It's not like they make more money whether you chose one or not. When you have an HDHP, you’re eligible to open a Health Savings Account (HSA). The savings of the HSA per year are: the reduced premium amount. Does your healthplan have website where you can look up your total medical expenses last year (your payments plus your insurance payments)? So I paid for the higher plan. And while it's that much, I've put aside $800 this year, for medical expenses into my FSA. Edit: The HSA cost also depends on your tax rate so if you could also provide your income it would help. So the real question is your HDHP better than your PPO option? An HSA is a tax-advantaged account that can be used to pay for IRS-defined health care expenses, including long-term care and COBRA premiums. I'll actually be putting a little more into this so that I can account for other costs as well, since an HSA can also be used for prescriptions! It’s not a form of health insurance. Both HRAs and HSAs are designed to give you more control of the money you spend on your health care. I can't believe the first top level comment to mention the tax advantage is this far down. HRAs are usually unfunded notional accounts, with no cash value. If no emergencies, then my HSA will grow every year, and I can then start investing it once it grows a bit above my deductible. So if my plan will cover 75%, do I plug 75% or 25% into that spot? ._2YJDRz5rCYQfu8YdgB_neb{overflow:hidden;position:relative}._2YJDRz5rCYQfu8YdgB_neb:before{background-image:url(https://www.redditstatic.com/desktop2x/img/reddit_pattern.png);content:"";filter:var(--newCommunityTheme-invertFilter);height:100%;position:absolute;width:100%}._37WD6iicVS6vGN0RomNTwh{padding:0 12px 12px;position:relative} HSA plans are great if you're very healthy or if you're very sick. I just went through benefit selection at my work and ended up chosing the HSA over the EPO. You need to compare plan designs. Given that you had a bladder tumor, and need 3-4 follow up visits with a specialist per year, I can almost guarantee that the PPO is a better deal, although it depends on deductibles and copays and whatnot. If you find yourself considering health insurance options that include a Health Savings Account (HSA) as well as a Health Reimbursement Account (HRA), you need to understand the differences between these medical savings accounts in order to make the right decision for your circumstances. Join our community, read the PF Wiki, and get on top of your finances! These are all family rates, as that is all I looked at. I'm currently setup to make the maximum contribution next year. And she does not know my healthcare needs. Post navigation. An HSA is offered with a qualified high-deductible health plan (HDHP) which typically has lower premiums/plan contributions and higher deductibles than a … Out of network coverage is not usually offered. While we’ve analyzed the HRA/HSA choice as an either/or proposition, the two plans can work in unison. If you do, you can deal with the risk and the lower premiums are definitely worth it. I ran the medication cost and doctors visits alone on all the plans, and the cost diffrence between everything was less than 500 a year. The difference between an HSA and HMO is really comparing apples to oranges, as these are two very different entities in the world of health care. If you're somewhere in the middle, it's often best to go with a lower-deductible plan. Portability and 9 Other Important Things to Know About an HSA. EPO and PPO vs HSA and HMO The main difference between EPO and PPO plans and Health Maintenance Organizations (HMOs) is the need for a Primary Care Physician (PCP) in an HMO. In my case I'd end up paying out of pocket for all those office visits and medicines, whereas with the PPO I only pay small copays, which is far less out of pocket even considering the higher premium. It seems like nobody can give a straight answer. Thank you! I also ran drug formulary to see what each offer would cover. The key difference between HRA and HSA is that HRA is an employer funded health benefit plan that reimburses for medical expenses including personal health insurance policy premium… Reader Question: Traditional PPO vs HSA Plan. You must also select a primary care physician which will serve as your gateway to specialists should they become necessary (referrals required). We'd need to know the details of each plan to really help. HSA Cons. Thanks a bunch for this! And they’re both intended to be used for qualified medical expenses. You can also invest the money you contribute and it will grow over time if you don't use it. It’s a lot easier to say PPO than Preferred Provider Organization. HSA eligible plans are available in pretty much every state. HDHP plans must meet some IRS criteria, mostly that the deductible be at least a certain amount. It acts as a designated health-related expenses bank account that employees can deposit money into and withdraw funds for medical care. Any of these plan types can be an HSA eligible plan. For example, if you are enrolled in the HSA Gold Plan for Employee Only, and you are paid weekly by Veolia, you will receive $14.42 per pay period deposited into your HSA account. The HSA provider and/or trustee/custodian is solely responsible for all HSA services, transactions and activities. Flexible Spending Accounts (FSA) are similar to HSA. So now my boss asks why I had not set up an HSA. For the PPO, I would spend $3850 on insurance premiums, then pay my $2000 deductible... and still be on the hook for 20% up to the next $1800. The FSA provider is responsible for ensuring that your expenses qualify and you typically must provide documentation to assist this. My company contribution to the HSA would be $1900. pretty much that means those with small children should be on the lower deductible plan since they always get sick? The Best Retirement Account You’ve Never Heard Of. Let’s begin by exploring the distinct features of each account. Also, make sure you have emergency funds sufficient to cover the out of pocket max for both plans. My employer is offering these new Lumenous options and phasing out the Aetna over the next two years since I have to switch eventually I figured why not sooner and let these accounts build up savings. So if you have a major, expensive medical situation, then you'll almost always come out ahead. Piggy backing off of what others have said, PPO is the plan type, as is HMO. It may have a deductible and that deductible may even be high (for you). So, you can get a PPO that is also HSA eligible, but not every HSA eligible plan is a PPO, and PPOs aren't available in every state. You shoulder part of the cost, but often less than a PPO. You must retain documentation to prove this if the IRS audits you. If I had the funds in an HSA, it would roll over. I have a PPO that is compatible with an HSA. Nice work on the spreadsheet, thanks. Is the co-insurance value the amount you will pay out of pocket or the amount the plan is covering? Do I go to the doctor often? Then subtract the amount you would expect to spend on all your doctor visits and medications yearly with the HSA. PPO plans are usually better if you have a lot of regular office visits and lab tests, and take regular medications but otherwise don't expect to spend much beyond the deductible listed on the high-deductible plan. Out of pocket max on the HSA was $5k, and $3600 on the PPO. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Are your doctors in-network? It's a savings account. If this money is deposited into your HSA, you have $1,000 a year to pay for medical expenses. If your plan is a HDHP, you may have an HSA to allow you to save pre-tax dollars to pay for your healthcare needs. To evaluate the relative value of the two plans you have to evaluate how much benefit you expect to receive versus how much you have to pay in total (premium plus out of pocket). The provider need not accept that, so you'd be responsible for the remainder of the bill. I took the $2k I saved in premiums and contributed it to my HSA. But, another thing to note, both employers have offered matching contributions for my HSA, which means the money I put away for my deductible doubles. Beyond that, as others have said, there's not much else we can say about your specific situation without numbers, but I'd figure out if your visits would be covered under the HDHP or no first and foremost, unless you're certain that they'll be out of pocket. The part paid by me, goes towards the deductible (lots of labs because I'm pregnant and getting a ton of labs, heh): So the cost I have to pay out of pocket here, is $201.31. HSAs allow for employees to input pre-tax dollars specifically for future medical expenses. Another thing to consider is whether you are the kind of person who plans ahead and has an emergency fund that can absorb that high deductible. It lowers your taxable income and the money used is tax free when you use it for qualified health expenses. HSA is not a healthcare plan. The HSA's health insurance has an annual pre-tax premium cost of $1940, the cheapest of the PPO plans had a premium cost of $3850. Usually you can also see providers not in the network, but it will cost you more, as the plan will only pay a portion of what they deem as reasonable. 6 Differences Between an HRA vs HSA. It's open enrollment time, which means many of us are reviewing health insurance options. Compare that to the co-pays for the PPO. https://www.bogleheads.org/wiki/High_deductible_health_plan#Financial_advantages_and_disadvantages, New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Your question should actually be, "Can someone explain the HDHP (with a HSA feature) vs. PPO to me?" POS = Point of service. I'm at a pretty big company & the expensive plan wouldn't really make sense for me unless I spent more than $20,000 which seems pretty unlikely. If you're somewhere in the middle, it's often best to go with a lower-deductible plan. HSA vs. PPO: The Takeaway. Nope. Shortening the names is a good start! So the entirety of the $800 is tax free, and my tax savings is estimated, let's say at $150 (for sake of a round simple number). For a young and healthy person, the HDHP with an HSA is usually a good deal. If you are so healthy you use the service seldom or not at all (what your HR rep was probably imagining is the case for young people) the high deductible plan is better as you spend less on premiums and can save money in a tax-advantaged way. Ultimately you need to look at the plans available to you and pick the one that best meets your needs, regardless of what the rule of thumb says. So what exactly is an HRA? Once you go over the deductible both the plans that I'm offered are almost identical (same network etc), they just have a different deductible/copay structure, so one is really no riskier than the other if you need serious care. With the HSA, you pay out of the ass only when you actually use it, but you can be reimbursed from the HSA. HDHPs typically benefit healthier consumers who don’t expect much medical attention for the year. It's lower across the board, whether I have good health or I have a terrible accident. Yes, $1,500 is a lot of money, but this is where having a health savings account will help you cover the cost of your medical expenses and help reach your deductible. Unfortunately plans vary widely. Then my other co-worker tries to explain that PPO is a lower deductible plan. One standard checkup per year is without cost, typically. Hopefully that helps straighten out some confusion. The goal of health spending accounts, both HRAs and HSAs, is to provide employees with healthcare coverage they can afford, while enabling the financial support needed to pay for medical expenses. So in switching to an HSA this year, I'll be putting aside at minimum $2600 to meet the deductible since I am planning on having a baby this year. Fortunately, in the United States, you do have a lot of options when it comes to the type of health care that you will receive, depending on the type of health care insurance that you have. This. Yours could be totally different. An HSA is a great option if a high deductible plan makes sense for you. Nope. It took me a while to fully understand the benefits of an HSA but I think in most cases it's a great option if your employer offers it. HMO = Health maintenance organization. My wife and I have a HSA plan, which works great for us, because 1) We have an emergency fund that can absorb the risk, 2) We have enough margin in our budget to save up the deductible if we have a foreseeable medical expense, and 3) we are having children right now, so we save a ton on medical expenses with pregnancy and childbirth because everything is payed over the deductible. With an HSA, you don't have to pay taxes on your investment when you deposit it or when you withdraw it (see the article linked above). These rules of thumb may be a good reason for you to investigate whether you are really on the right plan. So in the end, a lower deductible is a little misleading. Just your routine checkups including dentist and optometrist. HSA vs. PPO Plans: Which Benefits You More? But this is all based on the specifics of my plan options. Standard checkups are almost always without cost (I don't even think I have a copay for them with my HDHP) because they want you to be in for preventative checkups instead of waiting until things are an emergency. You are solely responsible for ensuring that the expenses you pay for from your HSA qualify. We would need to see your out-of-pocket maximum, deductibles, etc to make that decision. Often considered the "Cadillac" of plans, since these plans have been dying out, due to their high cost. HSA stands for health savings account. So it's a no brainer for me to choose the HSA. The key difference is with the PPO, you pay regardless of whether you use it or not. Exactly This. And our particular plan allows me to invest my HSA funds over a certain amount in mutual funds, so the HSA itself can grow tax free. An HDHP is needed for an HSA. A Health Reimbursement Account, or HRA, and a Health Savings Account, or HSA differ in terms of eligibility requirements, who contributes into them, how the contributions work, who has ownership of the account, how portable funds are, and how the funds can be used. Need to pair it with an HDHP; Not the best choice for everyone; You may need long-term care, for which a low-deductible health plan may be a better choice; What Is an HRA? $1500 vs. $1000 Deductible $3000 vs. $3000 Out of Pocket Max $2207 vs. $3262 annual premium No separate prescription deductible vs. $200 prescription deduct (That's not always the case though, so you need to check your plan). Never paid out of pocket for any medical visit.. (only went to dentist and Dermatologist a few times, plus an urgent care facility once). If you can provide some details then you may get more detailed answers. The following chart highlights the differences between an FSA vs HRA vs HSA, broken down by account. Hey Reddit, I've never been the best at selecting a medical plan, as I haven't always had insurance and am trying to do some research but wondering what others think: HDHP HSA vs. PPO. Press J to jump to the feed. Much like a PPO, this type of plan has a network that you must visit in order to be covered. Both Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) are two health benefit plans designed to offer affordable health care coverage to employees in the United States in order to cover their health care expenses. Low deductible plans usually also have a lower out-of-pocket max, so I'm not sure the very sick part of this holds up in a majority of cases. The article below really helped me better understand the benefits. Can you provide the premium, deductible, coinsurance percentage, and max out of pocket for the two plan options? 9 Ways to Spend Your FSA Funds Before Year End. My wife and I have a HSA plan, which works great for us, because 1) We have an emergency fund that can absorb the risk. But … To save money in an HSA you need to have a High deductible health plan. ... Amber spent $490 on healthcare last year using her PPO. Also, shame on your employer for assuming they know your medical situation. No, it requires more money. Oftentimes, plans with high deductibles make you meet the deductible before anything is covered. I posed a similar question to PF and got some good general advice about HSAs. $300 to visit the ER was a financial setback but not a catastrophe. Are you sure of this? I am. I did hsa for 3 years with my last job... 3 years later I have about 3k still in my hsa account. You need to look at both plans your employer offers, look at the premiums, deductibles, and how much is covered. DH's employer contributes an amount equal to our in network deductible. A couple things to add in case it wasn't clear. I don't even have vision and they still covered my optometrist checkup because some of the possible complications it might turn up would be on their plate. To me the HSA itself, once built up to be >= the HDHP deductible amount, is your medical emergency fund. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. If I have a medical emergency and burn through my deductible, my HSA will be used to cover the expenses. HSA is a health savings account that is utilized in conjunction with the health insurance plan. You can only have an HSA on what is considered a high-deductible plan. She always has an agenda. My opinion is the hsa is better if u rarely go to the doctor, but I'll let others chime in. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/ReredditLink.f7b66a91705891e84a09.css.map*/Then keep in mind that the PPO is likely to be better if you have a rare but serious health problem, like you get in a car wreck or something. He then tells me you can have a savings account that is tax-free AND have traditional insurance. Ultimately though, it’s all a numbers game. HSAs offer many distinct advantages for consumers. HRA is an IRS-approved, employer-funded, tax-advantaged health benefit that reimburses you (so long as you’re an employee) for out-of-pocket medical expenses and health insurance premiums. Since you are in a low tax bracket, the HSA advantages aren't as huge as they would be for someone earning more money who is healthier. In-network docs are cheaper typically. The deductible on the HSA's plan was $3000, with 90% coverage afterward, PPO was $2000 with 80% coverage afterward. Related. Press J to jump to the feed. that should definitely save you a couple hundred dollars off your taxes and help build a medical nest egg for when you have more medical bills down the road. That is why I, personally, chose to go with an HSA this year. HSA (Health Savings Accounts) A health savings account is usually an option that is added on to a PPO plan. ._2JU2WQDzn5pAlpxqChbxr7{height:16px;margin-right:8px;width:16px}._3E45je-29yDjfFqFcLCXyH{margin-top:16px}._13YtS_rCnVZG1ns2xaCalg{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex}._1m5fPZN4q3vKVg9SgU43u2{margin-top:12px}._17A-IdW3j1_fI_pN-8tMV-{display:inline-block;margin-bottom:8px;margin-right:5px}._5MIPBF8A9vXwwXFumpGqY{border-radius:20px;font-size:12px;font-weight:500;letter-spacing:0;line-height:16px;padding:3px 10px;text-transform:none}._5MIPBF8A9vXwwXFumpGqY:focus{outline:unset} The HSA is a far better deal for you, because of the $1,100 employer contribution, and because the HSA makes all qualified healthcare expenses pre-tax. Have I reached my deductible this year? ._3gbb_EMFXxTYrxDZ2kusIp{margin-bottom:24px;text-transform:uppercase;width:100%}._3gbb_EMFXxTYrxDZ2kusIp:last-child{margin-bottom:10px} That's generally true, but if you have a high income, the tax savings may make the HSA plan more advantageous even if you are somewhere in the middle. This means your out of pocket medical expenses are are lowered by the amount corresponding to your marginal tax rate when you use an HSA. So $150 kept away from the tax man, and I get to spend it. (If I'm understanding this correctly) What is the best option for me? So I took what I thought was the best option, the PPO or "regular" insurance. However last year I had surgery to remove a bladder tumor and now I need to see a urologist every 3-4 months as well for preventative care. Each account the right choice depends on your employer offers, look at end! Employer for assuming they know your medical situation, then you 'll almost always come out ahead or... 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