To use a high deductible health plan or not

Well, it’s that time of year. Medical benefit plans are out and we have to make an informed decision based upon our situation. We need to determine if we will be going to use a high deductible health plan or not.

This year however, we have the option of getting a Consumer Driven Health Plan (CDHP) along with a Health Savings Account (HSA). The CDHP is also known as High Deductible Health Plans (HDHP), and from what I can gather through reading various other blogs, is that those that retire early sometimes purchase these plans if they have no method to provide health insurance through other means.

Our PPO plan does offer an Flexible Spending Account (FSA), which we usually don’t fill it on purpose, so that we don’t throw money out the door.
As some folks know, the money in an FSA account simply disappears at the end of the year if you haven’t used it all. The case for the HSA is that the money that is placed into that account follows you whether you leave the company or not, and the money does not dissappear at the end of the year.
The limits on FSA accounts are limited to $2,500/yr starting in 2013, and the HSA limit is $6,450/yr beginning in 2013.

On the plus side, all basic items (well child / doctor visits) are covered automatically under either the CDHP or our traditional PPO plan. I believe this was part of what has become known as “Obamacare”.

The HSA has a very attractive offer of allowing one to fund it with pre-tax monies, basically in the hopes that one doesn’t have to use it until they need it. Thus the Savings part of the Health Savings Account. If able to be used properly, it could help someone fund the payments for any medications or other health related expenses in their senior years.
Obviously the per paycheck expenses for the CDHP are significantly lower, in our case by 24.2% less than the PPO plan. Then there’s the other side of the coin, which is that the deductible for the PPO is about 33.3% lower than the CDHP. There is also the additional cost of the PPO plan of copayments for office visits (or emergency room visits) whether you’ve met the deductible or not.

Based upon our family history, we rarely visit the emergency room and most of our visits are simply due to allergies acting up or “well child” visits. Neither of us has been admitted to the hospital in over a decade, aside from the birth of our children. There are the occasional hospital visits, mostly when I do something silly like shoot a 3-inch nail through a couple of my own fingers using a pneumatic nail gun – I’ve got to find that picture I took when I did that and post it one of these days. Because of this and the difference in the cost of the plans for a “normal” year, we are most likely going to choose the CDHP and HSA and obviously will want to fund the HSA as much as possible without going over the limits. This will provide a way to pay for our future healthcare in today’s dollars.

So I’ll open this post up to a simple question. Which would you choose for your purposes, and why?

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One Response to To use a high deductible health plan or not

  1. In case anyone is interested, I found some really useful information over on this other website (http://www.early-retirement.org/forums/f47/faq-archive-health-savings-accounts-hsa-30762.html), regarding the HSA and CDHP (or HDHP) type plan.

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