I am someone who has chronic health issues that are guaranteed to cost me $5k+ a year.
I’m not sure if it is worth it for me to elect a low deductible insurance plan so that I have to pay as little as possible out of pocket each year.
My org pays 100% of my premium so that definitely makes the low deductible plan extra attractive.
Is it worth giving up an HSA that I could contribute to for 30+ years for the yearly savings? The savings would remain relatively consistent, but the HSA would compound which makes me think it might a bad idea to pass up.
At what point is it worth passing up on an HSA?
byu/Danny2200 inpersonalfinance
Posted by Danny2200
5 Comments
If you’re spending $5k a year on health issues you should look towards taking the low deductible. High deductible plans are great for people who have little to no health issues. Invest that deductible difference, this is assuming there’s a susbstantial difference between the deductible.
How much is the difference between deductible?
Edit: Also the fact that your employer covers the premium , you completely lose out on another value of HDHP, lower premiums.
You’ve gotta run the numbers for you, but I’ve found that even with high health expenses ($7k plus out of pocket) per year we still pretty much break even when you consider premiums. Your situation is a bit different since your employer pays for all of your premium costs, but you’ll definitely still be paying copays on top of your deductible.
Best bet is to find a calculator that can show you best and worst cases and decide from there.
In your case I think the cost of using an HSA is the difference in out-of-pocket maximums between the high and low-deductible plans. Which is worth more, the savings this year or the ability to have an additional tax-advantaged retirement account?
If you aren’t already maxing out your 401k and IRA, then it’s probably not worth it. If you are, then it probably is but we’d need more details.
>I am someone who has chronic health issues that are guaranteed to cost me $5k+ a year.
The way you wrote that seems to imply that the medical services you need are not covered by insurance regardless of the level of coverage. Is this true?
You do need to check specifics, but you might look at the OOPM of each plan. Many HDHPs have lower OOPMs than other plans, which can limit the total out of pocket.