I’ve worked at my job for four years and paid $200 a month for the top health plan, which had no deductible, a $2k out-of-pocket max, and no copays for therapy, my main regular expense. I also had an expensive medication, but I got help with the copay.
This year, I looked into the free plan, but it had a $1,000 deductible and a $3,000 out-of-pocket max.
Then I checked out the HDHP. It has a $3k deductible and a $4,200 out-of-pocket max but no monthly premiums and my company adds $200 a month to an HSA with that option. I figured out this is the best deal because the out-of-pocket max is really $1,800 since they’re putting in $2400 into the HSA each year.
I also learned that instead of using the drug company’s copay card for the pricey medication, which doesn’t count toward the deductible or out-of-pocket max, I could pay out of pocket, have it count, then get reimbursed by the drug company. I spent $500 on mental health claims in January and also paid $3,600 for the medication. Now I’m covered for the rest of the year, the drug company reimbursed me the $3,600, and my employer keeps adding to the HSA. I plan to max it out without spending more from it this year apart from those mental health claims.
I’m sharing this because I’m proud but also feel kinda foolish since the HSA could have had a lot more if I’d done my homework earlier and hadn’t dismissed the HDHP before. Don’t be like me last year. I realize I’m fortunate to have been able to pay $3.5K up front for the medication, as I didn’t always have that kind of money or credit.
You could take it a step further by putting some of the premiums saved or part of that drug rebate into your HSA, which could lower your taxable income, then invest that money for even more savings, and it could be tax-free!
@Jesse
Absolutely! I’m going to max out my HSA by the end of March. Since I’m over 55, I can contribute an extra $2900 along with the employer’s $2400. I couldn’t believe how much it cut my taxes. My salary went up by $200 a month, but I boosted my payroll deduction by $800, contributing $1000 to the HSA instead of just $200 for the medical premiums, and I raised my 401k by 1%. My monthly take-home pay only went down by $400.
Just a heads up, using copay assistance to hit your deductible or out-of-pocket max makes you ineligible for HSA contributions per IRS rules. If the IRS notices, you could face some taxes and penalties on that. Reimbursements from drug companies also count as copay help.
I’m confused about how you were able to pay $3600 upfront and then get all of it back from the drug company. Isn’t there usually a cost with the copay card? Didn’t you have to use insurance with the card? I thought it acted like a secondary payer.
Edit: I missed that it was copay assistance, not just a regular manufacturer discount.
Darin said: @Hayden
That $3600 was my copay which I submitted using the EOB as proof of payment.
Got it, that clears things up. Cases like yours where you have a big recurring expense are exactly why HDHPs and HSAs are helpful. A $3000 deductible and $4200 out-of-pocket max isn’t bad for an HDHP. Kudos for being proactive and figuring this out.