HDHP Premiums

[admin]

I live in MA and am shopping for an individual health plan. When I read about HSAs, going that route seemed like a no-brainer for me. I assumed from what I read that premiums for qualified plans would be less than non-qualified plans. That does not seem to be the case in MA.

For one of the major carriers that I\'m considering, the lowest monthly premium for an \"HSA qualified\" plan is about $60 more than the lowest non-qualifying plan. The HSA qualified plan has a $2900 deductible while the non-qualifying plan is $2000. Both have the same max out-of-pocket per year of $5000. I realize there are other differences, but they don\'t appear make up for the increase in yearly premiums - at least for me.

It\'s the same with the other major carriers here - the lowest cost HDHP is more expensive than the lowest cost non-qualifying plan. What am I missing?

-Jamie

[admin]

I\'m not that familiar with MA policies and will speculate a bit and then ask one of our other experts to weigh in. First off the premiums for HDHPs can vary wildly from carrier to carrier for seemingly similar products. That said, if you are looking at two different policies from the same carrier, if you haven\'t checked already, you might look at the well-care benefits of the two plans and also the prescription drug benefits of each. That could be part of it. The two plans may qualify differently making one more likely than the other to reject applicants based on health history.

[admin]

Thanks for the response. In this case it\'s two policies from the same carrier, Blue Cross. I realize that the two policies are different and I\'m not asking why they should have different monthly premiums. It\'s more of a philosophical question about qualifying vs. non-qualifying plans. I\'m in good health and willing to accept more risk in order to lower my monthly fixed costs as much as possible. HSA\'s seems to exist to encourage people to do this very thing, and much of the literature suggests that one motivation is that the monthly premiums for qualifying HDHP are lower than other plans, which seems reasonable. The truth, in MA at least, is that the plans with the lowest monthly premiums are non qualifying. I was just surprised by this.

[admin]

These are good comments. While HSA qualifying HDHPs are typically lower than traditional insurance, they are not necessarily the cheapest plan (as you have pointed out). There are hurdles a plan has to meet to make it \"qualifying.\" As a refresher for anyone reading this, the requirements are noted below.

You must have coverage under an HSA-qualified “high
deductible health plan” (HDHP) to open and contribute
to an HSA. Generally, this is health insurance that does
not cover first dollar medical expenses. Federal law
requires that the health insurance deductible be at least:
$1,100* -- Self-only coverage
$2,200* -- Family coverage
In addition, annual out-of-pocket expenses under the
plan (including deductibles, co-pays, and co-insurance)
cannot exceed:
$5,600* -- Self-only coverage
$11,200* -- Family coverage
In general, the deductible must apply to all medical
expenses (including prescriptions) covered by the plan.
However, plans can pay for “preventive care” services
on a first-dollar basis (with or without a co-pay).
\"Preventive care\" can include routine pre-natal and
well-child care, child and adult immunizations, annual
physicals, mammograms, pap smears, etc.

[admin]

I agree with the previous post in that there may be a difference in prevention coverage or prescription drug coverage. I would add that you may also want to look at the co-pay for the traditional plan and determine if it is an 80-20 or 70-30 coverage compared to an HSA 0% copay. This means that if you do have a major health incident and you are on a traditional plan, you would be responsible for the added 20 or 30% above the deductible. Typically, an HDHP with an HSA will cover 100% of the costs above the deductible.

From the political side, Mass. tends to be a \"blue\" state which means the politicians of that state may have legislated some acts such that there would not be much difference in the premiums of HSA qualified plans and those of traditional plans.

Finally, I know you know this but you do get a lot better tax benefits with your deductible under an HSA plan. Check out our scenerios in the consumer section of this site for an example.