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About Michael Higgins
Expertise
All questions pertaining to health insurance, whether group, individual/family, student, child-only, COBRA, HIPAA, Portability, dental. No expert knowledge in areas such as life insurance, disability, workman's compensation, auto, etc.
Experience
27 years as owner of health insurance agency, primarily dealing with Blue Cross Blue Shield of Arizona.
Education/Credentials
College, Business Administration.
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You are here: Experts > Money > Personal Insurance > Life & Health Insurance > Have to choose HSA or PPO Today!!!
Expert: Michael Higgins - 11/11/2009
Question
QUESTION: What is the name of your state (only U.S. law)? Illinois
My husband's company is taking the HMO option away for 2010. And sadly I found out yesterday that we needed to know today. Here are our options for our family of four with two small children (5 and 3).
Previously we were paying $470 for family with a $20 copay.
PPO
Monthly - $490
Deductible - $1200
Max of $10,000 plus deductible
Pays 20% in-group after deductible
HSA
Monthly - $210
Deductible - $5800
Max of $11,000 total
Pays 20% in-group after deductible
Sadly they have it set up that we cannot take out the HSA funds for our bank account until after taxes. Not sure why that is. So we figure we can pull out all our money on our own and not through their account. But there would not be a tax savings in that way. Although .... don't we get tax savings because we will have to pay all this out of our own account?
What is best for us? Our kids are young and can have accidents. 2008 was a visit to ER for daughter needing stitches in her head. 2009 was a minor surgery on my son and will mean one specialist visit per year until his teens. (testicular issue doctor missed until we changed doctors at age 5).
What do we do??? We can save money in an account ourselves but will we spend more in the long run doing that?
They are marketing this as HMO has too many hidden costs and this will even out in the end but this is going to cost our family huge! On top of that they are cutting back on other insurance coverage (disability, etc). What a great way to start out 2010. Thank you for your help!!!
ANSWER: Trina:
In my opinion there is no better plan than an HSA. I have one with Blue Cross of Arizona and have a $5500 deductible, 100% coverage thereafter. All medical expenses up to the deductible are tax-free. Any money left in the account at the end of the year becomes an above the line tax deduction and also rolls over to the next year. In the long run you will always save money with an HSA compared to any other type of plan. I have been in the health insurance business for 30 years and believe that everyone should have an HSA.
I'm not sure what you meant regarding the money in the HSA. The typical set-up is that the employer pays the employee premium and then deposits a set amount per month into YOUR account. The employer deducts the family premium from the paycheck usually. Because the HSA is your bank account you receive all the tax benefits. Remember also that all your medical expenses up to the deductible will be discounted, based on the negotiated prices the insurance company has with it's network of doctors and hospitals. The amount of the discounts depends on which insurer you are with.
Hope this helps,
Mike Higgins
www.higginscompanies.com
---------- FOLLOW-UP ----------
QUESTION: Thank you, Mike! My husband finally got the HR department to call him back and there is another option that they had not explained well. It is a HRA. I believe it looks more like this...
$250 premium (so a bit higher then HSA)
$4500 deductible
Company pays 100% of the first $1,500 we spend per year of that. Then we pay 100% of the next $3000 if we spend it. The maximum $8000.
From what I can tell there is no HSA option connected to this. But if we don't spend the $1500 then it can rolled over to the next years company contribution.
wondering if we can still take out money for health spending before taxes on our own?
Answer
Hi Trina:
Here is a link that will be very helpful, a comparison between HSA's, HRA's, and Flex plans. http://www.utea.org/educatorResources/healthInsurance/pdfs/FlexHRA%26HSAComparis...
I still believe HSA's are a better deal for you.
Mike Higgins
www.higginscompanies.com
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