Calculator for comparing HSA (high-deductible) health plan costs
November 8, 2017 10:22 AM Subscribe
I am being offered a High-Deductible Health Plan (HDHP) with a Health Savings Account (HSA). But trying to calculate what my net cost would be is a nightmare. Is there a good calculator out there?
All the calculators I could find focus on contribution limits and potential tax savings, but don't follow it through to the final cost after the tax benefits are taken into account. I tried to make a Google Sheets spreadsheet to calculate what the total cost is, but the logic is tortured. As I understand it, the primary benefits of the HSA are the employer contribution and the tax deduction. But you are responsible for more of your own health care costs.
The premiums not covered by the employer contribution are tax deductible (if you itemize, against federal, and most state), but don't count against the plan's deductibles. At first, medical expenses are tax-deductible but not covered by the plan until I hit either my personal or family deductible. Then I pay 10% of the cost, again tax deductible, until I hit my maximum contribution limit for the account, after which they no longer are deductible. After that, once I hit my out-of-pocket maximum for the year I don't pay anything. Am I missing something here?
I would love to find a calculator that would let me plug in my various deductibles and costs and then compare them vs. my HMO copays to see whether I'd end up ahead. In my case the premium for both plans is about the same, so it seems like a lot of worry to have the HDHP, but I'm also in a relatively high tax bracket, so that could be a significant savings. I'd also like to be able to see what would happen in case I used very little health care, or had a major hospitalization. My insurance company at least will let me see what the cost of everything would have been had I been paying out of pocket, so I have a good grasp on what a prescription, office visit, surgery, etc. would cost. It's the fiendish calculation of the various deductibles and coverages that leaves me pretty sure I'm making a mistake somewhere. And who would sign up for an insurance plan if they had no idea what it would cost?
All the calculators I could find focus on contribution limits and potential tax savings, but don't follow it through to the final cost after the tax benefits are taken into account. I tried to make a Google Sheets spreadsheet to calculate what the total cost is, but the logic is tortured. As I understand it, the primary benefits of the HSA are the employer contribution and the tax deduction. But you are responsible for more of your own health care costs.
The premiums not covered by the employer contribution are tax deductible (if you itemize, against federal, and most state), but don't count against the plan's deductibles. At first, medical expenses are tax-deductible but not covered by the plan until I hit either my personal or family deductible. Then I pay 10% of the cost, again tax deductible, until I hit my maximum contribution limit for the account, after which they no longer are deductible. After that, once I hit my out-of-pocket maximum for the year I don't pay anything. Am I missing something here?
I would love to find a calculator that would let me plug in my various deductibles and costs and then compare them vs. my HMO copays to see whether I'd end up ahead. In my case the premium for both plans is about the same, so it seems like a lot of worry to have the HDHP, but I'm also in a relatively high tax bracket, so that could be a significant savings. I'd also like to be able to see what would happen in case I used very little health care, or had a major hospitalization. My insurance company at least will let me see what the cost of everything would have been had I been paying out of pocket, so I have a good grasp on what a prescription, office visit, surgery, etc. would cost. It's the fiendish calculation of the various deductibles and coverages that leaves me pretty sure I'm making a mistake somewhere. And who would sign up for an insurance plan if they had no idea what it would cost?
The other thing to remember about an HSA is that it is "triple tax advantaged" - that is:
1. You pay no taxes on the contributions to it
2. You pay no taxes on withdrawls to pay qualified medical expenses
3. You pay no taxes on interest accrued over the life of the HSA
You can 'take it with you' - the money is yours forever, and can be used to pay future health care-related items like Cobra insurance, Medicare Gap insurance, etc.
I've found that the company that runs my HSA is awful, but after I no longer work where I am, I should be able to find a less-awful (from a fees and investment options standpoint) administrator.
All of the above made me take the jump this year - and I'm glad I did! Hope this helps.
posted by dbmcd at 10:52 AM on November 8, 2017 [3 favorites]
1. You pay no taxes on the contributions to it
2. You pay no taxes on withdrawls to pay qualified medical expenses
3. You pay no taxes on interest accrued over the life of the HSA
You can 'take it with you' - the money is yours forever, and can be used to pay future health care-related items like Cobra insurance, Medicare Gap insurance, etc.
I've found that the company that runs my HSA is awful, but after I no longer work where I am, I should be able to find a less-awful (from a fees and investment options standpoint) administrator.
All of the above made me take the jump this year - and I'm glad I did! Hope this helps.
posted by dbmcd at 10:52 AM on November 8, 2017 [3 favorites]
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This seems odd to me, as HSA plans (in my experience) have lower premiums - the logic being that the premium is lower because you are picking up more of your own healthcare costs (albeit with tax-free dollars, if those dollars are in your HSA). Are you sure the premiums are the same? Or is the employer contribution the same, except that the employer contribution is split between the premium and a contribution to the HSA? (That's what my employer does.)
posted by devinemissk at 10:49 AM on November 8, 2017 [1 favorite]