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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Bronze HSA Better Than Platinum ?

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Question: My wife and I are self-employed and have a family of 4. We don’t qualify for subsidy in Covered California. Can you help us understand why one shouldn’t always go Bronze with HSA vs. a lower co-pay plan e.g. Platinum? Doesn’t the tax benefit of an HSA and the lower OOP costs of Bronze always mean a lower maximum, after tax health care spend? Under what circumstances does it make sense to purchase the Platinum plan?

Answer: People with chronic health conditions buy the platinum plan. For example, 40% of platinum plan users are diabetic. They know they will have significant medical expenses and they’d rather pay the higher insurance premiums than the out of pocket expenses. The out-of pocket maximum for platinum plans in 2016 is $4,000.

Healthy, more affluent people, see the Bronze HSA compatible plan, as a better option. For these people the $4,500 deductible (2016) is not a deal breaker because they have the money, if necessary. Because they are healthy, their out-of-pocket costs should be very low most years. Then of course, there’s the tax benefits and lower premiums. The out-of pocket maximum for platinum plans in 2016 is $6,500.

6 Comments

why hasnt there been a spelling check done on this site! It is embarrassing to see all the grammar mistakes. It should note be there.

If you and the members of your household are younger and healthier than the average health insurance consumer, then by all means, feel free to make the maximum contribution to your HSA and purchase a Bronze plan for your household, knowing that 100% of the cost of health care (other than “preventive” care) will come out of your pocket until the individual and family deductibles are fully satisfied.

Evidently your income is far above average, so an expensive medical year shouldn’t trouble you. As a self-employed person, you have the advantage of being able to deduct the full cost of your health insurance premiums, which for your family of four is probably in the $700-$800 per month range, in addition to the tax savings for your HSA contribution.

But for those self-employed persons who cannot manage both funding an HSA plan and the 100% OOP cost of a Bronze plan’s premiums + the 100% OOP cost of health care up to the OOP limit, the tax savings afforded by the HSA contribution likely pales compared to the reduced OOP costs under their choice of a Silver, Gold, or Platinum plan.

Remember, buying insurance does not avoid the risk of illness or injury, it merely transfers some or all of the potential financial loss to the insurance company. If you don’t use it, life is good, and you had the peace of mind knowing your expenses would have been covered as needed. If you have a bad year, maxing out your OOP rentention, well, that’s life.

Lisa I must correct your statement regarding 2016 Bronze 60 HSA plan deductibles and out-of pocket expenses. In 2016, “aggregate” is out and “imbedded” is in. That means that the individual deductible is $4500 and family is $9000. Similarly, the OOP max is $6500 individual and $13,000 family.

Tom, sorry but I must challenge your statement regarding the Platinum plan out-of-pocket maximum. For 2016 it is $4,000 individual, $8,000 family.

Keep in mind for 2015 the deductible and out of pocket max for an HSA is based on a family total so for 2 or more people your looking at the $9k & $13,500 which is not the case on standard plans where one family member only has to meet their deductibles.

“The out-of pocket maximum for platinum plans in 2016 is $6,500.”

This should say “Bronze HSA plans”.

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