Contemplating a High Deductible Health Plan (HDHP)

Posted by Mrs Money on November 4th, 2010

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It’s open enrollment time for benefits at my employer.  They have given us our options for health insurance, and we are able to choose which plan we’d like.  The choices for health insurance have been simplified down to a few choices, and it mainly boils down to two choices: a high deductible health plan or a PPO.  Last year, we ended up going with a PPO health insurance, and it ended up costing us more money out of pocket in premiums each month.  We did have less out of pocket expenses than if we had chosen the high deductible health plan.  Of course, this year I’m going to analyze the costs and see what makes more sense for our family.  The thought of a high deductible health plan scares me for a few reasons, but I need to not dismiss it, and see if we’d save more money going that route for health insurance.

Cost of High Deductible Health Plan versus PPO

The cost for the high deductible health plan for the entire year is $1,162.68.  The cost for the PPO health insurance is $2,233.56.  If I chose the high deductible health plan, right off the bat I would save $1070.88.  In addition, I would also receive $1,000 a year from my employer (which is divided amount 26 pay checks as long as I am employed there) towards a health savings account.

Health Insurance Deductible Comparison

With the high deductible health plan, we’d have to meet a $2,400 family deductible (not including preventative check ups) before our insurance would kick in.  For example, if we went to the doctor because we were sick, we’d be 100% responsible for the cost of the visit after they billed the insurance.  We would be able to use funds from a health savings account that would be tax deductible, provided we had the funds in the account.

Copays for the PPO are $20 for a general doctor visit and $40 for a specialist.  For whatever reason, my OBGYN is considered a specialist, and I always have to pay the $40 co pay when I visit her.

Maternity Coverage

I’m really hoping that I get pregnant next year, and with the PPO it would cover more than the high deductible health plan would.  Of course, if I ended up using a midwife and having to pay out of pocket with that, I could use the funds from a health savings account to cover that cost.  I guess I like knowing that I don’t have to meet the deductible if we do end up having a baby.

To be honest, I don’t like the high deductible health plan because it seems like it’s more work to keep track of.  Plus, if we did have an expensive medical emergency, it would cost us a lot of money out of pocket.  On the other hand, I feel stupid for passing up the free $1,000 that the company will put in an HSA (health savings account) to help defer the cost and the instant savings on premiums that the high deductible health plan has.  Another of my concerns is that if I go with the high deductible health plan this year, and next year want to go with the PPO that I won’t be able to.  This year they did that with HMOs.  If you had one last year, you can get it this year, but if you didn’t have it, you can’t get it.

It would be so easy to just pick the PPO health insurance and be done with it because then I know that we’ve got good coverage and we don’t have to worry too much about out of pocket expenses.

What type of health insurance would you pick? What kind of health insurance do you have?

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19 Responses to “Contemplating a High Deductible Health Plan (HDHP)”


  1. Ali says:

    I was advidly devoted to PPOs. The co-pays seemed perfect & easy to know what I was paying as I go.

    However, as someone who’s company switched to a HDHP with a HRA AND who has experienced a medical emergency this year, I am sold.

    We are dropping the HRA in favor of an HSA so we aren’t losing any unused money at the end of the year, which to me makes it even a better deal!

    I never thought I would meet my deductible, but after being attacked one night I ended up meeting it in JANUARY this year! I have had countless doctor visits, two surgeries & physical therapy twice a week for all but maybe 5 weeks this year & have only paid the deductible. For me its $1,500 & my employer paid the first $500 into the HRA.

    Since you are getting the HSA, I would certainly go with it. You don’t lose the money if you don’t use it & your employer is paying into it.

    On my plan some preventative things are free. Which is another savings. No co-pay to get annuals or shots, etc.

    Just make sure that the HDHP pays after the deductible is met. Mine pays 100% after the deductible. Which has been a blessing this year. However I know some do not pay 100%. Also my mental therapy was not included in the medical deductible. It ended up being an additional $3,000 deductible & only covered a certain number of appointments. With my therapist charging $90 per hour visit, the maximum number of visits would not have added up to the $3,000 deductible. So in that aspect it has not paid off.

    So I would be open to the HDHP with the HSA, I know its scary…..like I said I was opposed to it previously. However looking back it has saved me so much! Or rather allowed me to get the help I needed & would not have gone for with the PPO which paid a percentage of the surgeries, etc.

    Hope this helps. Its a confusing world out there. Good luck making the right decision for you & your (hopefully growning) family!

    [Reply]

    Mrs Money Reply:

    Ali- First of all, I am so sorry to hear you were attacked! My heart dropped when I read that. I really need to sit down and look at the numbers. I would love if we could avoid doctors this year and save the money. That would rock! I think the HSA would be awesome too because I can add my own money to it to help cover the deductible!

    Thanks so much for your opinion. It really helps!
    xoxo

    [Reply]

    Mrs Money Reply:

    I also just checked- it covers 80% of everything after the deductible is met, but preventative appointments are 100% covered. :)

    [Reply]

  2. Kacie says:

    We have an HMO. When we first joined it, it was just Shane and I and it was $150/month roughly. The rates have gone up, and once we add our new baby it will be about $260/month or so, so about $3,120 for the year.

    It’s expensive when I think of it that way, but when I look at what it covers (100% on many medical procedures…we just have a $20 or $30 copay for visits) it seems worth it to me.

    The birth will cost about $280 in copays and I won’t have any additional charges beyond that. If we had a high-deductible plan, I don’t know that we’d be coming out ahead at all.

    I really think it depends on what happens in your own health’s future and of course we can’t predict that!

    If you want a midwife, you can take a look at those insurance plans now to see that they’re covered. My HMO has a few midwifery practices that it covers.

    [Reply]

    Mrs Money Reply:

    Kacie- Your plan sounds awesome, and I can’t blame you- I’d probably keep it! I am really afraid of the HDHP and I think I’m just going to go with the PPO. With the HDHP, it only covers 80% after the deductible is met. I’m worried something big would happen and cost us a ton of money (the max out of pocket is $4000).

    [Reply]

  3. Heather says:

    Is the only difference between the two the cost?

    Your savings in choosing the high-deductible plan plus the $1000 from your employer together are less than the deductible in the plan.

    Do you have a deductible at all in the PPO? Can you estimate how much the last year would have cost on the high-deductible plan?

    High-deductible plans are financially a good idea for people who use their health care A LOT and people who never use it. For people in between, it’s not a good deal.

    [Reply]

    Mrs Money Reply:

    Heather- The coverage is a lot less on the high deductible plan. I have to meet the $2400 deductible before anything is covered (except for routine preventative appointments) and then it covers 80% after that.

    With the PPO, there is a $500 family deductible. I should estimate how much last year would have cost with the high deductible plan- great idea!

    I’m afraid we’re the in-between people. I’ll have to run the numbers.

    Thanks for your help!
    xoxo

    [Reply]

  4. Frugal Babe says:

    In addition to the copays to see the doctor, does the plan you have now have a deductible? Or does it have a higher “copay” that is charged if you’re hospitalized? Most traditional policies that have office visit copays also include a much higher copay or a deductible if you need care beyond something that can be done in the doctor’s office. These days, most policies have deductibles of at least $500, and $1000 is quickly becoming the norm. If that’s the case, the high deductible option would seem to be a better deal any way you look at it. If your policy has a super low deductible or none at all (very rare these days, but possible), it’s more of a toss-up.

    [Reply]

    Mrs Money Reply:

    Frugal Babe- the PPO has a $500 family deductible. There’s no copay if hospitalized- it looks like it’s 80% covered (I think) after we meet the $500 deductible. With the HDHP, 80% is covered after the $2400 deductible is met, with a $4000 maximum out of pocket. I’m leaning towards the PPO but not 100% sure. I don’t really understand how the deductible works on the PPO. :/

    [Reply]

  5. Jessica07 says:

    When my husband and I choose to go with the high deductible, we set aside the full deductible amount to put into our emergency fund. Our health insurance has a little “money fund” set up in that saves money as well, and that money can be used for what our normal insurance does not cover–such as pregnancy. You might look into that.

    [Reply]

    Mrs Money Reply:

    Jessica- Does your plan cover pregnancy? I am afraid there are a lot of plans that don’t know. I think if we went with the HDHP, I would move some money from our emergency fund into the HSA so I know we’ve got that covered. It is just a scary leap to go from PPO to high deductible!

    [Reply]

  6. Money Beagle says:

    I’ve been on the PPO plan for the last three years but our employer just came out with their rates for next year and they are definitely pushing people to the HDHP as the rates for the PPO have gone through the roof.

    [Reply]

    Mrs Money Reply:

    Money Beagle- I know! I think that stinks they are doing it like that, but I can see why companies would want their employees to go on the HDHP. What are you going with?

    [Reply]

  7. Deborah says:

    We have a high deductible plan with an HSA, as it is the only insurance option available to us. We have several children with chronic health problems that require expensive monthly prescriptions and regular visits to specialists (no $40 copay, we are charged the full amount of the visit, usually around $150). We meet our $4000 deductible about March of each year, and after 2 1/2 years we have never had a balance of more than a couple hundred dollars in the account. We contribute the maximum amount to the account, and we still pay hundreds of dollars out of our regular checking account every year because the amount in the HSA account is never enough. I would give anything if these high deductible accounts would disappear off the face of the earth and we could have real insurance that would cover our medical expenses.

    You note the lower premium, but notice also that they are charging you $100 a month so that you can pay full price with your own money for your health care.

    [Reply]

    Mrs Money Reply:

    Deborah- That’s a great point they are charging us $100 a month to pay full price! I HATE that. I am too scared to go without insurance though, especially with planning to have a family. :(

    I am so sorry to hear about your problems with your health insurance! I hate to hear that.

    [Reply]

  8. Little House says:

    I’ve always opted for the HMO plan my employer offers. Less out of pocket, however that also means less choices about the doctors I can go to. For now, since my husband and I are both healthy, I’m not too concerned about not being able to pick and choose my doctors since I’m saving money. Yet, in the future I can see when I get older, I might be more willing to pay more out of pocket if I get to chose my doctor!

    [Reply]

    Mrs Money Reply:

    Little House- It would be so easy to just go with the PPO instead of worrying about the HDHP. I can’t wait to see what I finally end up choosing!

    [Reply]

  9. I was scared to sign up for my employers HSA plan at first too, but made the decision a couple years ago and I couldn’t be happier. I also get about half of the deductible contributed to my account from my employer which makes a big difference! You also need to take into consideration the tax benefits of contributing to the account – if you contribute $1000 for example of pre-tax money, that would only be $700 or so of after-tax money depending on your tax rate. I can’t speak for what the HSA covers as far as maternity costs, so that may make a difference for you. However, I ran into a lot of unexpected medical expenses this year and I ended up still saving a bunch of money compared to the PPO because I met my deductible quickly. Good luck with your decision!

    [Reply]

    Mrs Money Reply:

    QuarterLifeGirl- That’s a great point- I hadn’t thought about just how much of an impact the pre-tax money would make!

    [Reply]



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