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Subliminallly_cool OP t1_jefnuld wrote

Reply to comment by Bangkok_Dangeresque in HSA vs PPO Health Plan for upcoming pregnancy? by Subliminallly_cool

  1. 22%. Income like 150k combined (me 80k, her 70k)

  2. I am hoping to max the HSA. Not exactly sure about how much we hope to contribute to the FSA.

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Bangkok_Dangeresque t1_jeg77fu wrote

Well since you know you have a pregnancy/birth coming up next year, if you do choose the PPO you should certainly contribute something. You know you will have out of pocket medical expenses. May as well get an effective 22% (+whatever your state tax rate is) discount on them.

That said, the math here makes it so that in virtually all scenarios you come out ahead with the HDHP, so long as you do actually max out the HSA.

If you have $0 in healthcare expenses, the PPO will cost you an effective -$3401, while you will actually be +$1510 better off on the HDHP. As in, with the employer HSA contribution plus your tax savings from contributing, you will make money on the HDHP as a starting point.

In the maximal care scenario where you hit the (shockingly similar) out of pocket max for both plans, the PPO effective cost will be -$6,851, while the HDHP effective cost will be -$5,290. So in the worst case scenario you'd be $1,561 better off on the HDHP.

Things can get a little hazier in the middle though. In theory, if most of the care you need is in the form of visits that require a copay rather than cost sharing, it's possible that there's a zone of moderate healthcare usage where the PPO makes you better off. At least in terms of direct out of pocket expenses.

For example, say you have 10x visits to specialists. On the HDHP this might be $2,000 out of pocket towards your deductible (assuming $200 billed per visit), but on the PPO it might only be $350 out of pocket in copays (assuming a $35 copay per visit).

Though even then, while the that extra $1650 out of pocket for the same care might sting your checking account, your overall effective cost accounting for the employer HSA contributions plus your tax savings on the HDHP would be $1561 - $2000 = -$490, while the PPO would be -$3401 - $350 = -$3751.

So still much better off on net. The difference would be even starker if instead of office visits you had coinsurance-eligible care on the PPO, since the 20% rate is the same.

On the other hand contributing to an FSA with the PPO would moderate the differences somewhat.

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