HSA vs Option A

[glendamarie]

I’m in an unusual position. At the beginning of the year I was enrolled in my employer HSA, they contribute $1000 to HSA on Jan 1. My domestic partner is pregnant, and eligible for enrollment this month. This is considered a life event, so I am now eligible to enroll in Option B, C or continue my high deductible Option A. I am considering opting for Option C for the lower deductible since we’re expecting a child. The numbers:

Option C:
Plan cost: 13388
Deductible: 610 individual, 1220 family
Max out of pocket: 2470 individual, 4940 family

HSA plan A:
Plan cost: 9449
Deductible: 4360
Max out of pocket: 9940
No individual numbers

Coinsurance 80% for both

If I expect to reach max out of pocket, it looks like I’d save about $1000 by switching to option A if I’m reading correctly. My other concern is taxes, as I’ve contributed to the HSA for 3 months this year, with switching to the new low deductible plan would I need to plan for taxes on those contributions next year?

Any specific or general advice would be appreciated, I was in the military for 12 years so I’m not very familiar with healthcare costs etc.

Edit for additional details:
Age 32, Fiancée 29, two existing dependents age 8 and 4
ZIP 29073, SC
Income $130,000

 

[broggyb]

@glendamarie Walk me through the details, if you can.

Your domestic partner is being offered insurance through their employer which is why you're considering the change?

 

[glendamarie]

@broggyb No, her employer insurance is off the table. She would be covered under my employer plan as a dependent

 

[broggyb]

@glendamarie Got it--sorry, trying to make sure I understand your current situation. When will you two be getting married? Pregnancy isn't considered a qualifying life event.

 

[glendamarie]

@broggyb Pregnancy is not, but adding a domestic partner is considered a life event for my job, and we just reached 6 months living together so she now qualifies under my plan. We plan to get married next year

 

[broggyb]

@glendamarie Excellent, then as @samuelc pointed out, both options are largely identical (you can subtract the employer contribution to the HSA from the overall costs with the HDHP since that's free money).

 

[glendamarie]

@broggyb Thanks!

 

[samuelc]

@glendamarie Is there an employer contribution to the HSA?

 

[broggyb]

@samuelc $1,000 / year according to the opening statement, I believe.

 

[samuelc]

@broggyb Ah, I missed that. Thanks!

 

[samuelc]

So option C in worst case scenario is $18,328. Whereas option A with HSA and employer's contribution is $18,389. They are basically identical in a worst case scenario.

But the HSA wins under low use conditions, and also, all else being equal, you get the HSA account.

 

[glendamarie]

@samuelc Thanks! Appreciate both your help. I’ll just stay HSA then to keep it simple

 

[sheisme55t]

@glendamarie If you keep the hsa maxout your family contribution it's taken pre-tax and then used like a checkbook for medical expenses.

 

[varkstert]

@glendamarie If you're being honest on your taxes, your maximum HSA limit will be prorated based on how many months you were only enrolled in the HSA eligible plan.

So take the family limit (if you're both on it), divide that by 12, and multiply that by how many months you were on the HSA eligible plan.

If that number is a total higher than your balance in the HSA currently, I'd make the switch in your spot.

If you have more than that, I'd still make the switch but you may need to withdraw the over contribution.