I’ve always thought of my health insurance as just….well, insurance. Much like car insurance, it’s something I willingly pay for each month to help pay for the result of a catastrophic medical event. If I get cancer, or some other serious disease and require expensive treatment insurance would be there to help take care of the bills. If I have plantar faciitis for a year and finally decide to go see a doctor, I want it to be covered. If my kids aren’t feeling well, I don’t want to have to think twice about taking them to the doctor, because I’ll know that the office visit won’t cost me a cent.
I’ve always thought the purpose of insurance was to protect against the expensive unexpected, and medical expenses are expensive. It’s not something on which I would expect to ever get a positive return. Every year of my eighteen year career, I’ve chosen a low deductible Preferred Provider Organization (PPO). It always seemed to be the best decision because if a member of the Pizel household would fall ill, the bill would very low, if not zero. If there was a major medical catastrophe, the money out of our pocket would be significant, but the least out of all the plan options.
I had never looked into other options, or these health savings accounts that seem to becoming more and more popular these days. My thought process was, I have a good job and can afford good insurance, why not buy the best insurance possible?
Does this sound like you? Have you followed this same stream of logic? If so, you may have been throwing your money out the window unnecessarily just as I have been for the last eighteen years.
I had planned on doing exactly the same thing this year as the time for enroll in our health care choice for 2015 was at hand. However, some hallway talk regarding our options prompted me to scrutinize the options closer. What I discovered made a great case for switching to a high deductible PPO with a health savings account (HSA).
What Would I Lose With A High Deductible PPO:
- My individual deductible would double, going from $1250 to $2500
- Diagnostic office visits go towards deductible instead of being covered 100%
- Prescription drugs go towards deductible instead of being covered 80% with a maximum amount per prescription.
What I would Gain With A High Deductible PPO:
- The high deductible PPO plan is $300 a month cheaper than the low deductible version.
- The high deductible PPO plan can be paired with an Health Savings Account (HSA)
- Money can be deducted from my paycheck and placed in my HSA tax free
- My Employer offers $1,100 healthy living incentives that can be earned and deposited tax free into our HSA.
- I have options as to where my HSA funds are invested to help them grow
- If I were to have the $300 difference in the price of the plans placed into an HSA instead, and fulfilled the employer specified incentives, the account would accumulate $4,700 by the end of the year.
The question is, do I normally have more than $4,700 of medical expenses in a year? The answer is a resounding, “No.” Our family had two non-preventative doctor visits last year (which would still be covered 100% under the high deductible PPO), which is an average year in our family with regards to medical care needs. These two visits would not have added up to $4700 of medical expenses.
What happens To The Money In an HSA?
When the year is over, your money stays exactly where it is. It continues to accumulate gains, and you can continue to put money into it. Some even use it as a form of retirement savings, but you can certainly use it to save for future medical expenses as well.
How Easy Is It To Use HSA Funds?
This is something that is likely different from provider to provider, however I will be supplied with an HSA debit card. When I pay for qualifying medical expenses such as office visits and prescription drugs I simply use the HSA debit card just as I would use my own bank debit card
The fact of the matter is, our family just doesn’t need medical care very often. Therefore, throwing our money towards high premiums for coverage we don’t use is a complete waste. The advantage of switching to a high deductible PPO is that it puts us more in control of our own money, which is always a good thing.
Have you always simply purchased the “best insurance you could afford?” Have you really ever looked into a high deductible plan with an HSA?