quote:
quote:
Both plans look like high deductible plans to me and both should be hsa elitible.

The max OOP is too high (barely) for individual coverage on Option 2 to qualify.

Thanks for the clarification.
HSAs are only available for high deductible health plans.
Do you know the reasoning for capping the out of pocket maximum on the qualifying health insurance for an HSA?
The logic of that cap doesnt make sense to me.

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Posted by Hopeful Doc

Member since Sep 2010

15388 posts

Posted on 4/13/21 at 1:08 pm to jimbeam

quote:
Assuming this is correct, is the $900 premium worth it to be able to fund an HSA?

To me it is. It may not be to you.
Here’s why:
1) I keep my max out of pocket in a rainy day fund. I do not pay out of my HSA for anything
2) I use my HSA (lively) which has no fees and allows me to put 100% of the funds into a TD Ameritrade account. I use this to split between the S&P, the Russell 2000, and an international vanguard stock fund. This is money for later. I don’t mind holding it through losses. It will never go directly to someone I owe money to for healthcare.
3) I keep receipts for all medical expenses. I will be able to cash them out tax-free in 30-40 years while the money has compounded to significantly more
4) the money I don’t have receipts for comes out at my marginal tax rate. I am heavily Roth’d otherwise in my retirement accounts.
5) I’m getting a deduction on my contribution annually ($7,100 or so for a family, I believe it’s just half for you filing singly and having an individual healthcare plan, unless of course I’m reading it wrong and you file singly but for some reason have a family health care plan). So, if you make $163,900 (the 32% bracket begins at $163,001) and plan on making the max ~$3000 HSA contribution annually, you’re getting about a $900 tax break along with a lower deductible and an awesome account. There are a lot of other arguments to make for/against it, but the above is why a lot of people like HSA accounts. There are a lot of other good ways to use it, too- just simply biting the bullet and putting 3-4x your max OOP as a “rainy day” fund isn’t a bad idea, either.

If it were me, I’d choose the HSA access over $900, especially in the case of a lower deductible AND Max OOP, assuming I read your post correctly. Even if they are flipped (which I would assume they are), I would probably elect a higher deductible and max OOP for the strategy I am using.

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Posted by dovehunter

Baton Rouge

Member since Sep 2014

1841 posts

Posted on 4/14/21 at 2:12 pm to Hopeful Doc

The OOP max is a little misleading as a lot of services, like a yearly wellness, are covered by Blue Cross. Get an HSA by all means. Max out your contribution. The HSA is way better than an IRA as it is triple tax advantaged. Never spend the HSA money. It’s cheaper to put the bill on a 21% CREDIT CARD GIVEN THE TAX ADVANTAGES.

I have over $260,000 in my single HSA. Over 55 so I can add an extra $1000 per year. Max for me is $4600. It goes up $50-100 a year.

A POINT WHICH HASN’T BEEN DISCUSSED ENOUGH IS THE 80/20 PLAN VS. 100%. Get the 100% after deductible plan. It costs more but 20% of a $1M hospital bill for cancer is realistic and unless you have $200,000 laying around you need that 100% plan. It’s just risk management and buying real insurance that will cover you in a dire emergency. Medical costs can bankrupt you and in fact area the leading cause of bankruptcies. Be smart.

This post was edited on 4/14/21 at 2:15 pm

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Posted by Hopeful Doc

Member since Sep 2010

15388 posts

Posted on 4/14/21 at 8:42 pm to dovehunter

quote:
A POINT WHICH HASN’T BEEN DISCUSSED ENOUGH IS THE 80/20 PLAN VS. 100%. Get the 100% after deductible plan. It costs more but 20% of a $1M hospital bill for cancer is realistic and unless you have $200,000 laying around you need that 100% plan. It’s just risk management and buying real insurance that will cover you in a dire emergency. Medical costs can bankrupt you and in fact area the leading cause of bankruptcies. Be smart.

Eh, not quite.
0-deductible is all you
After deductible, you’re responsible (in your scenario) for 20% up to the max out of pocket, and then the insurance pays the rest.
So, if there is a $3k deductible and then 80/20 up to MOOP of $7K, you’re paying $7K on a million dollar bill. If you had a $23,000 bill, you pay the first $3K, then you pay 20% of the next $20,000 ($4,000). Then you’ve hit your max. Whether the bill is $20,000, $200,000, or $2,000,000, you have exceeded the max out of pocket and will hit “100% coverage”

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