CDHP with HSA: on-first-exposure questions

[kalanamak]

Before I devote any more time reading IRS Pub 696 and various trustee's websites, I'm reading this as a, for me, $2832 premium per year with my standard plan, and $1008 per year with the CDHP. The max out of pocket with my first plan is 4K, and 8.2K with the CDHP. I can afford to put the difference into a HSA (and we qualify), and what you put away is *tax deductable* and can roll over to the next year (unlike the FSAs), AND is tax deductible on use, without having to file itemized returns (just utilizing an extra form).

 

I guess I'm treading lightly because it seems a wee bit too good to be true. If hubby or I die, the other can use the HSA, but if we both die, then our beneficiary pays taxes without penalty.

 

Please, all you penny pinchers out there, do you use CDHPs or have to looked them over and turned them down because of a pitfall I am not seeing.

 

THanks so much for your time and consideration.

[JulieD]

I don't have a CDHP, I have an HDHP. Make sure the CDHP isn't providing an HRA instead of an HSA. There are different rules for each.

 

The HSA works well, and yes, it is all tax deductible and rolls over from year to year. We don't itemize; we just use the form for HSAs.

 

I looked at cost for a normal year of medical insurance/bills, $3000 bill, $10000 bill, and $100000 bill. For me the HDHP with HSA was a better deal with all amounts. I also like that you can change the amount you put in your HSA at any time. We have had to put more in this year than I ever would have expected. Just make sure not to put in more than the maximum allowed.

 

Neither my husband or I have died at this point, so I can't give you any real-life experience there.

 

One thing I noticed different about our two situations, though, is that you would have a much higher out-of-pocket maximum with the CHDP rather than the regular plan. This was not the case for us. The deductible for the HDHP was much higher, but the out-of-pocket maximums were about the same.

 

Our HDHP used the same doctors and hospitals as our other plan did, and also would pay out-of-network which our PPO would not, so that was a plus.

 

Julie D.

[Hwin]

I'm considering a HDHP this year. I don't think I would be comfortable with 8k max out of pocket.

 

I'm my case, it costs nearly the same for HDHP premium + HSA contribution as it does for a regular plan premium... but there is more flexibility with how to use the HSA amounts (we ALL have bad teeth and bad eyes, and it can be used for dental or vision)

 

I think most people choose traditional insurance plans because the costs are predictable, even if it costs a bit more. I switched (from HDHP to a regular plan) when I started trying to conceive for the predictability factor.

[Cheryl in NM]

Before I devote any more time reading IRS Pub 696 and various trustee's websites, I'm reading this as a, for me, $2832 premium per year with my standard plan, and $1008 per year with the CDHP. The max out of pocket with my first plan is 4K, and 8.2K with the CDHP. I can afford to put the difference into a HSA (and we qualify), and what you put away is *tax deductable* and can roll over to the next year (unlike the FSAs), AND is tax deductible on use, without having to file itemized returns (just utilizing an extra form).

 

I guess I'm treading lightly because it seems a wee bit too good to be true. If hubby or I die, the other can use the HSA, but if we both die, then our beneficiary pays taxes without penalty.

 

Please, all you penny pinchers out there, do you use CDHPs or have to looked them over and turned them down because of a pitfall I am not seeing.

 

THanks so much for your time and consideration.

 

We have a HDHP with HSA and love it. It does take an adjustment, but now every penny that comes out of Dh's paycheck for medical goes to medical. CDHP seems to be a middle ground as you still pay premiums. I'd go HDHP personally.

 

Also, the money taken out of the paycheck in NOT "tax deductible" but rather pre-tax. "Tax deductible" means that you can deduct that amount on your taxes, you can't because you weren't taxed on it in the first place. Your premiums taken out of your paycheck are "pre-tax". That is, taken off the top of your wages before any taxes are figured.

 

To answer your question, the downfall of a CDHP is that you are still paying premiums. So money that comes out of your paycheck and goes toward premiums might not get spent on your medical care, you might waste it. In an HDHP plan you pay no premiums. You have money taken out of your pay before taxes and put into an HSA which you use to pay your medical costs. When you reach your deductible your insurance company kicks in at (usually 90%), when you reach your maximum out of pocket your insurance company kicks in at 100%. So under an HDHP plan all of the money taken out of your paycheck goes directly to your medical costs.

[kalanamak]

We have a HDHP with HSA and love it. It does take an adjustment, but now every penny that comes out of Dh's paycheck for medical goes to medical. CDHP seems to be a middle ground as you still pay premiums. I'd go HDHP personally.

 

Also, the money taken out of the paycheck in NOT "tax deductible" but rather pre-tax. "Tax deductible" means that you can deduct that amount on your taxes, you can't because you weren't taxed on it in the first place. Your premiums taken out of your paycheck are "pre-tax". That is, taken off the top of your wages before any taxes are figured.

 

<slap> that is what I meant.

I thank you all for your input. It is a CDHP with an HSA, and from a huge conglomeration of three of the four biggest plans out here (only Group Health, which has their own CDHP, in not in this group). I'm looking for catastrophic care only, and I can opt in and out once a year, no matter the preexisting. I have sent them an email asking what happens if the trustee of the HSA folds or swindles and leaves town.

After some web searches, some don't let you take the HSA "with you". Our plan claims you can, but I've asked for more technical detail than the annual newsletter that comes out the month before "open enrollment".

[Josie]

OK, I have never used CDHP or HDHP, so I know absolutely nothing about it. I HAVE used a Flexible Spending Account, and I can tell you it can be a real PITA--pain in the ___! Orthodontics is a pain with FSA. If we didn't have orthodontics we could have used an automated system, and that may have been better. I don't know.

 

I just wanted to put out the idea of the hassle of these programs. Using FSA reminded me that the government is really a paper-pushing bureaucracy. Dealing with insurance companies, hospitals, family practices docs, specialists, labs, dentists, optometrists, pharmacies, etc. is hard enough, and when the government is added in add in it can really be a frustrating experience.

 

Just something to consider.

[kalanamak]

OK, I have never used CDHP or HDHP, so I know absolutely nothing about it. I HAVE used a Flexible Spending Account, and I can tell you it can be a real PITA--pain in the ___!

 

I just wanted to put out the idea of the hassle of these programs. Using FSA reminded me that the government is really a paper-pushing bureaucracy.

 

FSA, which I had a few years ago, was a hassle. This one the only approval you have to meet is the IRS, and our poopsheet says you submit nothing, but should keep records in case you are audited.

[Mommyof4ks]

Before I devote any more time reading IRS Pub 696 and various trustee's websites, I'm reading this as a, for me, $2832 premium per year with my standard plan, and $1008 per year with the CDHP. The max out of pocket with my first plan is 4K, and 8.2K with the CDHP. I can afford to put the difference into a HSA (and we qualify), and what you put away is *tax deductable* and can roll over to the next year (unlike the FSAs), AND is tax deductible on use, without having to file itemized returns (just utilizing an extra form).

 

I guess I'm treading lightly because it seems a wee bit too good to be true. If hubby or I die, the other can use the HSA, but if we both die, then our beneficiary pays taxes without penalty.

 

Please, all you penny pinchers out there, do you use CDHPs or have to looked them over and turned them down because of a pitfall I am not seeing.

 

THanks so much for your time and consideration.

 

:lol: I remember the first time we looked at the HDP, and dh actually went to the HR office and asked if this was for real. Our son had cancer, and our bills were CRAZY high with our PPO, copays never ended and he was at a specialist sometimes daily for weeks at a time (ouch). The claims of the HDP really are true. We only pay up to the max out of pocket, and before we reach that we only pay the contracted rate that our ins. co. has with the provider. We love that we can roll over anything we don't use from our HSA too. Next year we will start with some money in there, and that will be awesome! If the health care law plays out we will lose the HDP, but until then it is wonderful!

 

Further in the thread there is talk of record keeping, and we are not accountable to the company like an FSA, but we keep all of our receipts in case IRS audits us.

[Cheryl in NM]

There are two major downsides to CDHPs that a lot of people are not aware of (I worked for 2 health insurance companies and we have personally tried them).

 

The first one is that although they say there is an out of pocket max, not everything you pay necessarily counts towards that. So your out of pocket could be higher than that. For example, if you go out of network and the doctor charges more and you pay the difference that does not count. Some plans don't count copays towards that (but require a copay for every little thing..office visit copay, doc sends your pee to a lab...another copay). Many plans also don't count drugs. It depends on the plan, but some of them have some crazy configurations. Read about what counts and does not count towards the out of pocket.

The second one is that you are always responsible in the event a service is rendered by an out of network doctor even in a situation where you have no control. So, for example, you end up in a hospital for emergency surgery and the anesthesia doctor isn't contracted with your insurance and your insurance only agrees to pay him $500 (but he charges $2500) then you have to pay him $2000 out of your own pocket and that does not count towards your out of pocket max. There is only so much you have control over as a consumer. Are you going to call the hospital to make sure the lab they use and every person who lays a hand on you (who can send you a separate bill) is in-network? That's not always possible.

 

I once processed a claim where a second surgeon was brought in during an emergency who was not contracted with our company and the person had a plan like this. That surgeon charged something like $18,000. Our contract allowed $5000. Guess who has to pay the rest? And that difference does not count towards the out of pocket max. And that $5000 was not based on anything arbitrary. That is based on a fee schedule (usual and customary) used by many insurance companies and doctors. But it doesn't matter. The doctor has no contract with us so he can charge a million dollars if he wants to.

 

If the plan is through a very large company (like BCBS) I would feel fairly confident that most people take them. A smaller company won't be able to offer that kind of coverage.

 

CDHPs are perfect for people who rarely go to the doctor and are only looking for coverage when there is something catastrophic. If that is you, then go for it.

 

This is definitely NOT the case with our HDHP, but I haven't looked closely at our CDHP.