by Elle Martinez

Why We’re Switching to a High Deductible Health Plan

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You know it’s time to change things up when your health insurance premiums are more than your mortgage payments.

At least that’s our push.

Over these last few years, we’ve seen premiums rise higher and higher. This year was no different.

Running the Numbers for High Deductible Health Plan

Open enrollment is here which meant it was time to review our options.

Besides the usual basic and plus plans, my husband’s employer is also offering high deductible health plan (HDHP).

As the name suggests, an HDHP comes with a big deductible than the other two plans. The upside is that we’d pay less for our premiums.

Here’s what they looked like:

Basic Family Plan: The deductible would be $5,000 for our family with a monthly premium of $800.
Family Plan Plus: The deductible would be $2,500 for our family with a monthly premium of $1,050.
High Deductible Plan: The deductible would be $5,000 for our family with a monthly premium of $500.

If we decided to stay with the basic family plan, our premiums would be higher than our mortgage payment!

Like every year, the packet from HR includes a ton of information about the premiums, coverage, and costs of the different plans offered so we dug into them to get a clearer picture.

Based on costs and benefits, we knocked out the plus plan and took a closer look at the basic and high deductible plans.

So the deductible is the same with both plans, but with the high deductible health plan, we would pay a lot out of pocket.

Primary care visits (excluding preventive visits) would be all on us. Prescriptions – all on us. Hospital visits – yep, it’s all on us.

So yeah, we’ll pay less for premiums, but a portion of our healthcare expenses would be shifted towards our side.

With two little kids, both under the age of 7, we knew we needed to discuss this a bit further.

On the other hand, since our kids have been born, we’ve rarely had to visit their doctors for anything other than their immunizations. (I think it’s been twice between the two of them.)

Gratefully, we’ve also had minimal visits as well so that’s something else we considered.

Our Healthcare Gameplan for 2018

After some thought, we’ve switched over to the high deductible plan.

While we’ll be saving on paper $300/month with the HDHP premiums, my husband is still having $800/month taking out of his paycheck.

Why?

The high deductible plan comes with a health savings account. It’s a handy account that has some awesome benefits we’d like to take advantage of.

What’s a Health Savings Account?

A health savings account (HSA) is another type of investment account.

Previously we’ve been using a Flexible Spending Account, which we pay for expenses like optometrist visits, deductibles, copays, my glasses, and contact lenses. It’s a wonderful account, but it ‘resets’ every year.

If you don’t use your money, you lose it.

So while we’re thankful to not have many medical related expenses, that also means a possibility of leaving money on the table.

(Good news is we stocked up on our stuff and maximized our FSA money.)

Here’s where a health savings account shines.

With an HSA, we can save up for the expenses like before, but it now rolls over.

That means if things are going pretty well, that balance will grow year after year.

Some other big benefits of HSAs include:

Our contributions are tax-free. For a family, we can contribute up to $6,900.
His employer is kicking in some money into the HSA. To sweeten the pot, his employer is putting in $100/month into the HSA or $1,200 for next year. Love free money!
HSAs offer tax-free distributions. If we use the money for qualified medical expenses, what we pull out is tax-free.
Our earnings in the account are tax-free. Yep, if we pull out less than we use, that money grows (earning and interest) tax-free.

So after weighing the costs and benefits, we feel good about making the switch over to a high deductible health plan.