ll likely hit the deductible.
Posted on 12/4/23 at 6:19 pm to PhiTiger1764
quote:
At first glance, given that your wife is having a baby next year, the $6,000 HSA will almost surely be the best financial choice.
He'll be paying out of pocket for everything.
I lean toward that plan in general because most people don’t hit their OOP max with any regularity, but that plan could end up being expensive.
ETA: ran the numbers with 20% coinsurance. I actually can’t find a scenario where the middle plan would ever be cheaper than the bottom plan. Same with the PPO - it might be a better network, but it’s never cheaper than the $0 premium plan all in.
This post was edited on 12/4/23 at 6:59 pm
Posted on 12/4/23 at 6:52 pm to slackster
All of the options are fairly expensive tbh. Yearly premium alone on plan 1 is $11,414. So $13,414 after deductible with max oop $16,414.
Plan 2 premium is $5876. That’s $11,876 after deductible with max oop $15,877.
He’s hitting deductible for sure in a year with a baby, and could approach oop max. That’s “only” $12k worst case with plan 3.
The premium of these plans do reduce taxable income, that should not be overlooked.. so they are all fairly close I suppose.
Plan 2 premium is $5876. That’s $11,876 after deductible with max oop $15,877.
He’s hitting deductible for sure in a year with a baby, and could approach oop max. That’s “only” $12k worst case with plan 3.
The premium of these plans do reduce taxable income, that should not be overlooked.. so they are all fairly close I suppose.
Posted on 12/4/23 at 7:01 pm to PhiTiger1764
quote:
Plan 2 premium is $5876. That’s $11,876 after deductible with max oop $15,877.
Yeah I looked into it with the premiums/coinsurance, and there is only one real option. There is never a cost where plan 2 is cheaper than plan 3.
This post was edited on 12/4/23 at 7:01 pm
Posted on 12/4/23 at 7:25 pm to slackster
Thanks for responses so far.
We will have enough to pay cash for baby’s birth.
Does the cost of the baby’s birth at all sway the decision for medical coverage?
We will have enough to pay cash for baby’s birth.
Does the cost of the baby’s birth at all sway the decision for medical coverage?
Posted on 12/4/23 at 9:03 pm to MoistureintheOyster
quote:
Does the cost of the baby’s birth at all sway the decision for medical coverage?
In this case, unless there is something you’re not explaining, there is never a scenario where Option 1 or 2 cover costs for cheaper than Option 3.
A $6,000 individual expense costs you over $12,000 in option 1, $9,500 in option 2, and only $6,000 in option 3.
A $12,000 family medical bill costs you over $15,000 in option 1, $13,076 in option 2, and only $12,000 in option 3.
This is assuming 20% coinsurance for all.
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