Obamacare Changes The Top HSA Insurance Plans in California
The only Health Savings Account compatible health plans left in California are all part of Obamacare. This means that most of the HSA plans are standardized plans that Covered California defined. As a result, we end up having to compare and choose between many plans that are identical.
The choice as to which of the options is the best plan for you depends on your circumstances. We’ll help you determine which plan is right for you, and show you why the top HSA health insurance plans in California are:
What Is An HSA Health Insurance Plan?
Health Savings Account (HSA) health plans were created to encourage consumers to control their healthcare costs by comparing prices and shopping for their care needs. These plans have 2 parts; a high deductible health insurance plan (HDHP), and a special HSA “savings” account that offers tax benefits and potential tax deductions. These two parts operate separately from each other.
The HDHP HSA (High Deductible HSA) Limits
All HSA compatible health insurance plans are high deductible health plans. The minimum and maximums for HSA insurance plans in 2017 and 2018, along with the HSA contribution limits are outlined in the table below. The values can change each year.
|Minimum Deductible||Individual: $1,300
|Maximum Out-Of-Pocket||Individual: $6,550
|HSA Contribution Limit||Individual: $3,400
|HSA Catch Up Contributions *||$1,000||$1,000|
* – Must be age 55 or older to make catch up contributions
These HSA insurance plans are fairly simple to understand. Preventive services, such as annual physicals or checkups, are no extra cost. All other services are part of the plan deductible. This means that you pay what the insurance company would have paid for those services as part of your deductible for the year. Once the deductible is reached, then the insurance company will begin paying for medical expenses. In these plans, the deductible and maximum-out-of-pocket (MOOP) limit are the same value.
There is a second type of HSA health plan in which the deductible and the maximum-out-of-pocket are not the same. In these plans, when you reach the deductible you begin sharing costs with the insurance company (you pay co-insurance of 10-50% and the insurance company pays the rest) until you reach a higher maximum-out-of-pocket limit. Once you reach the MOOP the insurance company pays 100% of all further expenses for the year.
The main benefit of HSA health insurance is using the saving account to reduce your taxable income. The secondary benefit is using tax-free withdrawals to pay for your medical expenses. All contributions to the health savings account reduce your federal taxable income dollar for dollar.
Putting $500 into an HSA during the year will reduce your taxable income by $500. If you are in the 20% federal tax bracket you would pay $100 less in taxes that year. Plus, if you used all $500 to pay for your out of pocket deductible expenses, the money removed from the account is tax free.
For more information about Health Savings Accounts, including how they work, what the tax benefits are, and how to find banks that provide these accounts, see our Health Savings Account Information page.
Does An HSA Insurance Plan Make Sense For You?
As we’ve mentioned before, HSA health insurance plans are not for everyone. They are not the least costly plans and they don’t have a lot of benefits until you meet the deductible. So is an HSA plan a good choice for you?
Here’s the situations where HSA plans make sense:
If you can make use of the tax deductions with an HSA
If you want to “self insure” but have a safety net
If you want a retirement plan for health care expenses
In the past we included “wanting to have a baby” in the list of situations. With the changes from Health Care Reform, HSA plans are no longer a good solution for expectant mothers.
HSA Insurance Pros And Cons
There are a number of pros and cons to getting a new HSA health insurance plan at this point. The most obvious concern is what will happen to HSA plans as health care reform continues? We’ve created this simple table below to summarize the various advantages and disadvantages of HSAs.
|You decide how to spend your HSA money. Any unused money stays in your account to grow and can be used for future medical expenses.||People who have health conditions or are older might not be able to save as much as younger, healthier people who need less medical care.|
|You decide how much money to contribute to your HSA for health care costs.||Injury and sickness is unpredictable, making it difficult to budget for medical costs.|
|You can shop for health care based on quality and cost.||Some information, including cost and quality, may be hard to find.|
|Your employer can contribute into your HSA.||Wanting to save the money in your HSA might make you skip care.|
|Money contributed to your HSA may be deducted from your federal taxable income.||If you withdraw money from your HSA for nonmedical expenses, you’ll have to pay taxes on it. If you’re younger than age 65, you’ll also have to pay a 20 percent penalty.|
|In some states, contributions to your HSA reduce your taxable state income.||California does not allow HSA contributions to be deducted from income.|
|HSA health insurance plans will continue to be offered after health care reform.||Tax law changes could modify what is considered a qualified medical expense. This would change the specific withdrawals that get tax free status.|
Best HSA Health Insurance Plans
Determining the best California HSA insurance plan for your situation requires a little bit of analysis. Your specific benefit needs are going to play a big part in determining which HSA-compatible health plan provides the right option for you. You’ll need to consider what your expected needs are in terms of office visits, medication expenses, treatment costs, etc.. See the section, “5 Questions To Determine Which Plan Is Best For You” to get help on this topic.
To determine which HSA insurance plans were better than the rest, we analyzed all the plans and compared them to each other. Because some HDHP’s have a higher MOOP than the deductible, we used an adjusted deductible to account for the greater MOOP as well as hospital and office visit co-pays that regular HDHP plans don’t have.
The data shows that there are a few HSA plans that appear to be better options.
To determine which plan is better than the others we’ll use three scenarios to test them with. The first situation assumes that you have zero medical expenses in a year. The second situation assumes the total of your medical expenses is less than $4,000, and the third assumes the medical costs are over $15,000.
The best way to show the HSA health plan comparison is to graph the plans by price and adjusted deductible. The prices shown below are for a 35 year old in San Diego county.
See the best 2015 plans by clicking here.
In this graph, the better HDHP plans are as close to the lower left corner as possible, and below the red line. That region has the lowest premiums and deductibles. The red line through the graph represents the average or trend-line of the plans. As you look at the graph you’ll notice there is a small grouping below the trend-line, one plan further to the left (above the trend-line) and one plan slightly to the right and a little bit lower. These are our best candidates for top plans.
The larger grouping is the standardized Bronze HSA plan defined by Covered California. These plans all have a $5,300 adjusted deductible.
- Kaiser Permanente Bronze 60 HSA HMO
- Sharp Bronze 60 HSA HMO
- Anthem Blue Cross Bronze 60 D HSA EPO
- Blue Shield Bronze 60 HSA PPO – a little above the trend line
Each of these plans offers a $4,500 deductible, a 40% co-insurance after you meet the deductible, and an out-of-pocket maximum of $6,500. The main difference between these four plans is price, network, and insurance company.
The other plan below the trend line is:
- Kaiser Permanente Bronze 60 HSA 5500/40% HMO
The Kaiser Bronze 5500/40% HSA plan offers a higher deductible than the standard Bronze HSA plans, but at a slightly lower monthly premium.
In the first scenario where you won’t have any medical expenses for the year, the better option is the lowest cost plan, or the one your doctor accepts. In this scenario, the Kaiser Bronze 5500/40% HSA plan is the best option. Sharp has the second best plan (along with the Kaiser Bronze 60 HSA), but Sharp is a regional insurance company that only offers coverage in San Diego. Check your quotes to see if a small regional company is offered where you live. They may be a good fit, if your doctor is in their network.
In the second scenario, where your medical expenses are $4,000, the better option will be the Kaiser Silver 70 HSA 1500/20%. This is because this Kaiser HSA plan has a $1,500 deductible, and then you begin sharing costs at 20%. The portion you would pay is the deductible, $1,500, plus 20% of the remaining $2,500, which is a total of $2,000. If you use the Kaiser CA Bronze HSA 5500/40 or any of the standardized Bronze 60 HSA plans, you would pay the full $4,000 because your deductible is greater than your total medical expenses.
In the third scenario, where your medical expenses are greater than $15,000, you will reach the out-of-pocket maximum in all but the Kaiser Silver 70 HSA 1500/20% plan. This Kaiser Silver HSA plan will have you pay only $4,200 of the $15,000 in medical costs, while with the other HSA plans you would pay $6,500. The difference in premium cost of the Kaiser Silver HSA versus the other HSA plans is low enough that the Silver plan is the winner in terms of total cost. The key part is, do you want to go to a Kaiser doctor?
For the majority of you, the first or second scenarios are more likely to happen.
For Kaiser patients, the Kaiser Bronze 60 HSA is the best option. For everyone else, the Sharp Health Plan Bronze 60 HSA or the Anthem Blue Cross Bronze 60 HSA Tiered PPO are the better options. The decision between Anthem or Sharp being, which one does your doctor accept?
All Three of these plans are available directly from the insurance companies or on Covered California. Get a quote to see the plans and rates by clicking on the “Get Health Insurance Quote” in the upper right corner of this page, and select either “On Exchange” for Covered California plans, or “Off Exchange” for plans available directly from each insurance company. Then find the plan you want in the health quotes and click the “Apply Now” button beside that plan.. The Kaiser Bronze 5500/40% HSA and Silver 70 HSA $1,500/20% plans are only available directly from Kaiser Permanente.
Maternity Coverage With HSA Health Insurance Plans
The new Obamacare rules have made HSA plans less attractive for maternity insurance. The biggest reason is the new MOOP limits of $6,250. This makes the out-of-pocket cost to have a baby very high if you use an HSA plan. There are other HMO and PPO plans that are better suited for maternity care.
If using an HSA for your pregnancy is what you want to do, then the best HSA health insurance plan for maternity coverage is:
- Kaiser CA Silver HSA 1500/20%
This plans will result in the lowest out-of-pocket cost. The Kaiser plan has a $1,500 deductible and then a 20% co-insurance. For a $10,000 delivery cost you would pay $3,200. Assuming you put the full $3,200 into an HSA savings account, and you are in the 20% tax bracket, your after-tax cost is $2,560. Add in your monthly premiums of $276, an annual total of $3,312. The total out of pocket cost for a baby in this Kaiser Silver HSA plan is $5,872.
As you will notice on the Maternity Insurance page of the website, when we actually calculate the expected prenatal and delivery costs for all California health insurance plans, there are no HSA plans in the top 5. The $5,992 total cost would put the Kaiser Silver HSA plan in between the 8th and 9th best plans.
Rates for all these plans vary from one region of California to another, but this is a good starting point for your analysis of what HSA insurance plan best fits your needs. Go ahead and get your own HSA health insurance quote here.
If you would like our help, please call the office and one of our advisors will be glad to assist you.