Jan 8, 2009

PPO versus HSA: A welcome decision

It has been a long time since I've had the luxury to ask myself whether I should enroll in an HSA or PPO. In fact, I've gone without health insurance for the past year. Now that I've finally been offered a full-time gig, I'll be getting health benefits a long with it. Boy, am I glad the day has finally (almost) come.

Now, I just need to decide if I should go with the HSA or the PPO. I'm leaning towards the HSA. My company contributes $100 a month to it, and it has a $1.5k deductible. Apparently my max yearly contribution is something like $3k for an HSA account. So *if* I could go a year without needing to go to the doctor for anything other than my regular exams (which are covered by this plan) I could theoretically save $3000 tax deferred per year for retirement.

My goal for the next year is to save 15% of my income, or at least $9,000 of my income for retirement. I'll max out my Roth IRA, but that has a $5k limit. Then where do I put the rest of my money? I was thinking of opening up a SIMPLE IRA, but now that I'm going to be an employee, that's out of the question? There has to be some way to put more money away for retirement tax deferred if your company doesn't offer a 401(k)...

Anyway, the HSA really makes the most sense. I know myself, and I know that I hardly ever go to the doctor, even when I should. Last year when I was sans insurance I had something bad going on with my stomach and I finally went to the Ob-Gyn to get it checked out. Cost a small fortune.

The PPO is attractive because the company pays 90% of it per month. My monthly payment, then, would prob be $50. So I could pay $600 per year for a PPO *or* I can do the HSA (which prob costs something but less than the PPO) and get $100/month - $2.95 monthly admin fees - $15 one time set up fee put into my HSA account. And put more money into that as well.

They say HSAs are good for us youngins but I'm also not the healthiest of young people. Then again, with an HSA I could still go to the doctor, I'd just have to decide if it's worth dipping into potential retirement income. Hmm.


Anonymous said...

I thought my company's HSA was a good idea until I had emergency surgery. As a result, I ended up paying my maximum out of pocket expense. While it wasn't the end of the world, it was an unhappy surprise.

wellheeled said...

Congrats on the promotion!

I don't have a 401K either. ARGH. It really frustrates me to how much gets eaten up by taxes. Aside from the Roth, I really can't think of anything that will let you defer W2 earnings. If there is... I haven't figured it out.

As for the PPO vs. HSA, I have a PPO and I love it. I'd vote for the PPO - if you have a major illness, you'll be glad for the flexibility and wider range of options that I think a PPO offers.

Your new site design looks great, btw. Did you do it yourself? I've been trying to learn some web skills.

her every cent counts said...

anonymous: Yea, that's always a concern. It's a good idea unless you have to use it.

wellheeled: that sucks about there being no way to defer taxes on income if your company doesn't have a 401(k). That's so lame.

I'm leaning towards the HSA so I can save more for retirement, but the PPO would be nice for convenience. Need to research costs of both more.

Thanks about the site design. I did do it myself. It's not 100% done yet. Still futzing around with it. Blogger is pretty easy to set up. I want to try out wordpress next.

Jerry said...

It's scary not to have health insurance at all so it's fantastic that you now have options! Congratulations! I opt for the HSA. For my situation, it leads to more savings.

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