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Mike: Hi everyone. It’s Mike from newjerseyinsuranceplans.com. Today I’m going to go over HSA accounts versus traditional plans and one of the biggest misconceptions. That is, that Health Savings Accounts plans are only for healthy people. Today I hope to dispel that myth with just a quick case example on the differences between the two plans and how it may make sense to take the high deductible plan, even if you do have a lot of claims. It is contrary to what most people would think.
What you see here on my screen is the Horizon Blue Cross OMNIA Bronze HSA, and today I am going to compare it to the Horizon Blue Cross Omni Silver. These are the 2018 plan designs, and I believe this is a 63 year old male in New Jersey. Right off the bat, you can see the premiums here, $809 per month for the Bronze HSA, the Omni Silver is $1,009 per month. Those are the monthly premiums. Go over to a spreadsheet I was working on here. As you can see here, these are the monthly premiums you just saw. All I did is multiply the monthly times 12 to get the annual premium that you would expect to pay if you were 63 years old and you chose one of these plans.
Right off the bat, if you take the HSA plan you would save $2,400 in premium. Coming out of the gates, you’re ahead of the game by $2,400. If you have claims less than that, you will save some money. If you have claims more than that, well, we’ll just have to see how much difference it will make and if it was a bad decision or a good decision.
The claim we’re going to go over is just a made up claim assuming someone went to the hospital, and I’m just going to say for four days. On the HSA plan, since everything goes towards a deductible, you would be expected to pay the first $3,000 out of pocket. Once that $3,000 deductible was met, you would then pay 50% of whatever the remaining balance is. Now, it’s not an unlimited number. The most you could pay in any one year is called the MOOP, maximum out of pocket. On this OMNIA Bronze HSA, that’s $6,000. It doesn’t matter how you get there, that’s the most you can pay in a year.
The number to the right here, annual costs. All I did is that large claim you had, $500,000 claim that cost you 46,000, I’m going to add that to the premium. $9,708 plus $6,000 is $15,708. If you had this plan, that is your ultimate worst case scenario. Your full premium plus the maximum out of pocket. No matter what else happens during the year, that is your number.
Now we’ll look at the OMNIA Silver plan. Annual premium for that, $12,108. Same four day hospital stay, you would pay the first $1,500 as your deductible, because this plan has a [inaudible 00:03:04] deductible. Then after that they expect you to pay $500 per day. $500 per day, five times five is 25, plus $1,500. The same exact claim on this plan, instead of costing you $6,000 would cost you $4,000.
What does that look like as far as your out of pocket? We’ll take the premium, we’ll add it to your out of pocket. $16,108. If we look at just this one claim on the HSA plan, you would have spent $15,708 and then you’re covered 100% for the rest of the year. On this OMNIA plan, you’re now out of pocket $16,108 and that’s your premium plus the $4,000. But, you still have to pay for claims and deductibles after that. You’re not done, like on the other plan because this plan has a higher out of pocket. You could still potentially spend a few more thousand dollars.
Most people would think, “Okay, if I have a $500,000 claim I’m better off with the better plan.” You can see in this case, that is totally not true. It would end up being a several thousand dollar difference over the course of a year if you took the cheaper plan, the high deductible plan.
Now, one more thing to go in the favor of the HSA plan, is that you can open up the Health Savings Account. Health Savings Account, remember, it’s just a bank account you can open up for your medical expenses. Any dollar you put in is federally tax deductible, and it would come out tax free. The annual contribution limit changes every year. For this purpose of this I’m using $3,400. For your $6,000 claim, we’re just going to assume you’ll run that money through a Health Savings Account, so we can put in $3,400. You’ll deduct it at the end of the year, and that will save you an additional $850 in taxes. That would come back to you in your tax return if you get one, or lower the amount that you pay the IRS.
Again, just wanted to show everyone a quick example on why a high deductible health plan and HSA qualified plan may be the best bet, even if you’re sick or unhealthy, compared to a traditional health plan like the Horizon Blue Cross OMNIA Silver. If you have any questions on this or any other videos I’ve made, please contact me at [email protected], and have a great day. Thanks, bye, bye.