Run the Numbers to See if an HDHP & HSA is Right for You

Comparing your health insurance options is in many ways a numbers game. Sure, there are other elements involved, but when it comes down to it, the main points of differentiation between one plan option and the next boil down to numbers—or more accurately—what they will ultimately cost you.

In a time when finding ways to save and make smarter use of your money has never been more critical, it’s worth your while this open enrollment season to consider switching to a health savings account (HSA) eligible high-deductible health plan (HDHP) if you’re currently covered by a traditional PPO plan. An HDHP paired with an HSA:

• Saves you money on insurance premiums
• Saves you money on taxes in multiple ways
• Gives you the flexibility and portability you need now more than ever
• Let’s you invest your funds tax-free to boost your long-term financial wellness

Simply put, if you’re currently enrolled in a traditional health plan, PPO or otherwise, you’re losing out on premium dollars that could be better invested and spent elsewhere, along with many other tangible benefits.

But we get it, “high-deductible health plan” can sound scary and make you feel uneasy. So again, trust the numbers. Let’s take a look at how you come out ahead choosing an HDHP with an HSA versus a traditional PPO health insurance plan.

Compare Your Options Like a Pro

You don’t have to be a health insurance expert to be confident you’re making the best and most cost-effective decision. Before we dive into the examples, let’s quickly map out two tips to compare your HDHP versus PPO options like a pro:

• Revisit your healthcare spending-First thing’s first—look back at your expenses over the past year to give you a general guide as to what your average annual expenses look like. Be sure to factor in your premium payments, as well as any planned expenses you have for the coming year, like having a baby or other scheduled procedure. This’ll give you a general benchmark as you dive into each plan option.
• Review your health plan option details-Once you have an idea of what your healthcare spending looks like, dig into your HDHP and PPO health plan option details. Look for what’s changed and what’s new, and focus on the numbers to make your comparison and get a clearer picture of each option’s true costs.

The Numbers Don’t Lie–Examples to Consider

To start, let’s explore a simple sample breakdown from an employee exploring her options for family coverage. A couple important points to note—the monthly premium for the HSA-eligible HDHP is $120, while the traditional PPO plan is $375. And her employer contributes $1,500 annually to each employee’s HSA who chooses family HDHP coverage—employers aren’t eligible to make contributions to traditional PPO plans.

By choosing the HDHP with HSA option, she saves $2,560 annually. She can take that savings alone and contribute it pretax to her HSA to not only save on taxes by lowering her taxable income, but also grow her funds tax-free and either save and invest or use them for any eligible healthcare expense tax-free—or choose to contribute even more (or less) to her HSA depending on her specific circumstances. But long story short, no matter what she does with that savings, she’s coming out ahead from where she’d be if she stuck with her traditional PPO plan.

Next, let’s explore an example specific to her HSA usage.

• Assuming she pays 25% taxes on her earnings, she’d have to earn $1,000 to pay for a $750 medical bill. If she contributes $1,000 to her HSA pretax, she avoids being taxed on that money. So $750 of her earnings covers the expense, while the other $250 stays put in her HSA to grow or be used whenever needed tax-free.

The numbers don’t lie— the financial savings you can achieve with an HDHP and HSA is real, and more often than not, definitely worth your while to make the switch from a traditional PPO plan.

Remember, these are just general examples to give you an idea of how an HSA/HDHP combination stacks up against a traditional PPO plan. Many employers often provide tools to run your own numbers specific to your plan options, but even if you don’t have access to an automated tool through your employer, you can still do a side-by-side comparison just focusing on the basics—premiums, deductibles, employer contributions—and looking at your average yearly healthcare spending.

HSA-Eligible HDHP vs. Non-HDHP Health Plans – Not as Different as You May Think

So now you’ve seen the numbers and how much you stand to save by switching to an HDHP/HSA option. But perhaps you’re still tentative at the thought of going through the process and making it official.

It’s important to understand that numbers aside, an HDHP paired with an HSA isn’t all that different from traditional non-HDHP health insurance plans. Here are just some of the similarities that make the switch simple and seamless:

• Both require monthly premiums, regardless of if you use your coverage
• Both have a deducible you pay before the plan begins paying
• Both often have the same coinsurance once your deductible is met, typically the plan paying 80% and you paying 20%
• Both typically feature in-network providers that provide lower costs and a lower out-of-pocket than out-of-network providers
• Both cover preventive services and preventive drugs at 100%
• Both cover telehealth services at 100% with no cost-sharing

Get More Control Over Your Healthcare While Charting a Path to Better Financial Wellness

Enrolling in an HDHP and utilizing an HSA helps you keep more of your hard-earned money and lower your overall healthcare costs, among other benefits.

By leveraging an HDHP with an HSA, you’re able to keep saving money tax-free and adding to your HSA savings while taking a more active role in controlling your healthcare costs—all things you can’t do with a traditional health plan. And by managing your HSA effectively, you can set yourself up with savings to use for current and future medical expenses without worrying about added financial strain—all with an eye on your long-term financial health.

Now is the Time to Choose Bend HSA

Remember to trust the numbers and not be scared off by changing up your health insurance coverage for the coming year—especially if you’re used to the structure of traditional health insurance plans. Once you make the switch and experience all the advantages of choosing an HDHP + HSA for 2021—not to mention all the monetary savings—you’ll never look back.

And if you need to choose your own HSA provider once you’ve enrolled in an HSA-eligible HDHP, look no further than Bend. With a Bend HSA, you don’t have to be an HSA expert to make the most of your account. We’re here to help you every step of the way and provide you with the resources, tools and education you need.

No matter who you are or where you’re at in life, we’re here to help you make the most of your health savings account.

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