Mathing out my insurance election, I think a majority of people who gawk about the tax-free HSA investment gains are just repeating things they heard.
In 2023 in order for the HSA option to be more cost-effective, I would have to spend $10,000+ on healthcare as an individual. If I were to spend $7,000, in order for the HSA to make sense I would need to be making $300 per year in investment returns, meaning I would not be able to just put this in a money market acct (only gets worse as medical expenditure decreases).
Sure, there’s some tax advantage to HSA, using pre-tax dollars to pay for care (A), decreasing taxable income (B). But value is murky? Like what’s the probability that A+B(the only guaranteed ROI) exceeds $900?
Then past that, you’re incurring admin overhead because in order to actually REAP investment returns you need to pay out of pocket today, and then hold your receipts for years, and then remember to cash those receipts out.
Not to mention that non-network fees remain 30% even after your deductible. Better hope you don’t get sick and need a specific specialist!
Idk it all sucks
@acjay curious for your thoughts
@Ilovelemons It really depends on your plan choices.
At Better, I modeled out the in- and out-of-network expenditures for each plan to figure out which had the most out-of-pocket cost, and in almost every scenario, the HDHP/HSA won. But that's also because the company paid 100% of the premiums plus made an HSA contribution, so we were starting from negative cost.
The analysis could come out differently for a different company's plan offerings.
Generally, I think of these things in terms of risk tolerance. Rule out options that have an intolerable worst case scenario, then optimize for the expected case.
I agree that you don't want to get caught up in the hype of fringe benefits, like an HSA. That's a nice-to-have after the main analysis.
@Ilovelemons I didn't predict anything, I just mapped out a table of different in-and out-of-network expense levels. Here's what it looks like for my current benefits options.
@Ilovelemons I think prescriptions could complicate this. I've never been 100% sure how they're handled w.r.t. deductibles and out-of-pocket maxes and such.
@acjay yea, the model I came up with is that if I spend less than 1000ish dollars on HC, HSA wins, and if I spend over $3000, HSA wins. Curious how you predicted which care would be in/out of network?