I love the idea of using an HSA to be able to add to one’s investing dollars. I read about how good of a vehicle it is and want to contribute, but I am very green with the world of insurance and am not one to want to do a lot of paperwork or deal with headaches of saving medical receipts etc. especially for something that may not be a fit for me.
Wife and I are younger and on a low cost BCBS plan for federal workers. It is cheap, you get access to the Blue Cross Network, and the first 10 visits to any doctor are $10 copay each year (after that, not much is covered and you have to meet your deductible etc.). When just going for a checkup once or twice a year like we do it is great, however if getting any type of unforeseen procedure or even blood work etc. you have to meet the $500 per person deductible before a single thing is covered, and then there is still only minimal coverage afterward.
For 2025 it will be $275.63 a month for us each to be on the plan. Meanwhile, we have access to the GEHA HDHP which many love. The GEHA HDHP is $332.85 a month (2025 rates not yet out). The yearly deductible is $3,200, but GEHA gives you $2,000 for free each year into your HSA, so if using that money to pay for medical expenses, you are only paying $1,200 a year. With our current BCBS plan, in this scenario we end up paying $3,307.56 in premiums for the year with a $500 deductible versus paying $3,994.20 with GEHA with a $3,200 deductible but you get a free $2,000 each year invested into your HSA.
A few caveats that make our situation more nuanced: we are not high income earners, so we are not in a position like many Bogleheads to max out our HSA, keep the money invested and pay cash for all medical expenses. We will not be contributing beyond the 2k a year given to us (we invest as much as we can into our other retirement accounts). We do not want to use the free HSA money to pay for medical expenses either, and so we would look to pay cash for our yearly checkups so we can have an extra 2k added to our savings rate each year, which is fine if it is $250-500 total in medical bills for a checkup or two, but if an emergency arises and we have to clear out the $2,000 plus pay another $1,200 out of pocket to hit the deductible, I feel like it would all have kind of been for nothing since the whole point of wanting to use an HSA was to get more free contributions to use toward retirement.
Our state also does not allow for tax deductions for HSA’s making it less appealing as well. It seems with our current plan, we are paying $3,307 a year in premiums and just our usual copays plus a hundred here or there for an unforeseen scan or test etc. whereas going with the HDHP we would be paying nearly $4,000 a year in premiums and then have to pay in full for all medical expenses up to $3,200 so you are paying $7,200 in total in that case, and if you opt to keep the 2k invested in the HSA you have to be okay with pulling that $3,200 from your savings. With the HDHP it seems you have to hope you luck out and dont go to the doctor, bank the 2k, but then you are still paying more in premiums each year versus BCBS, you just are being paid 2k if you can manage to keep it and stay healthy
Wife and I are younger and on a low cost BCBS plan for federal workers. It is cheap, you get access to the Blue Cross Network, and the first 10 visits to any doctor are $10 copay each year (after that, not much is covered and you have to meet your deductible etc.). When just going for a checkup once or twice a year like we do it is great, however if getting any type of unforeseen procedure or even blood work etc. you have to meet the $500 per person deductible before a single thing is covered, and then there is still only minimal coverage afterward.
For 2025 it will be $275.63 a month for us each to be on the plan. Meanwhile, we have access to the GEHA HDHP which many love. The GEHA HDHP is $332.85 a month (2025 rates not yet out). The yearly deductible is $3,200, but GEHA gives you $2,000 for free each year into your HSA, so if using that money to pay for medical expenses, you are only paying $1,200 a year. With our current BCBS plan, in this scenario we end up paying $3,307.56 in premiums for the year with a $500 deductible versus paying $3,994.20 with GEHA with a $3,200 deductible but you get a free $2,000 each year invested into your HSA.
A few caveats that make our situation more nuanced: we are not high income earners, so we are not in a position like many Bogleheads to max out our HSA, keep the money invested and pay cash for all medical expenses. We will not be contributing beyond the 2k a year given to us (we invest as much as we can into our other retirement accounts). We do not want to use the free HSA money to pay for medical expenses either, and so we would look to pay cash for our yearly checkups so we can have an extra 2k added to our savings rate each year, which is fine if it is $250-500 total in medical bills for a checkup or two, but if an emergency arises and we have to clear out the $2,000 plus pay another $1,200 out of pocket to hit the deductible, I feel like it would all have kind of been for nothing since the whole point of wanting to use an HSA was to get more free contributions to use toward retirement.
Our state also does not allow for tax deductions for HSA’s making it less appealing as well. It seems with our current plan, we are paying $3,307 a year in premiums and just our usual copays plus a hundred here or there for an unforeseen scan or test etc. whereas going with the HDHP we would be paying nearly $4,000 a year in premiums and then have to pay in full for all medical expenses up to $3,200 so you are paying $7,200 in total in that case, and if you opt to keep the 2k invested in the HSA you have to be okay with pulling that $3,200 from your savings. With the HDHP it seems you have to hope you luck out and dont go to the doctor, bank the 2k, but then you are still paying more in premiums each year versus BCBS, you just are being paid 2k if you can manage to keep it and stay healthy
Statistics: Posted by BizarroJerry — Tue Oct 01, 2024 4:11 pm — Replies 0 — Views 135