Choosing New Health Insurance in NYC

An Apple a Day

One of the big question marks with our move out to New York City was how our health insurance would change — and how it would affect our budget. Because our insurance in Utah was with a regional company, it couldn’t come with us to NYC. So we found ourselves once again at the drawing board with a few different plans to choose from.

Our old plan had a $250 deductible, a $5,000 individual out-of-pocket maximum, and a $0 monthly premium (Need a refresher on health insurance terms? Here ya go.). Our choices in New York City were more expensive (surprise, surprise!) and different, so we had to weigh our options once again. One of our big considerations in making our choice was this:

Do we know of any big health costs coming up this year?

Umm, yes — baby #2. Knowing we have a guaranteed big health cost coming up (in a little over 6 weeks!!), as well as lots of doctor’s appointments for the new little one and me, actually helped us to make our decision.

Here are the two main choices we considered:

Plan A

  • Deductible: $500 individual/$1,000 family
  • Coinsurance: 20% (i.e., after deductible is met, we owe 20% until out-of-pocket max is met).
  • Out-of-Pocket Individual Max: $5,000 individual/$10,000 family
  • Out-of-Pocket Family Max: $10,000
  • Monthly Premium: $300

Plan B (HSA Plan)

  • Deductible: $2,800/family (Once the deductible is hit, insurance then covers 80% and we cover 20% [coinsurance] of all costs until the out-of-pocket maximum is met for the year.)
  • Coinsurance: 20% (i.e., after deductible is met, we owe 20% until out-of-pocket max is met).
  • Out-of-Pocket Individual/Family Max: $4,600 (Once we’ve spent $4,600, we wouldn’t owe another dime for any covered healthcare expenses.)
  • Monthly Premium: $40

So with those numbers in mind and with our guaranteed health expenses coming up, what do you think we chose? What would you choose?

Well, after crunching the numbers, we chose Plan B, the HSA. If I’m being honest, Johnny had to convince me for a while to agree to the HSA plan. I hated the idea of having to pay $2,000 out of our own pocket before insurance covered anything. With Plan A, we would have had a copay of $25 for office visits. With Plan B, everything — including office visits — would be out of pocket from the start. My first doctor’s appointment out here cost me over $900 bones (because of the ultrasound and blood work), and I had to pay every cent of it up front!

But here’s why the HSA was a better option for us:

  • With the HSA, we’ll save over $3,000 over the course of the year on premiums alone!
  • Despite the high costs up front, the HSA will actually cost us less over the course of the year. At the very most, our total health costs for the year will be $4,600 out of pocket with the HSA. Even with the low deductible, our coinsurance cost would get us pretty close to that same number with the traditional plan.
  • Heaven forbid any complications with the pregnancy or any other health problems arose this year, but we would stand to save a lot of money with the HSA’s $4,600 out-of-pocket maximum. I think sometimes we forget that’s the real reason we have health insurance.
  • The tax savings from the HSA plan are phenomenal. We’ll save almost $2,000 this year because the money is pre-tax. And that’s not even scratching the surface on HSA benefits for retirement savings (which Johnny briefly touched on here).

So those were our considerations. It looks like we’ll be having a $4,600 baby — which is a lot of money. But we’re hoping our supplemental Aflac insurance (read all about it here), will pay for most of that.

What plan would you have chosen? This is our first time going with an HSA… any fellow HSA users out there?

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  • Reply Gretchen February 23, 2015 at 7:47 am

    That’s quite a change from the first baby, whom you made money on, isn’t it?? But ultimately, you have the savings to make up-front, pricey medical care possible – even using the option that will save you money in the long run! I will say, though, that I was surprised at your options – I was expecting another Obamacare fiasco story 🙂

    • Reply Johnny February 24, 2015 at 9:00 am

      Yep, pretty big cost increase. Granted, our premium was much higher then, so it actually might end up only being a couple thousand dollars more expensive. It seems like most health insurance related posts have to do with Obamacare these days, but in this case, it’s mostly a moot point. And we can avoid any political drama in our comment section. 🙂

  • Reply MomofTwoPreciousGirls February 23, 2015 at 7:50 am

    I absolutely love my HSA! This year my company offered a silver and a gold HSA option. I knew right at the beginning of the year I was going to have surgery. So I chose the gold option which had lower deductible and co insurance. Basically, I will have no out of pocket expenses the rest of the year. I have been using it for a few years and maxing the HSA contributions each year (with some assistance from my company). I keep telling my husband “any other procedures you want this year?!” My oldest daughter takes a medication that normally costs $130/month. Being able to pick it up yesterday and not pay a dime was nice.
    I think once you get past this year with that extra big expense, you may enjoy the HSA! I’m so excited to see how all goes with your new baby girl (and how Sally enjoys being a big sister).

    • Reply Johnny February 24, 2015 at 9:03 am

      Awesome! I mean, not awesome that you’ll surgery and medical bills are involved, but awesome that you planned ahead and have a medical cost-free year ahead of you. Assuming we hit our OOP max with the pregnancy, you better believe we’ll be hitting up every doctor and specialist that’s out there — medical spending spree!

  • Reply TT February 23, 2015 at 8:03 am

    With HSAs you have a higher deductible, but lower maxes (generally). Psychologically, I feel like this makes things easier to plan for. In your example if you save $4,600 for the year you are done. With the other plan, yeah you could have $10k set aside, but it seems unlikely you’d use it all. So how much should you really set aside? When we had a baby last year, we planned on hitting the max, and so the wife and I also took care of a few medical items we had been putting off ourselves and they were essentially free. Just one more benefit in addition to the tax and investment perks.

    • Reply Johnny February 24, 2015 at 9:04 am

      Totally agree. When I was comparing plans, it was so much more straightforward doing the math for the HSA. No individual deductible/OOP max, no massive gap between deductible and OOP max. Super straightforward.

  • Reply Holly S February 23, 2015 at 11:11 am

    Wow! I live in Kentucky so you would think we’d have cheaper insurance here than New York apparently not so. I have an HSA also but our individual deductible is $2600/family $5200. For us it’s still worth it because my oldest son is type-1 diabetic and that’s an expensive disease, we usually meet his deductible by April just because of his insulin costs. The first part of the year is horrible while I’m paying all that money out of pocket but then it eases up a bit. The other son plays competitive lacrosse so it’s always a crap shoot if he will end up using his deductible. I think HSA plans are really great if you are one extreme or the other. Great if you have a lot of insurance costs like we do or for some of my young, healthy co-workers who rarely use the insurance.

    • Reply Johnny February 24, 2015 at 9:18 am

      Sounds like we have pretty similar plans. But you’re totally right, frontloading the expenses at the beginning of the year feels really tough, even if it will save substantially in the long run. And I think you’re assessment is spot on — great for those with known, high medical costs, great for those with very minor medical costs, and still pretty good for everyone in the middle who can use it as an investment and tax-savings vehicle.

  • Reply Amber February 23, 2015 at 1:04 pm

    It took forever for me to understand what an HSA was and why it made sense for me. I rarely have any medical expenses, so right now I’m saving a ton of tax free money for someday when I know I’ll have to use it (aka having baby at some point).

    • Reply Johnny February 24, 2015 at 9:20 am

      Yeah, our government doesn’t do a great job explaining some of these programs, but it’s well worth figuring it out. That’s awesome that you’re just saving/investing it for a medical rainy day. Super smart.

  • Reply Leigh February 23, 2015 at 1:10 pm

    Back before birth control was covered for free with no co-pays or coinsurance, my pills cost me a cool $85-100/month before insurance calculations. Even with that, the HSA plan was cheaper than the “regular” plan with low co-pays. Why? The difference in premiums was about equivalent to the deductible and the coinsurance amount on $85-100 was lower than the co-pay would have been, plus there was an out of pocket maximum, which the other plan didn’t have. With my former employer, the HSA plan was almost always the most logical at least for a single person. It used to be that the “regular” plan was cheaper when you had a baby, but I think they had too many people switching to it when they were planning on a baby because it isn’t anymore.

    That reminds me – it’s time for my boyfriend to do open enrollment and for me to calculate which plan he should go with this year. I’m starting a new job soon and it has two options, but the HSA one is way clearly better as the premiums are lower AND the employer puts a decent chunk of money into an HSA for you.

    • Reply Johnny February 24, 2015 at 9:25 am

      There are so many factors at play in deciding which plan is a better deal. There’s a tendency to just look at the premium cost or just the deductible amount, but it all has to be weighed out collectively. Throw employer matching into the mix and there’s yet another variable to consider.

      Good on you for pointing your BF in the right direction. Health insurance stuff is maddening, so it’s nice to talk it through with someone.

  • Reply Tarynkay February 23, 2015 at 2:18 pm

    We have an HSA for my husband and son through his work. We pay $70/month for the premium. Nothing is covered until we meet the $7K deductible, which we have never even come close to, so in practice, everything is out of pocket. If we did meet it, 100% would be covered after that. If we put me on his insurance, the premium goes up to $400/month. So I have private insurance for $90/month. The deductible is $10K. My plan is technically illegal under ACA, but they have let me keep it again this year, which is nice bc my lowest possible premium under the new plans is $250/month with a $5K deductible to meet before anything is covered. I do not qualify for a subsidy bc I could buy coverage through my husband’s job and the coverage would be less than some percentage of his income. I don’t remember what the maximum percentage was.

    • Reply Johnny February 24, 2015 at 9:29 am

      Ugh, sounds like some rough options are heading your way (whenever the “if you like your plan, you can keep your plan” extension expires), but jumping on your husband’s plan would probably be the best bet since you can all work toward the same family deductible.

      You’ve worked out a smart system in the meantime. Oh the webs that health insurance make us weave.

  • Reply Brian @ Debtless in Texas February 23, 2015 at 4:24 pm

    Ah this is great timing! We switched over as well (baby on the way) and I recently wrote a post about our HSA custodian and the issues I am having with them. HSAs are great, but you have to make sure that the company managing your investments is doing the right thing. Ours automatically defaults contributions into a cash savings account with a .05-.15% APY. If you decide to invest in the fund offered, they are all SUPER high expense ratio and/or front end loads of up to 6% to “invest” with them.

    We will be maxing ours and still paying out of pocket as the HSA is a triple tax advantaged account and we can withdraw without penalty after 65. What we will be doing is opening a second HSA with a different custodian (which is TBD) and investing in low expense Vanguard index funds. You can move contributions from one custodian to another, but there is legaleze and possible fees so you have to do it properly.

    What really irked me is that this custodian did not advertise or disclose these fees anywhere. I had to spend A LOT of time looking up the fund expense ratios and front end loads and was shocked at how expensive they were. This particular company is perched to take a lot of money away from folks who are saving in their HSAs but didn’t take a look at the fine print or do any digging. I think it is disgraceful, but it really goes to show how important educating yourself really is. Stop by my blog and take a look, I hope it will motivate y’all to dig deep and find the best place to park your HSA!

    • Reply Johnny February 24, 2015 at 9:37 am

      Good point on the HSA custodian. To be honest, I haven’t even paid much attention to what they offer, so I’ll need to spend some time this afternoon to see what’s up, including checking out your post. Thanks for the heads up.

  • Reply Christy February 23, 2015 at 5:53 pm

    This post was an eye opener. I live in Canada where our health care is all paid by the province and prescriptions are covered 90% by our extra insurance which is less than $40/month. I can’t imagine how we could have stayed afloat if I had to think overtime I went to the Dr. Good for you guys for doing your homework.

    • Reply Johnny February 24, 2015 at 9:40 am

      Whenever we do health insurance-related posts, it’s basically a big ol’ advertisement for Canada. 🙂 Count your lucky Canadian stars, err, maple leaf. We’re jealous.

      • Reply Chrusty February 24, 2015 at 4:17 pm

        I listen to a US finance podcast and if I had a nickel for every time someone said ‘My husband had a heart attack and we almost lost our house’, I’d be wealthy!

  • Reply Jeff April 24, 2015 at 4:40 pm

    hey guys. I’m a fellow NYCer. My wife and I and our two boys live in Sunnyside, Queens. I was wondering, how in the heck did you get such low premiums for a family of four? I get insurance through my company, but I have to pay for my family. Everytime I check out for our area, I can’t find any insurance for less than about $900 a month for a family a four.

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