saving money in the 'marketplace'

by justin bolmgren

As families search for ways to lower their health care costs, a health savings account (HSA) may just do the trick.  An HSA gives you a triple tax break: Your contributions are sheltered from income taxes, the money grows tax-deferred, and the funds can be withdrawn tax-free for medical expenses.  To qualify for an HSA, though, you must be enrolled in a qualified High Deductible Plan.  The idea of “High Deductible” may scare families assuming it translates to inferior coverage for their family.  However, as I’ve recently found out, the same nationwide providers such as Blue Cross & Blue Shield offer quality High Deductible plans on the Government's Heath Care Marketplace (Marketplace). 

Being mid-thirties, healthy family of four, and a small business owner, I must pay close attention to my family’s health care coverage. Amounts of coverage and cost on the Marketplace vary tremendously.  Since opening up for enrollment on November 15th for 2015 coverage, I've been running comparisons of what works best for my family.   Let me share my findings.

I compared three plans in the Marketplace all offered through Blue Cross and Blue Shield of Illinois.  To compare evenly, I selected three plans by the same provider, same out of pocket max, and similar medical care coverage.  Basically, the differences are cost.  Plan 1 is a High Deductible plan ($12,700 family deductible), out of pocket max of $12,700, and monthly premium of $482.83.  Plan 2 is standard plan with a $6000 family deductible, $12,700 out of pocket max, and a $712.22 monthly premium.  Plan 3 is a $1500 family deductible, $12,700 out of pocket max, and $1153.58 monthly premium.  I determined the total out of pocket dollar cost the family would pay on various amounts of total hypothetical health care expenses ranging from $20,000 to $1,000.  Since calculations get complicated determining wellness visits, doctor visits, etc; I assume hypothetical health care expenses are Emergency Room visits  & Hospital stays.  What I found is the higher the hypothetical health care expenses, the more compelling the cost savings the lower deductible standard plans are for my family. Plan 3 is the cheapest after $15,000 in hypothetical health care expenses.  Plan 1 is cheapest when hypothetical health care expenses are kept under $10,000.     

What this information means to me: Since I expect that my family will continue to have low medical expenses (well under $10,000 per year), the High Deductible plan with an aggressive HSA contribution would be most advantageous. Further, this basic comparison does not factor the tax free nature of the HSA withdrawals and contributions can be rolled over to following years if unused.  The after-tax savings can certainly add up.  To be fair though, many of the higher premium plans available have the conveniences of nationwide coverage, low or no co-pays.  Also, budgeting ahead may be easier due to lower variability of actual expenses.  However, quality medical coverage at lowest possible cost is the priority for my family.  That is how I'm Saving Money in the 'Marketplace'.