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Hsa Insurance Vs Ppo Question & Answers

2014 January 29
by Sarah Fields

Charles asks…

HSA vs. regular plan for starting a family!?

It is time to renew my health insurance, on which I had a high deductible ($1k). My husband has his health insurance through his job; I am paying for mine on my own. We are planning on starting a family in Jan. 08 and I am wondering if a regular plan or HSA is better to help with the maternity coverage, esp. since the monthly premium for the HSA is comprable to the regular plan. (at least through BCBS) I have been to plenty of HSA websites and I’d appreciate answers that would help our specific situation! We are great at saving, but we are unsure if the HSA would benefit us. Thanks so much!

Sarah Fields answers:

Nobody here can give you the answers you want because nobody here knows your specific situation. Plans and companies are different depending upon your state, and premiums can vary depending upon your ages, current and past health concerns, if you smoke, and your height and weight.

In general, if you seldom if ever go to the doctor or use prescriptions the HSA plan is better. If you go to the doctor you do get the discounted rates plus this amount will apply toward your deductible. I have an HSA plan and I’m happy with it.

Most individual policies do not cover maternity. Some HMO plans will but there are few available for individuals and none are HSA qualified. Some PPO plans have maternity as an option. I consider most maternity riders to be pre-payment plans. After you take into consideration the extra premium and the waiting period you’ll pay more in premiums than the cost of the delivery. When you get a maternity rider the insurance company knows you are going to get pregnant; they’re not going to pay out more than they receive. Remember that complications of pregnancy are covered on most plans even if you don’t have maternity coverage.

Give a call to a local independent agent that works with the major companies. The agent can tell you the options available to you. The plans and premiums are exactly the same whether you use an agent or not.

Helen asks…

Does an HSA make sense in California or should I stick with a PPO?

I’m trying to figure out if I should get an HSA high-risk health insurance account or a PPO. My company pays for 90% of the premium, so the high deductible account would be about $20 a month and the PPO would be $25 a month.

The big difference is that for the HSA my company also chips in $100 a month. The deductible is $1500. So in theory, that sounds like a good deal.

I know in California the HSA doesn’t quality for tax benefits so I have to pay tax on interest earned in it, plus on the $100 a month my company puts in. Plus, it goes money to have an HSA open.

I was considering opening the HSA and putting $1500 additional in it per year as another retirement account. But I am also worried about getting sick and needing to go to the doctor. I’m 25, but tend to avoid going to the doctor even when I should.

Do you think I should go with the PPO or $1500 deductible HSA, keeping in mind that I live in California…

Sarah Fields answers:

Part of the answer depends on exactly what coverage is offered from the medical plan itself. It’s fairly easy to save and set aside money for the deductible, but of greater concern is what the insurance plan will pay when you need it. Is the high-risk plan your only option?

You may have to pay state taxes on the interest earned in the HSA, but it should still be exempt from federal income taxes. In that respect, it can still help you build extra funds for retirement.

Even with a PPO, you are going to need extra money to pay for future medical costs should you become ill or injured. If you select the PPO, you cannot utilize the HSA.

Another consideration is if you do not have a Section 125 (flexible spending plan) offered by your employer, you can use an HSA to set aside funds for co-payments, etc.

Of all the very thoughtful questions you have raised, I think the most decisive issue is a comparison of the coverage offered by the PPO vs. The high-deductible plan. PPOs do not always offer the best coverage, and if even they’re relatively good, they will not cover a big part of your expenses. My husband was diagnosed with cancer 18 months ago, and his PPO had a $500 deductible with an out-of-pocket maximum of $3,000 per year for in-network providers. Nevertheless, we far exceeded $6,000 each year in medical spending that we had set aside in my husband’s flexible spending account. An HSA would have offered another tax-advantaged option for us. Note: We don’t currently have the option of an HSA-qualified plan from my husband’s employer. We have to go with the PPO.

The terms of a PPO can be very misleading as to actual out-of-pocket costs.

George asks…

Please give me advice about choosing a health insurance plan?

I need to find an individual health insurance plan for myself. I am 27 and my previous coverage ended (which was through my college). As a young adult I had ulcerative colitis, but it has been a few years since I have had any issues (or doctors visits about it) and my last colonoscopy report (a few years ago) stated that there was not only no evidence of present colitis but no evidence of past colitis (which was great news). Well, recently I have been having symptoms, but refuse to go see a doctor about it until I have health insurance. I did have a physical exam this past month and was told that I needed to have an abdominal ultrasound for other symptoms. One, I am worried that somehow an insurance company could get ahold of these past records and deny any future treatment. I told this to the practitioner and told her I didn’t want her to make that referrals yet. Is it possible for an insurance company to find out about this last visit and its results and in effect deny future coverage? So, to get to the point of my inquiry, I do not understand which factors will aid me the most in a health insurance plan. It sounds as though a PPO is best, and one with a HSA is ideal, but I am confused about how it actually works and whether I would actually benefit from a higher or lower deductible in the end. Remember, I MUST have a colonoscopy as well as one or two procedures (such as ultrasounds) in the near future. I am worried that the results of these procedures might reveal something more serious and would require further treatment. THANK YOU SO MUCH for your answers, I really appreciate it!!!!

Sarah Fields answers:

A plan that can turn you down because of preexisting conditions, or that bases its premiums on your health status, would probably require that you allow them to check your medical history. Check your state’s Blue Cross / Blue Shield plans, or whatever companies have the status of “insurer of last resort” (or are nonprofits) in your state. They would probably not be allowed to turn you down based on your health, although they might still be able to set your premiums based on your health. Check your state’s insurance commission for that state’s rules.

Based on experience, stay FAR away from HMOs. They’re horrible. Doctors are basically paid to not treat you (they’re paid a lump sum based on the number of their patients that are covered by the HMO, so it’s more profitable for them to not treat you, and to leave their slots open for patients from whom they’ll receive additional payment). Also, you’ll need referrals for treatment from any doctor other than your primary care physician to be covered – a total pain in the a**. I’ve found that the best doctors in my area don’t accept HMOs. The doctors who accepted my HMO were AWFUL – I left them as soon as I got rid of my HMO. I’ve had good experience with PPOs. Just make sure your doctors of choice are considered “in network” for any plan you choose. Otherwise, your costs for treatment from those doctors will be higher (higher copays, higher deductibles, some charges not covered in full, etc.).

To determine whether to choose a high-deductible vs low-deductible plan, you need to do the math to determine which will cost you more over the year. A lower deductible means higher premiums. Look at copays, what’s covered and what isn’t, etc., too, to determine what your potential costs will be.

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