HSA and HDHI

[avendesora]

My DH currently is paying $500 towards his company's health insurance plan. His company also pays, I believe, $500. The plan isn't particularly impressive or unimpressive. We're pretty healthy and hardly use it. I'm not one to run to the dr every time the kids sneeze, for example. Only one of my kids has been on antibiotics, and only once. We aren't having any more kids.

So, here are some numbers I've run.

Currently, $12,000/year plus some modest copays is being spent on us having health insurance.

I looked at eHealthInsurance and found a plan that is $350/mo, with a $6000/fam deductible, after which everything is covered.
$4,200/year on insurance + $6,000/year max on expenses = $10,200/year on health care.

The big difference, of course, is that $6,000 is currently not paid by us, but paid by the employer. DH works for a small company (10 people), that is always looking for new ideas for how to get us the benefits we need at the lowest costs, etc. The boss has even mentioned that he'd rather be giving us the money in terms of HSA instead of giving the money to insurance companies.

So, I'd like to propose to DH's boss that we opt out of the company's health plan, and ask that they allocate that money to us in the form of an HSA. We would then spend the $350/mo our selves, which is less than the $500, even when you consider that the $500 is pre-tax and the $350 would be post-tax.

Is the company allowed to do this? Or could we ask for a $6000 raise and do it all ourselves?

I'm sure there are some aspects that I havent' thought of here. Any thoughts?

Thanks!
Aven

[phatchristy]

Well, one other things is that if they deduct from your DH's payroll for insurance then you are not taxed on it. I think there is a way to somehow credit that on taxes if it is a high enough amount.

Have you looked at the other insurance plan's exclusions, etc? We looked elsewhere here, but there were so many exclusions on the plans.

We also have a very expensive health plan through DH's work. I'm praying for universal coverage, we're really healthy people too. And, I've birthed at home w/midwives, and they paid SOOO little for that. Far less than what we paid in. Sigh.

[MissMommyNiceNice]

HSA is really the way to go if you are healthy & young & don't have chronic medications & conditions. Ideally, the employer would consider offering the HSA as an option when open enrollment takes place this fall. Whatever plan they currently have should also have an HSA option. Any company I or my husband has worked for has always offered either a PPO or PPS option, and in the last few years have started offering the HSA as well. The last company I had HSA with made contributions directly to the account, like you are describing. So, I paid like $100 mo and put $200 mo into the account. In addition to what I was contributing, my company also put a fixed amount in. Why wouldn't they? It saves them tons of money.

[sunnysandiegan]

We had a similar situation (same type of insurance; DH's paid in full by SMALL company; mine paid in full by us through the company; so net equals yours) and what I did was ask DH to let his employer know about the plans I had found.

He did. They decided to change plans to an HSA-eligible plan. It costs a bit more and covers a bit less than the ones I looked up and gave them, though. The guy who does this stuff at DH's company said the ones I looked up were for individuals and he had to go with a small biz type offering. In the end, though, we are saving $100/month and we are able to contribute pretax money into our HSA, which increases the actual savings.

[russsk]

Another option for your DH's employer might be an HRA - that's where the employer allocates a certain amount (your deductible, or a portion of it) and deposits it in an HRA. You use a debit-like card to access that money when you go to the doctor, etc. This sounds like what you are talking about, except with an HSA the money is yours (so increases your gross income). An HRA won't affect your income, as the money isn't yours. My company switched from a low-deductible, expensive insurance to one with a very high deductible, but they gave us the deductible amount in an HRA. Our costs went way down (a little for the premium, but no out of pocket costs) and I believe there are tax benefits for the employer.

[avendesora]

Originally Posted by sunnysandiegan

The guy who does this stuff at DH's company said the ones I looked up were for individuals and he had to go with a small biz type offering.

This is one of the things I'm confused by. Isn't group insurance nearly always cheaper than individual insurance? If the individual insurance is cheaper, it would make sense to go get that and have your company give you a raise for that amount or something. Or sometimes there is a 'buy-out' option that companies allow. They'll give you the cost of the insurance.

Originally Posted by russsk

This sounds like what you are talking about, except with an HSA the money is yours (so increases your gross income). An HRA won't affect your income, as the money isn't yours.

But the HSA is tax-free, and tax-deferred for interest, and shouldn't actually affect our gross income. The only time HSA is taxed is if we withdraw from it for non-medical purposes (plus 10% penalty, just like IRAs, unless over age 65, then you can withdraw and just pay taxes, no penalty).

Wouldnt' HSA be better, because then the money would be ours?

Aven

[sunnysandiegan]

Originally Posted by avendesora

This is one of the things I'm confused by. Isn't group insurance nearly always cheaper than individual insurance? If the individual insurance is cheaper, it would make sense to go get that and have your company give you a raise for that amount or something. Or sometimes there is a 'buy-out' option that companies allow. They'll give you the cost of the insurance.

I am not insurable on my own due to our CRAZY healthcare system or I would get the individual HSA-eligible plan that covers more and costs less. I have an angiomylopoma (sp?) on my kidney and have been released from care years ago with absolutely no complications, etc. They only found it due to an emergency room visit nine days after giving birth and they wanted to make sure there was nothing left inside my body from the emergency C-section, so they were looking REALLY carefully. I've tried getting it excluded as a pre-existing condition, etc. I have a good friend who is an insurance agent (healthcare) and he got one company (out of MANY) to agree to *possibly* insure me at a higher premium (how much higher depending on the results of below)... IF I jumped through a bunch of hoops and spent several thousands of dollars out of pocket getting a bunch of tests to satisfy the underwriters. There was no guarantee they WOULD insure me and it totally wasn't worth it.

As far as why small group insurance is higher than individual, that is a bit mysterious. However, I was told it is because the insurance agents/companies essentially group all individuals together and that creates a bigger "group". Large companies get volume discounts. Super small companies get the shaft...

[wifeandmom]

I would be incredibly hesitant to go the route of asking for a raise to cover the cost of an individual policy on your own. Individual policies are a beast all in their own category.

First, they are typically written for one year. So, for that one year, your premium will be $X amount of money. If, during that one year, you cost them more than what you paid them, guess what your premium is going to do? If, during that one year, you or someone on the policy is diagnosed with a condition that they would have initially denied coverage for, guess who isn't going to be renewed when the year is up?

The list goes on and on, but access to group insurance is not something I'd give up except under very limited circumstances.