Health Insurance 102

Like many companies, my employer is moving to strictly account-based health insurance for 2012.  I now have a choice between a high deductible plan with a Health Reimbursement Account (HRA) and an even higher deductible plan with a Health Savings Account (HSA).  This change is of concern even if I weren’t planning to retire, but planning to retire puts a different spin on the plans.

As I see it, account-based plans provide the ability to take care of the everyday medical expenses through the use of money in the accounts while providing true insurance against the expense of catastrophic care.  Both options provide preventive care at 100% with no deductible.  And both options pay for “preventive” prescriptions as though deductible had been met – just at different rates.

This is important, as Paul and I each take one prescription.  Mine retails for $154 a month.  His retails for $3,510.60 a month.   According to https://www.unitedhrdirect.com/hrdirect/benefits2011/docs/rx_pdl_expanded.pdf, both of our prescriptions are considered “preventive.” 

A significant change in these plans appears to be the lack of an individual out-of-pocket maximum.  In our previous coverage, the cost of Paul’s prescription put us over the out-of-pocket max m id-year.  This assumes that the HRA plan treats his prescription as major medical.

So let’s do the math.  Plans to retire actually puts a third option on the table – have Paul go on Medicare now. 

	HRA	HSA	Medicare + HSA
Annual Premium	$3312	$1584	$2358+
Coinsurance for prescriptions	$6000	$4397	?
Total:	$9312	$5981	Unknown
Annual Deductible	$3000	$4500	$2000
Annual Out of Pocket Maximum	$6000	$7500	$5000
Corporate funds to account	$1800	$1600	$800
Personal funding to account	$0	$4650	$2300
	$1800	$6250	$3100

So far the math looks like the HSA option will be best for us.  We still have a number of questions to be answered before we make this decision.  The significant ones are:

·         Is there an individual out of pocket maximum?
·         How does the HRA plan treat injectable drugs?
·         If I drop Paul from coverage this year, will I be able to get the retiree Medicare supplement when I retire?
·         What happens to the (assumed joint) Health Savings Account once we retire?  Will there be any penalty because Paul goes on Medicare and is no longer eligible, or do I just keep the funds as my own?

Answers to come…