U.S. Health Insurance and HSA Accounts
December 2, 2015 11:06 AM   Subscribe

Looking for some feedback on what combination of U.S health insurance combined with an HSA you use. We're looking to reduce costs.

My wife and I are on her plan through her company. The rates are getting a little out of control and we'd like to explore some options. So far, it looks like the cheapest plan is around $700 bi-weekly with a $6640 deductible. We're both on the cusp of 50, have no kids, no pre-existing conditions, no medications and have never hit our deductible even when it was at $2,500. I'm thinking that finding a really low-cost catastrophic plan and combine that with an HSA with pay into every month would make a lot more sense over the next few years than not having to pay $25 for a flu shot which is basically what we're doing right now. Most of the time when I've even filed a claim for PT or something it gets denied so insurance is making less sense for us. Obviously we'd like to have catastrophic and pay for other things out-of-pocket via an HSA.

Have any of you done this approach and how is it working out?

How much approximately can one expect to pay for a high-deductible catastrophic plan. I did some research and Blue Cross/Blue Shield is still coming in around $700 a month.

Anything I should be looking out for?

We're in Minnesota and we make a lot of money so subsidies etc wouldn't really apply.
posted by misterpatrick to Health & Fitness (6 answers total) 4 users marked this as a favorite
For most payers, you can only qualify for a catastrophic plan in one of two ways:

1. Be under 30 years old
2. Qualify for a hardship exemption

So you might find yourselves unable to get true catastrophic coverage. Keep an eye out for High Deductible Health Plans (HDHPs)- this may be what you're thinking minus use of the term "catastrophic", which you can see is now being reserved for the very young and people in special situations.
posted by ThePinkSuperhero at 11:15 AM on December 2, 2015

I had a high deductible plan and a health savings account this year and it wound up not being worth it for me because i had a year FULL of health issues (surprising for normally healthy me, about your age) and if I had paid for slightly more expensive heath insurance it would have worked out better. Nothing big just a lot of crap that added up like a lot of PT, some therapy, and one expensive ENT visit that ate up most of what I'd set aside on my (self-monitored) HSA which maxes out at $3500. For me as a single person I was spending $360/month on this insurance (which was NOT catastrophic, just low end of the Blue Cross offerings) and probably had the perfect storm of health stuff. If I had wound up having surgery, for example, that would have wound up being nicely covered because I'm just at the deductible. So for next year I decided to pay more for insurance and skip the HSA. Some of this was peace of mind stuff also: I didn't like worrying about spending $200 on a non-covered thing and having it come out of my deductible and watching the numbers rack up. Different people have different comfort levels with that sort of stuff.
posted by jessamyn at 5:11 PM on December 2, 2015

Just like you, I made a statement one year that "we've never hit our deductible yet" so I chose the high deductible plan for our family of 4 for the following year.

Just like jessamyn, that was the one year that EVERYONE in my family had some serious health issue and we all had huge bills. When looking at the numbers, you need to compare the max allowed in your HSA to your family deductible, not the individual deductible. They usually don't match.

Lots of things were rejected, lots of things had to be resubmitted and fought and we mostly lost all battles. The paperwork was a nightmare.

Several of our providers (mostly the PTs) made statements like "oh, we might as well do this because the insurance will pay for it", but no, I actually paid for it since my deductible was so high.

Ever since then, I have signed up for the most coverage of my choices. The peace of mind and reduced paperwork is worth it to me, even if the price is higher.
posted by CathyG at 11:10 AM on December 3, 2015

I worked for a major insurance company for over 5 years. I currently do freelance writing and, because of my expertise and training in insurance, some of the writing I do is insurance related. So I have had to research Obamacare a good bit in recent weeks. I am seeing some really inaccurate assumptions in both this question and some of the answers. So let me give you some baseline information to start with.

First of all, Obamacare does not compel you to do anything in particular. So someone saying you can't get the kind of coverage you want doesn't really understand the regulation. You can get whatever insurance you feel makes sense for you. The federal government cannot and will not stop you from doing so. However, it is possible that going this route will have you paying the penalty.

The penalty does not do anything like give you a criminal record, so if this is a purely financial decision for you, you can account for that by looking at the penalty as a portion of the cost of doing what you choose to do. But, first, check to see if you are exempt from it. There is a long list of exemptions. They aren't all hardship exemptions.

I like this penalty calculator, which also lists a bunch of exceptions beyond hardship exemptions. These exemptions include religious exemptions and membership in a Native American tribe. So first look those things over real thoroughly.

Assuming you really do make scads of money, you should assume that 2.5% of your income will go towards the penalty. There are multiple different definitions of affordable insurance under Obamacare, but to simplify things, we can basically use 9.5% of your annual income for premiums as the figure to run some calculations with. This means if you can spend less then 7% of your annual income on the kind of insurance you would like to have, paying the 2.5% penalty and getting just catastrophic coverage of your choosing may be cheaper than getting an Obamacare compliant policy that gets you out of paying the penalty.

I don't know what you have in mind for your idea of "catastrophic coverage." I already sent you a memail yesterday with a link to the website of my former employer. When I was still working there, the biggest thing we had to worry about was covering dependents up to age 26. The company mostly sells supplemental coverage and is largely unaffected by the regulations in the 1000 page Affordable Care Act.

Among other things, that company sells policies for cancer, accident, and hospital indemnity to individuals. But I know for a fact other companies sell things like accident policies. So I am not trying to convince you to get a policy from my former employer. I just happen to be familiar with their products, so I know for a fact that relatively inexpensive supplemental coverage exists. If you want to discuss how my former employer operates, please memail me and we can go over what I know. I am fairly confident you could get 3 or 4 supplemental policies from them for things like accident, cancer and hospital coverage for a good deal less than $700/month.

But, again, this might mean you wind up paying the penalty. And they aren't major medical. So I would need to explain what they actually do. People who understand the product, love the company. People who don't are sometimes sorely disappointed.

A couple of people have already pointed out that if you cancel your coverage right before needing a bunch of medical care, you will likely be sorry. I don't think that is necessarily reason to not implement your plan to cancel major medical and just get catastrophic coverage of some sort. But I will suggest that if you aren't someone eating right, exercising, reading news articles on the latest research on diet, brushing, flossing and so on and you are just assuming that your past health predicts future good health, you are really playing with fire here. The longer you live, the more likely you are to have a major health event. I am not going to bother to google stats, but if you live into your 80s, it is practically guaranteed that you will have cancer at some point. Some cancers are relatively minor and some cancers are a very big deal. But if you aren't already someone work outs, pays attention to diet, etc, this is a big gamble.

However, even if you have really good insurance, you really should be exercising, eating right, etc. Taking good care of yourself is much cheaper and more effective than any insurance or medical treatment. And even with good insurance, a major health event can lead to bankruptcy. I paid a claim where they had major medical and also supplemental and had to do fundraisers after someone had a bad car wreck and ended up good and messed up for life.

Also, some of the worst accidents I reviewed seemed to be "an accident waiting to happen." So if you want to keep your expenses low, use common sense: Don't drink and drive. Don't get high while mountain climbing. Don't leave a loaded gun of any kind casually laying around the house for some kid to pick up and shoot someone with. Etc.

One last thought before I go, subsidies are available for people making up to 400% of the Federal Poverty Level (FPL). For 2015, the FPL for 2 people is $15,930. Multiply that number by four (that's nearly $64,000, but not quite -- no, I am not going to pull up a calculator). So, if you make less than that, you may qualify for some kind of discount through the state marketplace.

Be aware that insurance varies from one state to the next. Due to differences in state laws, two people can buy the same policy from the same major company and have different de facto results due to differences in state laws. And the Supreme Court upheld the right of states to choose to not get on board with certain portions of Obamacare, like expansion of Medicaid which 19 states currently have chosen to not get on board with yet. So even Obamacare is different from one state to another.

If you make under $64,000/year, you might want to go ahead and log into your state's Obamacare marketplace and see what your options are. Your state's portal will be one of the best sources of local, relevant information regarding insurance.

I am not familiar with HSA accounts.
posted by Michele in California at 1:27 PM on December 3, 2015 [1 favorite]

Did you find a good HSA yet? I'm based in NY, but I just signed up for one at Lake Michigan Credit Union. 1.5% return, no income restrictions, and you can use it to pay for everything listed here. This article was really helpful: Choosing the Best HSA Account Administrator.

The Bogleheads HSA wiki was cool, too.
posted by jessca84 at 2:35 PM on December 27, 2015

You might also be interested in Direct Primary Care, something I was not aware of when you posted you posted your question but which supposedly can be combined with an HSA to comply with the ACA. I did an FPP on it last night.

Best of luck.
posted by Michele in California at 10:36 AM on December 30, 2015

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