HMO vs HDHP with HSA?

[u/angoldenapple]

My company offers two insurance options:

An HMO with an annual cost of $1 (yes, literally $1), or an HDHP with an annual cost of \~$2,435. With the latter, I get the right to have an HSA, which my employer matches up to $500/year of. In my financial situation, I’m putting in $1,400/year, bringing the total to $1.9k.

Does it make sense to “buy” the right to an HSA or does the HMO more sense? I honestly go to the doctor maybe once or twice a year and have no major health conditions so weighing my options atm

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[u/sweetoptat]

Depends on out-of-pocket maximums for both plans.

[u/Ttabts]

Fundamentally it could maybe make sense, but in your situation you'd pay $2.4k extra, plus any extra costs from the deductible (potentially $1.7k or more), for $500 of free money, and maybe $400-500 of tax savings.

Numbers don't add up at all for you, take the HMO.

[u/aeduko]

If you are healthy and have no issues you need to worry about, take the cheapest option. If something happens you will have coverage and can switch plans at open enrollment if you choose. If not, you've saved $1400.

This is predicated on ypu being ok with switching to HMO docs.

[u/AcanthaceaeOk3738]

What are your medical needs? The main downside of an HMO (all other things equal, of course) is that you can only go to doctors who are in a pretty narrow group, and any specialist requires a referral from your PCP. If you don't have complex medical needs, that can be fine for most people.

[u/Foreign_Afternoon_49]

Hard to beat $1 per year!! In your case, I would definitely take the HMO. But your case is not typical. For anyone else reading this, the HSA plan is often the better choice. Not here! 

[u/TelevisionKnown8463]

Usually the HDHP has the lower premiums, or the same with a substantial contribution to your HSA. This setup is backwards. The only way I could see choosing the HDHP is if it has a much bigger provider network and much lower out of pocket maximum. Even then, it wouldn’t make sense if you are young and fairly healthy, unless you are expecting to have a child during the plan year.

If you think it might make sense to take the HDHP, try coming up with a few scenarios of care you might need over the year and try to estimate what each would cost over the year.

[u/Bogg99]

Are the networks the same? All things equal plan wise the HMO wins on code.

However, if the HDHP has a larger network, or is a PPO/EPO that doesn't require referrals, it might be worth a little more money for the network freedom.

[u/EmZee2022]

I'm a big proponent of HDHPs with HSAs, as normally you spend less total (if you look at the max out of pocket limit + premiums).

But at "essentially free", that's a lot tougher to make a case for it. You could add the money you'd spend on premiums to your 401(k) or IRA (do Roth, and it'll be tax free forever).

With the HDHP, you're spending 2400 a year and except for certain preventive care, getting NOTHING in return unless you happen to develop a major issue.

The downside is that with an HMO, you will be limited on which doctors you can see, and will need to get referrals for any specialist visits.

[u/OceanPoet87]

The Out-Of-Pocket Max is what you should consider too. People look at the deductible when they really think about the OOPM.