FIRST COMES LOVE, THEN COMES MARRIAGE, THEN COMES CHOOSING A HEALTHCARE PLAN….

My sister’s employer recently presented them with new health insurance choices.  They can pick from a Traditional Plan (PPO) or a High Deductible Healthcare Plan (HDHP) with an Health Savings Account (HSA) savings account.

I’m the “big sister” and as such, a bossy know-it-all – so of course she asked me for some advice on which plan makes better financial sense for her.  I’m kinda at a loss here.  Very complicated stuff even when you do try to plan ahead.

She getting married in July, will add her husband to her plan and they hope to start a family soon after they tie the knot.  In regards to healthcare, the question for her is, “WHAT WILL THE MATERNITY COSTS BE” under each plan?

“Which plan will cover more pregnancy related costs?”  The Traditional Plan or the HDHP with HSA?

It took her while to flush out the true costs for either plan.  Insurers and provider’s don’t make it easy for you gauge what is covered, what is considered “preventative care” (what the IRS will allow as Preventative Care under HSA’s – not necessarily what YOUR plan will cover as preventative care), what is subject to deductibles…

After much back and forth with her “Policy Rep” she finally felt confident enough to do a cost comparison of the two plans.  If she chooses get pregnant under a HDHP with an HSA , she COULD pay less than the PPO plan, it all comes down to how much risk you are comfortable with (and a little bit of gambling).

Imagine you have “Employee + Spouse coverage” and plan to have baby.  Your “POLICY YEAR” runs January 1st to December 31st (why that matters later) and you get pregnant in February, have a pregnancy with NO complications and deliver with NO complications in November:

This is quick look at cost she had to consider (only in regard to maternity coverage) with that hypothetical in mind.

Choice #1 – TRADITIONAL PLAN COSTS (PPO) – 100% Coverage after Deductible is Met

Yearly Premiums (deducted from paycheck pre-tax) – $5460

Co-Pays (Prenatal exams – $20) (Ultrasound – ($20) – $40

Deductible (Delivery is considered an “In-Network Hospitalization”  and subject to meeting deductible) – $500

Co-Insurance  – $0

COST OF UNCOMPLICATED PREGNANCY= $6000

Choice #2 – HDHP with HSA – 100% Coverage after Deductible is Met

Yearly Premiums – $3016

Co-Pays – $0 (but all “non-preventative” care is subject to deductible)

Deductible – $4000 (Paid from tax-favored  HSA account – Employer contributes $1500 a year to HSA)

Co-Insurance – $0

COST OF UNCOMPLICATED PREGNANCY =($7015-$1500 employer HSA contribution) $5516

You would save $484 with the High Deductible Plan in the above scenario.  So is it a no-brainer?  The HSA all the way?

But what if you get pregnant in JUNE instead of JANUARY? The pregnancy now spans “TWO POLICY YEARS” and therefore you now have to meet the deductible twice before any coverage is paid out.   It’s very likely that with a pregnancy with no complications you won’t meet the full deductible for the pregnancy during POLICY YEAR ONE, maybe only paying out from the HSA account for an ultrasound or a few tests.  But that’s the GAMBLE.

So the choice to get pregnant money-wise becomes:

1.) Prepare for a “TWO YEAR POLICY” pregnancy but hope for the best.

HDHP Plan – AS MUCH AS $8016 –  AS LITTLE AS $5516

OR

2.) Know the costs beforehand but pay more.

Traditional Plan – $6000

Which would you choose?  I’m pretty risk-adverse so I’d probably pick #2 – the PPO. Ironically, I’ve had three uncomplicated pregnancies, three uncomplicated deliveries and somehow completely unintended on our part THEY ALL spanned  only ONE POLICY YEAR.  We have an HMO so it would have been a  moot point – but if we had the same choice we would have saved some money by going with option #1!

If you have an HDHP and had a baby did you actively try for that “ONE YEAR POLICY” window?  That’s a lot pressure the get pregnant in very specific timeframe!

Is maternity care/pregnancy the only “health issue” treated with such a risk-reward scenario for the insuree?

If you find yourself with a similar choice you may want to read the “Kaiser Foundation” report on Maternity Care and Consumer-Driven Health Plans. (Long but VERY informative.)

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