My HDHP and HSA is what I planned on blogging about tomorrow. You might look at Alliant Credit Union’s HSA. It pays 5% and is the popular choice at FatWallet. You don’t need to be a member of the credit union to open the HSA either.

If I were a healthy young male like you I would do the same thing. In fact I have done the same thing for years.

But having kids and allergies that, despite behavioral modifications, get worse as I get older (I now need asthma medication each day), there’s no financial gain for me in having a high deductable.
And with the braces the kids need (we have really bad teeth, it runs in the family) I would be paying the full deductable for last year, this year and 3 or 4 years ahead.

Btw I am selfemployed so I carry my own insurance.

Kudos Jacob for not believing the self interests of the pharmiceuticals and their henchmen/ women (read medical doctors.) Instead of just treating symptioms like that community likes going for wholeness/ health is where people need to focus. Our family does the same. We purchase health insurance that enables us to have access to care globally because we do live overseas. Yt with a high deductible we still get good coverage should something require surgery.

I’m curious if you would comment on the lifetime coverage limit issue, which has always been my problem with high-deductible health plans. When my cousin was in a car accident at age 20 (she was not responsible for the accident), just the cost of the blood she needed transfused was over $400k–that’s before the costs of the ICU, physician payments, etc. which brought the total to several million dollars. I’ve heard similar stories of multi-million dollar bills from people who were diagnosed with certain types of cancer. And I can’t imagine how lifestyle choices could *guarantee* you won’t be hit by a car or face a cancer diagnosis.

As a result, I’ve always chosen group insurance through my employer with no lifetime coverage limit, because the risk I care about is being asked to pay a bill greater than $5 million (once the insurance stops paying, the quality of care you can get is an issue) and being unable to purchase insurance again in my lifetime. I’ve never seen a private plan with no lifetime coverage limit, and the cheapest plans seem to have very low limits compared to potential costs (like $250k).

I’m the same age as Jacob and had an HSA for almost 3 years for $90 a month, my deductible was only $1,500 though. I was with Golden Rule which is a subsidiary of United Healthcare – one of the biggest health insurers around.

The best thing about them is that you get the “network” rates the insurance company negotiates with doctors, hospitals, etc. I didn’t realize this at first, but was a nice surprise.

I was paying almost $150 through my employer before this, so I kept “paying” that after getting the HSA, except the extra $60 went into my HSA bank account. Like Jacob said, those funds were tax deductible.

One downside I found was that maternity coverage was expensive or non-existent with HSAs. That’s why we’re back with my employer’s plan, plus the fact that they’re paying 100% of the premiums for me.

I’m on an HSA for my 2nd year now and its working great. My employer offers a HDHP with HSA. I pay $0 in premiums then fund my HSA. If I chose the regular health insurance I could pay $3500 a year for normal coverage or $2200 a year for crappy HMO. Instead I choose to put my money into the HSA pre-tax. Worst case I spend all my deductible and am no worse off than standard health insurance cost wise, or best case I have low medical costs and bank the HSA contribution for the year.

Hi Jacob – I’ve been reading your website for awhile (I think from the beginning?) and you have some great thoughts/ideas! I’m not sure your 100% correct on the HSA stuff. When I looked into it last year, I found that your health care premiums could not be paid for through your HSA so it takes away the tax benefits of those payments (possibly?) I may be confused on your approach.
http://www.getgliga.com/insurance_resource_center/health_savings_account_faqs.htm

Re empty’s point – if you get hit by someone while riding your bike, you may not get to choose India or Thailand for treatment. But I guess you have to weigh the chances of that happening and make a cost / benefit analysis.

Ive been doing alot of reading about these high deductible health plan lately as Im about to obtain one through my job. I admit, at first it seems like alot to pay for, but there is a chance for some big savings as well. These plans are usually accomodated by a HSA, HRA, or FSA, into which you put a certain amout pretax, and said money can be used to pay for medical expenses, or go towards your deductible. It saves the company money, which in the long run, lets you keep your job, which is nice in this economy. And even though you have to pay everything up to your agreed deductible amount, everything after is covered, with perameters of your plan. Another bonus is that, if you use the Doctor infrequently, the money in HSA, is your money,and it accumulates. If you leave the job, that money is still yours. There are pros and cons to every situation. I have posted a couple links I found to be very useful. I hope they help in your search for info.

http://highdeductiblehealthplan.blogspot.com/
http://www.youtube.com/highdeductiblehealth

Love your blog Jacob and have appreciated your comments on the Early Retirement web site as well.

Looks like you generally draw a young crowd (which is good – there are plenty of geezer boards). At 53 and forced out of the corporate world prematurely I look at this issue differently. Agree 100% with the need to take charge of one’s lifestyle, but being ER’d, older, and living off off assets my perspective on health insurance is very different.

My wife and I have an ultra high-deductible (25K each) policy. Premiums are over $215 a month but are likely to spike dramatically between now and 2014. Living off of assets we are in a very low tax bracket (taxable income way under 20K last year), but that $215 represents about 10% of our monthly draw, and of course any actual health care costs (and they do increase as you age) are on top of that. When premiums get to $300+ per month we will doubtless go “naked” or move to Mexico (where we have lived before and can get excellent care, as well as catastrophic insurance for less than $400 per year, total).

in 2014 under Obamacare we will be eligible for Medicaid. It is a totaly broken health care system. What will things be like for you and other your age in 30-40 years? Will Medicaid exist, and in what form? SS eligibility looks likely to be 70 or older. Different world.

Thanks again for the great blog

@pbkennedy – Interesting. That’s what I used back then the first time. For my second HDHP (when the first one raised their rates), I used ehealthinsurance.com

@empty:

The Patient Protection and Affordable Care Act (health care reform) prohibits group health plans from establishing any lifetime or annual limits on “essential health benefits”. Future regulations will define “essential health benefits”, but will at least include the following categories:

ambulatory patient services;

· emergency services;

· hospitalization;

· maternity and newborn care;

· mental health and substance use disorder services, including behavioral health treatment;

· prescription drugs;

· rehabilitative and habilitative services and devices;

· laboratory services;

· preventive and wellness services and chronic disease management; and

· pediatric services, including oral and vision care.

This is effective September 23, 2010.

I can understand buying your own insurance if you have no other option, but if you can, why wouldn’t you go with the plan your company is offering you. Its part of the package, instead of paying it out of pocket yourself, right?

“relying on a medical doctor to remain healthy is positively backwards. While I would certainly welcome the assistance of a doctor to reset a bone or perform surgery, my faith in medical doctors does not go much beyond this(*). I prefer a proactive approach to health rather than a reactive approach.”

As a health professional I, too, believe in a proactive approach to health hence why I do my best to live a healthy lifestyle. Too often, a health providers practice is dictated by the patient’s health insurance company and/or health system in which s/he is employed (lots of pts to see in a short period of time, preventive care not supported by the system, etc.). The other issue is that it is very difficult to motivate patients to modify their lifestyle to healthy living. Many patients are content with “a pill for every ill”. It is easier than taking the fat out of meals and exercising.

On another note, a healthy lifestyle can not prevent catastrophe. I have taken care of self-employed professionals without health insurance diagnosed with a terminal illness or involved in severe accidents resulting in them wiping out their assets. The number one cause of bankruptcy in this country is medical bills. Health insurance (or a much improved health system) is very important to have, if available.

Even in some simple cases of broken bones, I took care of myself. I don’t know if I would be able in case of a bigger broken bone. I also have put a friend’s knee bone in place once. By fighting jiu jitsu or some similar fight, you get to know a little more about the bones.

I won’t get so sick following my lifestyle, so I won’t have to submit to surgery in case of a disease. Only if I happen to be hurt badly, like by bullet, knife or something sharp.

Excellent analysis. My employer offers a very good HMO medical plan at no cost to employees. However, it’s kind of expensive to the employer. Family coverage is $12,800 per year. Single coverage is $5600 per year. Deductibles and copays are very low. If an employee is able to obtain coverage elsewhere, then he can opt out of the employer-provided plan and receive an annual cash payment of $1800. For a healthy single person like myself, the idea of doing my own HSA and taking the opt-out cash looks pretty good.

I’m 56, self-employed, have a $5k high-deductible healthcare plan with Humana. I recently opened up an HSA at HSABank.com and deposited $4050, which is the amount allowable over age 50. HSA Bank charges no monthly fee if you carry a balance of $3,000, and the interest rate is currently 0.55%.

I’ve always been incredibly healthy, never even had the flu, so that’s why at age 53, when I moved to NV, I went with a high-deductible healthcare plan at $250/month premium. Then at age 54 I was diagnosed with breast cancer. Had double mastectomy, chemo, radiation, the works. I spent the $5k deductible out of pocket two years in a row, and the rest of my bills totaled close to $250k, which Humana covered at 100% (after deductible).

I’m moving from NV to CA in a few months, and just because it’s CA, Humana is increasing my premium from $250 to $430/month, with the exact same coverage.

So I’m proof that even if you take great care of yourself, you never know what can happen. I’m glad I had the insurance.

jacob, what are these behavioural modifications you speak of to rid yourself of allergies?

Alliant is a good choice for an HSA as TightFistedMiser said… but they only pay 2% not 5%. Here’s a link to their rates…

http://www.alliantcreditunion.org/services/rates/

Incidentally, you also have to be able to become a member of the credit union, but they have VERY broad membership requirements. I’m aloud in because my wife is a member of our local pta. So long as you are a member of a PTA anywhere in the country, you can get in.

So how does that $3500 deductible work? Is it a per-visit thing, or what? My wife’s pregnancy would have cost us over $10,000 total, but it’s a lot of recurring costs and visits. I think what you’re doing only works for a certain segment of the population.

Thanks for the response… that might not be bad at all then.

[…] which I love, but the deductible is quite high, so I would have paid more out-of-pocket than $664. Here’s the article which led to my choosing an HDHP, rather than a plan through my […]