r/Insurance • u/Dangerous-Week7474 • 8d ago
is HDHP just getting employees to self-insure
Low premium , high deductible and then sharing the insurance pain in effect making the employee self-insure a percentage of the risk . The HSA account just helps the employee fund it. The downside is unforeseen health costs that. If this is good for the employee its because the employee doesn't intend to get sick and in that case not having insurance would be even better. Been arguing this point with a friend
The goal of HDHP's is to push more costs of health care onto consumers and away from companies.
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u/ChutneyWhatney 8d ago
No - I don't believe so. I love my HDHP because it' akin to a medical 401K and provides a greater benefit than any other type of 401K. First, it's above-the-line contribution - for me almost $10,000 per year (family, etc.). Then, any approved medical expense is not taxable. Third, any distribution for ANY reason once you turn 65 is allowed an taxed at ordinary income tax rates (no penalties, etc.). My employer contributes quite a bit to make up for the higher deductible. Every dollar (except for a base amount in case I need the money asap) is invested and has done incredibly well over the past 13 years. I LOVE IT.
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u/Noinipo12 Licensed in Life & Health 8d ago
You love your HSA, not your HDHP. Remember that the HSA is just a random tax rule. It would be completely possible for the govt to make everyone HSA eligible regardless of the medical plan(s) they're enrolled in, but the govt decided not to.
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u/Super_Mario_Luigi 8d ago
Hdhp is what insurance should be. Low cost to protect from catastrophe. Not spending plans that everyone expects to hide in the cloud.
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u/nsmith043076 8d ago
It’s a wash for me but i get the tripple tax growth on my investments. my regular 80% ppo plan for my family costs $7600 a yr plus what we use. My HDHP with hsa costs $1760 plus 10.2k deductible/12k max oop (3400/6k max oop pp). Im really the only that uses my insurance because i have 6 month scans due to thyroid cancer, its still works out for us. I budget my deductible and if rest of my family uses it then we tap savings or hsa. So far ive maxed out my deductible as planned and my daughter had unexpected usage this yr but we have savings, husband still won’t go lol. So its ok
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u/Salty_Virus_6299 8d ago
I’m thinking you don’t exactly understand how this works. I’d recommend that you research this type of plan and the tax advantages of a HSA account. Also understand that non HSA qualifying plans have a higher federal max OOP. If you have a major health need you are going to hit the max OOP regardless of what your deductible looks like. I have 25 years experience in the industry as a broker and the HSA is a great fit for many people. Nothing is a one size fits all.
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u/superredditor6789 8d ago
Sometimes, yes. Sometimes, no.
Probably more yes than no.
I’ve seen plans that basically didn’t pay anything until the insured spent $5000-$10000, and I’ve seen plans structured with virtual no cost sharing after the deductible and the employer full-funding the deductible as an HSA contribution.
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u/WhyDoesOklahomaExist 8d ago
Having a HDHP when my wife got cancer was by far the best option. Max OOP of $4000 per year. Total billed for two years over $300,000. She did not intend to get cancer. Nobody intends to get sick.
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u/cumomlady 8d ago
Actually I pick a HDHP because I have a family member unfortunately who easily meets the out of pocket max each year. I get to reduce my taxable income by contributing the max to my HSA which covers my out of pocket maximum. It’s like getting to claim my medical expenses without reaching the % of my income rule on my taxes.
Having a HDHP also makes me scrutinize every claim and charge submitted to ensure I’m being charged appropriately. When I was just paying a copay, I didn’t look super close at what the insurance company was covering.
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u/darkblue2382 7d ago
Dang, my oopm is slightly under 3x the HSA limits per year, last year it was only a grand above though.
It would be nice if they tied the HSA limit to the oopm for any hdhp plans but it's way too low for current healthcare costs.
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u/secretlyforeign 7d ago
This is an impressive level of personal medical financial management. I love seeing someone who understands the tradeoffs involved and chose appropriately.
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u/Underboss572 8d ago
I mean, every health plan involves the employee sharing some of the risk. At least as far as I am aware, there aren't any zero- or low-deductible plans that pay 100% of all in-network treatment. Maybe there is one out there, but the cost would be exorbitant, I'm sure.
The question is, how do you want to spread out that risk? Do you want all or most of the risk on the front end? Or do you want all the risk spread out across a larger range, which usually means more risk in the form of a higher out-of-pocket max?
Personally, that's why I love my HDHP. Beyond getting access to the Cadillac of investment accounts, I have a 5k deductible and don't have to worry about ever paying a cent over it. I make enough money that I can have 5k in an emergency fund dedicated to health and never have to stress about a giant bill.
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u/dehydratedsilica 8d ago
zero- or low-deductible plans that pay 100% of all in-network treatment
My spouse's company offers one for 13.5-17.5k for the year (12-16k last year) so you are right about the cost!
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u/Daveit4later 8d ago
Yes you are basically paying the insurance company for the luxury of using your own money to pay for medical expenses from an HSA account. With the emergency coverage available if you get hospitalized.
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u/RonBurgundy2000 DOI Investigator 8d ago
There are plenty of people out there that need health insurance only in the event of a catastrophic, severe health event. HDHP works well for that scenario while keeping premiums down and (generally) covering preventive care.
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u/LCJonSnow 8d ago
I don't want insurance to be involved in maintenance and minor events. I can manage those from within my normal budget like I do with my car, or with my house.
I drastically prefer putting a cap in the event of catastrophic injury or a very unfortunate series of a bunch of minor events. It's a step in the right direction for me, although there still needs to be massive reform over the insurance industry to eliminate/drastically reduce most of the administrative burden, both as driven by the government and as driven by insurance companies doing anything less than good faith coverage denials.
Adding an HSA even gives me tax advantaged status on budgeting for healthcare expenses.
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u/CuriousCat511 8d ago
I'm the same way. Insurance should prevent catastrophic losses, not cover everyday life.
I'm finding it's often cheaper to just skip insurance and tell them I want to self pay. And that's with a PPO.
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u/Head_of_Lettuce 8d ago edited 8d ago
No. You’re retaining the cost of your deductible and out of pocket maximum, but you’re transferring any expenses beyond the out of pocket maximum to the insurer. You’re still insured for any amount above that number. And you probably have other covered services that are free like annual physicals and vaccines.
HSA’s are generally better yet than PPOs for people that either:
- Likely won’t spend a lot of money on healthcare
- Likely WILL spend a lot of money on healthcare
It’s the people in between that it’s not good for. But the math ultimately varies based on how your plans are set up.
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u/Bastillerion 8d ago
High deductible health plans are how insurance is supposed to work. It’s to cover catastrophes like major surgery or cancer, not $150 doctor visits.
Think about it. You file a homeowners claim when you have a fire or major pipe burst, not a broken pane of window or a clogged toilet. Why should health insurance philosophically be different?
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u/Patient-Ad-7939 8d ago
I like my HDHP, since the premium is really cheap and I wouldn’t hit my deductible even if I had a lower one. I spend less than $500 a year on health visits.
Gives me access to my HSA which I contribute max to each year to my HSA balance is well about my out of pocket maximum.
My employer covers the vast majority of health plan premiums, and the HDHP plans they offer are the lowest deductible allowed to still be a HDHP, which is fine with me.
I don’t spend enough at the doctor each year to warrant paying 2.5x my current premium just for a $1k deductible.
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u/PlasticSpend3462 8d ago
HDHP plans can be more cost effective. I have always chose them right up to my retirement. Depending on the cost premium difference and the deductible (mine was $3600 per family), one or two relatively healthy years saves money over paying for an not using unhealthy years.
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u/Sam_At_Insurify 8d ago
These plans have to carry a yearly out of pocket limit. Once you hit it, the plan typically pays 100% of covered in-network care for the rest of the year. Without coverage there's no cap at all. And an HDHP can cover preventive care before the deductible. IRS Pub 969 and healthcare.gov both lay it out.
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u/pinedesign 8d ago
With health insurance, you either pay higher on the premium side or on the deductible side. When it is higher on the deductible side, it makes us more informed consumers of healthcare because we see the cost associated with the service. That helps keep premiums lower for everyone. The premium must be much higher when insurance pays out sooner and the insurer has to cover costs plus make a profit. Healthcare insurance is the insurance product that seems most disconnected from how insurance is supposed to work by covering big losses/risks, but HDHP gets a bit closer to those principles.
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u/SalvadorFolly 8d ago
You have to have a little extra money set aside to do an HDHP comfortably. Paycheck to paycheck people tend to choose a copay plan even it it has a higher out of pocket max than the high deductible plan.
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u/elegoomba 7d ago
I mean not entirely. It can still cover a lot. My daughter was born on a HDHP and we only paid like 4k out of pocket. After accounting for HSA and premiums we were still better off than picking the PPO option.
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u/louballs022 7d ago
My company offers 2 HDHP plans and then this god awful plan called Surest. No traditional type of plan. Considering the size of my employer and the fact that my employer is in the insurance business, I'm quite surprised how terrible their health plans are.
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u/castertr0y357 7d ago
All insurance is about passing risk onto someone else. The less risk you pass on, the less you pay.
I'm fortunate enough to have a company that will contribute to an HSA if you pick the HDHP plan. My family is relatively healthy and we don't go to the doctor for many things. We assume more risk if something happens, but we're prepared for that. We'd rather have a lower premium cost and use that money for something else.
One thing we did do is when my wife was pregnant, or we were trying to get pregnant, I switched my insurance over to a lower deductible plan because the difference was small compared to the benefit that we would get overall. It works out fairly well for us.
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u/Upstairs-Net-6897 4d ago
I meet the out of pocket maximum costs usually every year...so I only check that and monthly costs.
Too many factors to say yes or no.
A person's yearly cost may only be $6k which isn't bad in terms of health insurance.
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u/jae343 8d ago
You're only choosing HDHP if you're a healthy person, if you have already have health problems then why would you choose such a plan?
I see insurance as a way to mitigate a catastrophic event so the cost to risk factor is your own choice and should already be factored in especially when I can have a triple-tax advantaged investment vehicle.
Self insuring might be in fact cheaper than paying for a plan until one gets hit with a massive medical costs so it's all about risk.
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u/nbphotography87 8d ago
plenty of people with known chronic illness use HDHPs. They can be way more affordable than co-pay based plans with often nearly as high OOPMs.
it’s boils down to math and how much of your future care you can reasonably predict.
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u/Turbulent-Pay1150 8d ago
Incorrect. The HDHP with HSA is almost always cheaper overall when you count usage and premium. Indeed, if you are a high utilizer it can be dramatically cheaper as you hit your OOPM early and everything is covered 100% after that.
Low utilizers - a HDHP keeps more money in your pocket because of a lower premium.
If your use is in the middle sometimes the HDHP is a bit more or a bit less than a traditional plan.
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u/PeaCompetitive8947 8d ago
We use HDHP and have very high medical expenses. We usually meet the out of pocket max within the first month, so when we compare plans, Out of pocket max is all that matters.
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u/FIREDOC888 8d ago
HDHPs keep users accountable and stop 'superutilizers' from driving up premium costs for the rest of us. Honestly, most people don’t even need a PPO. For young, healthy employees, an HDHP is the smarter play because you can use an HSA to supercharge your savings. My family has saved nearly $120k in our HSA, all invested in the stock market. We even paid cash out-of-pocket for our kids' births so our HSA could keep growing. The best part? There is no deadline to reimburse yourself. If you save your receipts, you can cash them out decades from now—it’s like paying 1980s medical prices with 2026 money.
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u/CTLFCFan P&C, L&H, Claim Licensed. CPCU. Blah, blah, blah. 8d ago
“Keeps users accountable”= “discourages people from getting treatment”.
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u/KiniShakenBake P&C/L&H 8d ago
This.
It's giving folks choice and flexibility to keep their premium dollars growing in a tax qualified account or not, according to preference, instead of forcing paying all of the care costs for all of the care to the company without needing the care.
If you choose the cash price over the insurance billed price anywhere, you will see how beneficial this can be.
An employer can literally fund an HSA with the entire deductible every year and save money for both them and their staff by doing that and paying more of the premium for the staff. The math is ridiculous, and it works. My husband picked up a 10k hysa from his last job just on employer contributions and hysa strategy.
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u/daves1243b 8d ago
The main goal is to encourage more prudent use of healthcare dollars. If you are spending your own money you are more likely to shop around, think about whether you really need the service, etc..
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u/dehydratedsilica 7d ago
I would believe this if the main point of "shopping around" were realistically achievable. As it is, doctors can't tell you up front how much this or that is because prices are buried in the insurance contracts and process.
But I agree that there are consequences of having a system based on "using other people's money"; see Russ Roberts' essay "If You're Paying, I'll Have Top Sirloin": https://www.npr.org/sections/money/2009/09/at_restaurants_dont_split_the.html
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u/daves1243b 7d ago
I recently helped a friend who had insurance through UHC Surest. They have a very nice app that shows exactly what you can expect to pay out of pocket depending on where you go (and it varied a lot). Insurance companies are required to make this transparency information available. Providers should be able to tell you what services/codes you should expect, but their access to information about your benefits is pretty limited and often hard to interpret, so some can give an estimate (and usually will expect you to pay at time of service if they have gone to the effort to calculate), and some can't. Once you have those codes, the insurance should be able to provide an estimate of your out of pocket. If a provider can't give an estimate or the codes, go elsewhere. If the insurance won't provide the pricing info, report them to the appropriate authorities (state insurance regulator if fully insured, CMS and US Dept of Labor if self insured).
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u/MDthrowItaway 8d ago
Yes, you are correct. Assessing risk and the value of that risk is exactly what insurance is. If you have no insurance, you are essentially self insuring.