Originally Posted by tennisguru

I've posted this before, and decided to save what I wrote since this same topic comes up several times throughout the year and warrants re-posting:

Note: All comparisons are for family coverage

Silver HSA:
Yearly premiums: $1,392
Out-of-Pocket Maximum: $13,100
Delta HSA Funding: -$2,200
Maximum financial cost for the year: $12292

Gold HSA:
Yearly premiums: $3,828
Out-of-Pocket Maximum: $7,800
Delta HSA Funding: -$2,200
Maximum financial cost for the year: $9,428

NOTE: The biggest difference in coverage between the gold and silver plans is the gold plan only has a single family deductible of $2,800, while the silver has $2,800 individual and $8,100 family max. If you know you are going to have more than 1 person hit the $2,800 deductible, then the gold plan makes more sense. The silver is guaranteed to save $2,436 on premiums, but you are betting that during the year no more than one person will hit the individual deductible in order to actually save money over being on the gold plan. As long as no more than one person hits the $2,800 deductible then the silver plan will save you money. Whether the risk is worth the $2,436 in premium savings is up to you to decide.

DPMP:
Yearly premiums: $8,016
Out-of-Pocket Maximum: $7,700-12,700 (I’m not sure why there’s a range). Rx has a separate max
Maximum financial cost for the year: $15,716-20,716, not counting Rx co-pays

So as you can see the DPMP premiums alone are only $1,412 less than the absolute worst case yearly spend on the gold HSA plan. The $350 ind/$700 max deductible on the DPMP closes that gap even more, if you are a heavy user the DPMP has a $2,000 ind/$4,000 max co-insurance requirement, so again you’re already spending more on the DPMP than anyone would spend yearly on the gold HSA. Plus you don’t get any of the tax benefits of an HSA (covered below) under the DPMP.

So who benefits from the DPMP? Two types of people:

A family where one or more people are on expensive prescription drugs where using the Rx copay of the DPMP saves significant money over paying out of pocket on the HSA plans.

A family who for whatever reason needs to use out-of-network providers. You will get drilled on the HSA for out-of-network care, but the DPMP has full coverage regardless of network status. If you have no choice but to go out-of-network, use the DPMP.

Tax benefits of an HSA:

Besides the cost savings of the gold and silver HSA plans (even for heavy medical users) the other major benefit of an HSA plan is the ability to contribute and invest in your HSA which allows for double-tax-advantaging your money. At the most basic level, all money contributed to your HSA is tax-deductible on the front end, and you can then immediately use those contributions to cover medical expenses. However, the best use of your HSA is to contribute the yearly maximum each year and never touch the money until retirement. Once the money is in your HSA you can invest it in mutual funds either through Optum, or you can roll the money to an outside HSA administrator (Fidelity is a popular option) and invest in practically anything they have to offer. The best part is that all growth on your money is tax-free if used to cover medical expenses. Hence the double-tax-savings, tax free in and tax free out. If you start your HSA at 35 and max it out for 30 years, at a 10% rate of return that’ll be roughly 1.25 million dollars. And every penny of that balance can be used to cover all sorts of medical expenses in retirement with absolutely zero taxes on it. If you so desire after age 65 the HSA also acts like another traditional retirement account where you can take money out for non-medical reasons and just pay the deferred taxes on it.

The other things to note is that there is no time limit for reimbursing yourself from your HSA for medical expenses. So, over many decades you pay all your medical expenses out of your own pocket and not your HSA, all while letting your HSA money grow in investments. Then 30+ years later (save all your receipts!) you can reimburse yourself for expenses paid years and years ago after the money has grown for you tax free. For example, say you’re 35 and have a $1,000 medical bill. If you just pay that bill out of your HSA you can, but if you have the cash to pay the bill out of your pocket and keep the money in your HSA that is the way to go. If that $1000 grows for 30 years @ 10%, it’ll turn into ~$17,000. Then at age 65 you reimburse yourself for your $1000 expense from 30 years ago, and you get to keep the additional $16,000 in growth to be used tax free on future medical expenses.