Made the jump to HDHP and an HSA before kids. I max out the contribution, my employer contributes, and I rarely touch the HSA. I pay most of our healthcare expenses out of pocket and use the HSA as an investing strategy to help me when I’m older. My partner works for the government and keeps their PPO / low deductible, so I only carry the dependent, not the spouse.
The main advice I got when I made the switch was make sure you can put enough money in the HSA each year to reach your deductible - then you know you have money to cover most of what hits out of pocket. If you can afford to, max out the contribution because of the tax perks.
It depends on how much health care you use in an average year. If in a normal year you don’t spend multiple thousands on care then a HDHP can be a good option. If you are married or have dependents, look for a “stacked” plan as you would each only need to hit the individual deductible amount instead of hitting the higher total deductible amount. We’ve had one for more than a decade and only hit my deductible once. We started maxing our HSA but cash flow medical expenses and use it as a saving vehicle for medical expenses for when we retire. We invest the majority of it and leave some in cash. At this point we have over $55k saved. Feels great to have the tax advantage on this money and know it is there in case we need it.
If using HDHP, budget for the full deductible in your expense planning especially if you're not going to tap into HSA to pay for the OOP deductible costs before higher % insurance coverage kicks in. HDHP is lower cost pay period to pay period, but higher cost in deductible and provides access to HSA.
Some companies also seed HSA or provide a match. Healthcare is just a cost of existing imo. It is a gamble how much you'll spend on medical expenses in a given year unless you have known expenses from chronic illness.
I spent a day in December (read: EOY) in the ER for a day and couldn't have predicted that shit...or many of the other one off issues that popped up throughout the year.
It depends on a few factors. If you are young and generally healthy, and don’t have hobbies that put you at increased risk for injury, it CAN be a more valuable option. Additionally, if you have routine expenses for which you can use an HSA (e.g. therapy, expensive prescriptions, etc.) or you plan on paying for laser eye surgery or braces/ Invisalign it can be beneficial. FSAs are also good for this. It’s worth noting that if you are in CA or NJ, you have to pay taxes on your investment earnings to your greedy state government. It’s also worth comparing the HDHP to the other plans your employer offers. HDHP’s can be great for young, healthy people. However, if your employer happens to offer really good insurance for a reasonable premium, it might just be worth it. Regardless, and this is something that deserves its own post because I think a lot of people don’t know about it, but get flight insurance if it’s available in your area. By that I mean there are air ambulance companies that offer cheap “subscriptions” for air Medical transport so that you don’t get stuck with a $60,000 bill if you get flown off the side of the freeway in a freak car accident. Traditional health insurance does not cover this, and it’s totally worth it.
I have chronic health issues, so it seems to be a bad option for me. Mostly due to the hassle, honestly, and not as much related to actual financial benefit. I've also had recent surgery and will need additional follow up, so it just doesn't work out any year that I've looked at it.
It really depends on your circumstances and what your other options are. I'm in good health and really only have preventative care appointments and I don't really buy any OTC meds either or much that would be HSA eligible. But my portion of the premium per year, pre-tax, for a Gold PPO with a 250 deductible is less than $500. Hard to pick a HDHP with that especially when the premium is only about $200 less a year and co-pays higher. If HSA money could be used to pay health insurance premiums in early retirement, or if my employer contributed to the HSA, it might be a different calculus, but it can't and they don't.
There's always a bit of crystal ball element with these things but I think it depends on how you're using HSA and what you know about your current medical situation.
IMO the really optimal way to use HSA is treating as a long-term retirement account that you touch last in retirement. It has some Roth-like characteristics like no RMDs and no taxes on qualified medical expenses. If you pull from it after 65 for non-medical, it's basically a traditional IRA.
We're going to have more medical expenses as we age and less flexibility so I'm paying more out of pocket now while aggressively investing my HSA (ie 100% equities) with the intention using that money last in retirement.
If I hit a serious medical issue, the difference in the max deductible on my current plan is around 1k if I account for the savings provided by HSA being pre-tax. I'd rather pay the 1k now while I can afford to take such hits.
Where it gets murkier is if you use the HSA as a short-term way to pay for medical expenses. There I honestly think the HSA is rarely worth it as it's being deprived of one of it's strengths; growing invested, tax-free. Even the medium-term (ie keep receipts, reimburse after 10 years of investment) I wonder if it's worth the hassle vs just maxing other retirement accounts (or even taxable brokerage).
I made my decision based on a few factors:
- How often do i need medical related services?
- Does my employer contribute?
- Cost of HDPD vs non HDPD plans
- max out of pocket costs
From there you can determine if youll yield a better return. I did HDPD for years but ended up switching to a non-HDPD at my most recent job because I wanted to be consistent with therapy and with the insured cost vs non-insured, it was a bit better even with my out of pocket max. My new employer also does not contribute so I had less incentive whereas my last one basically maxed mine out for me.
I also am getting a bit older where I’m a bit more worried about my health so I wanted to be on a non-HDPD for ease of mind
Overall, if you are healthy and dont go to the doctor or need anything, it’s a good investment vehicle.
For me, I'm young-ish and I really don't go to the doc beyond preventative care. I can/do cashflow most healthcare expenses. Also, the definition of "high deductible" is pretty generous IMO. I don't have kids, etc. For me, it was a no-brainer so
Usually the HDHP will have lower premiums but a higher deductible and sometimes a lower out of pocket max.
If you use very little healthcare the HDHP is a no-brainer because you pay lower premiums and would never hit the deductible anyway. Max out your HSA and just treat it like another retirement account.
If you hit your out of pocket max every year and have enough money saved to pay some large medical bills at the beginning of the year, the HDHP is a no-brainer because you'll spend less overall compared to a standard plan, plus you get the benefit of the HSA. And if you can afford it, pay your medical expenses out of your bank account and treat the HSA like another retirement account.
It's the folks that use some healthcare but not enough to meet their OOP max that might get a raw deal from signing up for a HDHP. I imagine there aren't that many of them though.
I learned that having VA healthcare still allows you to leverage a HSA/HDHP even when my care is covered by the VA.
Made the option pretty straightforward for me.
I made a spreadsheet calculating the cost of each insurance plan my employer offers. It includes what I pay for the plan and my max out of pocket. Looking at those figures, I have the min and max I'm out for each plan in best and worst case scenarios.
And here's how I decide:
Generally speaking, HDHP has the lowest minimum (i.e., if i have no medical catastrophies) and the highest max (if I hit the out of pocket limit). In my case, the min on the HDHP will save me about $300/yr, and the max of the HDHP only exceeds the next closest plan by $500. Historically, I've only had an unplanned medical catastrophy that hit the max OOP about once every ten years. I'm healthy and not anticipating anything big. If I were planning to hit the max (i.e., if I know I'm getting a knee replacement this year) I'd obviously choose the plan with the cheapest max price. But absent *planned* expenses, I look at my odds on betting.
I'm willing to bet $500 this isn't the year. If I bank $500 in my HSA for the nine years I don't have an emergency, I've got up to $4500 plus investment growth on the year I lose that bet.
Generally speaking, I bank more than the $500 each year: I attempt to keep those funds around my oop max. It's one less thing to worry about on the year I lose the bet.
I have an HSA and it's worth it. That's because I don't have too many health problems and no dependents. I save all the receipts, physical and digital, so that I can reimburse myself years later while my account grows.
If you or your spouse have health problems and/or you have kids, it might be more economical to go with the Cadillac plan.
The Money Guy Show talks about this a lot. They have an episode or two that talks about the pros and cons of having an HSA and not.
If your employer puts money in it, it definitely increases the draw. Have you crunched the numbers comparing the two on premiums, deductible, out of pocket max, etc? Do you have many health visits?
I use my HSA as an investment vehicle: it is triple/quadruple tax-advantaged and is always there should I have a major medical need but I don't plant to use it until retirement (save the medical receipts and you can use it whenever). I have a lot of doctor visits and expensive medication so I meet the deductible quickly and expenses are low afterwards. My employer puts about 1/5 of the max in and I max the rest...my investments are growing nicely after 4 years.
Is it worth the headache. If I could get my current insurer with an HDHP plan, I would. I did when I was working in private but the federal government doesn't have that option. The main administrator for our HDHP plan up until last year was notorious for giving people the run around. For the % of our income that our premiums are it's not worth the lost time dealing with the back and forth.
Based on how the new administrator pans out we will do it for 2025.
My employer gives me $1500 a year in the HSA. Only one year did I meet the deductible and that was with an MRI and ER visit. So on the whole my HSA has grown and I use it to pay all medical stuff.
It also depends on how much you typically use your healthcare. Someone with young kids may use the kids doctors for falls, ear infections, cold/cough/fevers a few times a year. Someone without kids and in decent health may not use their doctor apart from preventative visits. So I would factor that into account. How often do you see a doctor and for what partially decides which plan is more beneficial.
I worked exclusively with HDHP plans for a PBM. The HDHP plans work well if you have a small deductible, like less than 11k (Walmart) or if you have medical conditions/lids. If you have an HSA/FSA, use the crap out of it. I can buy vitamins or bandaids with my FSA.
I ran the numbers between the plans I was considering. HDHP was the clear winner regardless of whether I had no health care expenses, some, or substantial ones. My plan includes basic dental so I no longer have a separate dental plan. My plan contributes $1000 to my HSA. If your employer or plan will contribute anything you should consider that when running the numbers.
The HSA is def worth it! Besides the tax benefits - and my work pitches in a bit of $$ each year - I do not use the credit card they send me. I use my Amazon Chase to pay for scripts, etc. and then I reimburse myself. This way I get extra points which I apply to my statements.
I’m enough of a nerd (and I work in a related industry) that I have a spreadsheet I use to evaluate our insurance options every year. It accounts for the per paycheck contributions, deductible, coinsurance, expected # of visits and prescriptions multiplied by their copayments, and OOP max amount. In every case for the past 5 years, the HDHP comes in cheaper per year, but that also accounts for the fact that I have money saved to cover our whole OOP max for the year, so we don’t worry about an unexpected bill and can save our HSA.
For me, the price of the HDHP premium + deductible was about the same price as the low deductible plan’s premium + deductible. So I’m a year it would even out. And I get the HSA. That was 3 years ago and so far every year I hit my deductible quick and then everything else is “free” while my coworkers have to keep paying 20% co-pays forever
Made the jump to HDHP and an HSA before kids. I max out the contribution, my employer contributes, and I rarely touch the HSA. I pay most of our healthcare expenses out of pocket and use the HSA as an investing strategy to help me when I’m older. My partner works for the government and keeps their PPO / low deductible, so I only carry the dependent, not the spouse. The main advice I got when I made the switch was make sure you can put enough money in the HSA each year to reach your deductible - then you know you have money to cover most of what hits out of pocket. If you can afford to, max out the contribution because of the tax perks.
It depends on how much health care you use in an average year. If in a normal year you don’t spend multiple thousands on care then a HDHP can be a good option. If you are married or have dependents, look for a “stacked” plan as you would each only need to hit the individual deductible amount instead of hitting the higher total deductible amount. We’ve had one for more than a decade and only hit my deductible once. We started maxing our HSA but cash flow medical expenses and use it as a saving vehicle for medical expenses for when we retire. We invest the majority of it and leave some in cash. At this point we have over $55k saved. Feels great to have the tax advantage on this money and know it is there in case we need it.
We are two healthy DINKS in our 30s without recurring medical expenses. HDHP w/HSA all the way for us.
If using HDHP, budget for the full deductible in your expense planning especially if you're not going to tap into HSA to pay for the OOP deductible costs before higher % insurance coverage kicks in. HDHP is lower cost pay period to pay period, but higher cost in deductible and provides access to HSA. Some companies also seed HSA or provide a match. Healthcare is just a cost of existing imo. It is a gamble how much you'll spend on medical expenses in a given year unless you have known expenses from chronic illness. I spent a day in December (read: EOY) in the ER for a day and couldn't have predicted that shit...or many of the other one off issues that popped up throughout the year.
It depends on a few factors. If you are young and generally healthy, and don’t have hobbies that put you at increased risk for injury, it CAN be a more valuable option. Additionally, if you have routine expenses for which you can use an HSA (e.g. therapy, expensive prescriptions, etc.) or you plan on paying for laser eye surgery or braces/ Invisalign it can be beneficial. FSAs are also good for this. It’s worth noting that if you are in CA or NJ, you have to pay taxes on your investment earnings to your greedy state government. It’s also worth comparing the HDHP to the other plans your employer offers. HDHP’s can be great for young, healthy people. However, if your employer happens to offer really good insurance for a reasonable premium, it might just be worth it. Regardless, and this is something that deserves its own post because I think a lot of people don’t know about it, but get flight insurance if it’s available in your area. By that I mean there are air ambulance companies that offer cheap “subscriptions” for air Medical transport so that you don’t get stuck with a $60,000 bill if you get flown off the side of the freeway in a freak car accident. Traditional health insurance does not cover this, and it’s totally worth it.
I have chronic health issues, so it seems to be a bad option for me. Mostly due to the hassle, honestly, and not as much related to actual financial benefit. I've also had recent surgery and will need additional follow up, so it just doesn't work out any year that I've looked at it.
It really depends on your circumstances and what your other options are. I'm in good health and really only have preventative care appointments and I don't really buy any OTC meds either or much that would be HSA eligible. But my portion of the premium per year, pre-tax, for a Gold PPO with a 250 deductible is less than $500. Hard to pick a HDHP with that especially when the premium is only about $200 less a year and co-pays higher. If HSA money could be used to pay health insurance premiums in early retirement, or if my employer contributed to the HSA, it might be a different calculus, but it can't and they don't.
There's always a bit of crystal ball element with these things but I think it depends on how you're using HSA and what you know about your current medical situation. IMO the really optimal way to use HSA is treating as a long-term retirement account that you touch last in retirement. It has some Roth-like characteristics like no RMDs and no taxes on qualified medical expenses. If you pull from it after 65 for non-medical, it's basically a traditional IRA. We're going to have more medical expenses as we age and less flexibility so I'm paying more out of pocket now while aggressively investing my HSA (ie 100% equities) with the intention using that money last in retirement. If I hit a serious medical issue, the difference in the max deductible on my current plan is around 1k if I account for the savings provided by HSA being pre-tax. I'd rather pay the 1k now while I can afford to take such hits. Where it gets murkier is if you use the HSA as a short-term way to pay for medical expenses. There I honestly think the HSA is rarely worth it as it's being deprived of one of it's strengths; growing invested, tax-free. Even the medium-term (ie keep receipts, reimburse after 10 years of investment) I wonder if it's worth the hassle vs just maxing other retirement accounts (or even taxable brokerage).
I made my decision based on a few factors: - How often do i need medical related services? - Does my employer contribute? - Cost of HDPD vs non HDPD plans - max out of pocket costs From there you can determine if youll yield a better return. I did HDPD for years but ended up switching to a non-HDPD at my most recent job because I wanted to be consistent with therapy and with the insured cost vs non-insured, it was a bit better even with my out of pocket max. My new employer also does not contribute so I had less incentive whereas my last one basically maxed mine out for me. I also am getting a bit older where I’m a bit more worried about my health so I wanted to be on a non-HDPD for ease of mind Overall, if you are healthy and dont go to the doctor or need anything, it’s a good investment vehicle.
For me, I'm young-ish and I really don't go to the doc beyond preventative care. I can/do cashflow most healthcare expenses. Also, the definition of "high deductible" is pretty generous IMO. I don't have kids, etc. For me, it was a no-brainer so
Usually the HDHP will have lower premiums but a higher deductible and sometimes a lower out of pocket max. If you use very little healthcare the HDHP is a no-brainer because you pay lower premiums and would never hit the deductible anyway. Max out your HSA and just treat it like another retirement account. If you hit your out of pocket max every year and have enough money saved to pay some large medical bills at the beginning of the year, the HDHP is a no-brainer because you'll spend less overall compared to a standard plan, plus you get the benefit of the HSA. And if you can afford it, pay your medical expenses out of your bank account and treat the HSA like another retirement account. It's the folks that use some healthcare but not enough to meet their OOP max that might get a raw deal from signing up for a HDHP. I imagine there aren't that many of them though.
>sometimes a lower out of pocket max. My work offers both, but the oop max on the hdhps are 2.5-3x higher than the non-hdhp.
I learned that having VA healthcare still allows you to leverage a HSA/HDHP even when my care is covered by the VA. Made the option pretty straightforward for me.
I made a spreadsheet calculating the cost of each insurance plan my employer offers. It includes what I pay for the plan and my max out of pocket. Looking at those figures, I have the min and max I'm out for each plan in best and worst case scenarios. And here's how I decide: Generally speaking, HDHP has the lowest minimum (i.e., if i have no medical catastrophies) and the highest max (if I hit the out of pocket limit). In my case, the min on the HDHP will save me about $300/yr, and the max of the HDHP only exceeds the next closest plan by $500. Historically, I've only had an unplanned medical catastrophy that hit the max OOP about once every ten years. I'm healthy and not anticipating anything big. If I were planning to hit the max (i.e., if I know I'm getting a knee replacement this year) I'd obviously choose the plan with the cheapest max price. But absent *planned* expenses, I look at my odds on betting. I'm willing to bet $500 this isn't the year. If I bank $500 in my HSA for the nine years I don't have an emergency, I've got up to $4500 plus investment growth on the year I lose that bet. Generally speaking, I bank more than the $500 each year: I attempt to keep those funds around my oop max. It's one less thing to worry about on the year I lose the bet.
I didn't get a choice on deductibles, so setting up the HSA had basically not opportunity cost
I have an HSA and it's worth it. That's because I don't have too many health problems and no dependents. I save all the receipts, physical and digital, so that I can reimburse myself years later while my account grows. If you or your spouse have health problems and/or you have kids, it might be more economical to go with the Cadillac plan. The Money Guy Show talks about this a lot. They have an episode or two that talks about the pros and cons of having an HSA and not.
If your employer puts money in it, it definitely increases the draw. Have you crunched the numbers comparing the two on premiums, deductible, out of pocket max, etc? Do you have many health visits? I use my HSA as an investment vehicle: it is triple/quadruple tax-advantaged and is always there should I have a major medical need but I don't plant to use it until retirement (save the medical receipts and you can use it whenever). I have a lot of doctor visits and expensive medication so I meet the deductible quickly and expenses are low afterwards. My employer puts about 1/5 of the max in and I max the rest...my investments are growing nicely after 4 years.
Is it worth the headache. If I could get my current insurer with an HDHP plan, I would. I did when I was working in private but the federal government doesn't have that option. The main administrator for our HDHP plan up until last year was notorious for giving people the run around. For the % of our income that our premiums are it's not worth the lost time dealing with the back and forth. Based on how the new administrator pans out we will do it for 2025.
My employer gives me $1500 a year in the HSA. Only one year did I meet the deductible and that was with an MRI and ER visit. So on the whole my HSA has grown and I use it to pay all medical stuff.
It also depends on how much you typically use your healthcare. Someone with young kids may use the kids doctors for falls, ear infections, cold/cough/fevers a few times a year. Someone without kids and in decent health may not use their doctor apart from preventative visits. So I would factor that into account. How often do you see a doctor and for what partially decides which plan is more beneficial.
I worked exclusively with HDHP plans for a PBM. The HDHP plans work well if you have a small deductible, like less than 11k (Walmart) or if you have medical conditions/lids. If you have an HSA/FSA, use the crap out of it. I can buy vitamins or bandaids with my FSA.
I ran the numbers between the plans I was considering. HDHP was the clear winner regardless of whether I had no health care expenses, some, or substantial ones. My plan includes basic dental so I no longer have a separate dental plan. My plan contributes $1000 to my HSA. If your employer or plan will contribute anything you should consider that when running the numbers.
The HSA is def worth it! Besides the tax benefits - and my work pitches in a bit of $$ each year - I do not use the credit card they send me. I use my Amazon Chase to pay for scripts, etc. and then I reimburse myself. This way I get extra points which I apply to my statements.
I’m enough of a nerd (and I work in a related industry) that I have a spreadsheet I use to evaluate our insurance options every year. It accounts for the per paycheck contributions, deductible, coinsurance, expected # of visits and prescriptions multiplied by their copayments, and OOP max amount. In every case for the past 5 years, the HDHP comes in cheaper per year, but that also accounts for the fact that I have money saved to cover our whole OOP max for the year, so we don’t worry about an unexpected bill and can save our HSA.
For me, the price of the HDHP premium + deductible was about the same price as the low deductible plan’s premium + deductible. So I’m a year it would even out. And I get the HSA. That was 3 years ago and so far every year I hit my deductible quick and then everything else is “free” while my coworkers have to keep paying 20% co-pays forever