Health Insurance Evaluation Tool
The claims situations employees really face, and which plan design serves them better in each one. Including the case where the traditional plan is the right answer.
Comparing an HSA based plan with a traditional plan
Below are the claims situations employees actually find themselves in during a year. For each one, the question is the same: would this person have done better on an HSA qualified Bronze plan, or on a traditional Silver plan?
Run your own year through it. An employee who wants to be rigorous about this can pull last year's explanation of benefits statements, add up what was actually spent, and test both answers against a real number instead of a worry.
Which design tends to win, and why
In general the HSA based plan outperforms the traditional plan in most claims scenarios. Here is where each one earns its keep.
A healthy year with almost no claims
The HSA based plan wins comfortably. The premium saved goes into the employee's own account instead of to the insurance company for low copays that were never used.
This is the most common year for most employees, which is why the default matters so much.
Moderate claims through the year
The HSA based plan usually still wins. Claims are paid with tax free dollars out of the account, which is the feature people underestimate most.
Paying a bill with money that was never taxed is what makes an affordable plan behave like a far more expensive one.
Frequent doctor visits
This is closer. A traditional plan with low office visit copays looks better at the counter, but the higher premium is paid in every one of the twelve months.
The comparison has to be run on the year as a whole, not on the visit.
A very large medical bill
The HSA based plan is substantially better in a year when someone reaches the out of pocket maximum, because the whole out of pocket amount can be paid with tax free dollars.
An employee who has saved steadily for a few years has a pool large enough to absorb that maximum, in more than one year if they have to.
Frequent generic prescriptions
Generally fine on the HSA based plan. Generic drugs are inexpensive, the negotiated price applies, and the spending counts toward the deductible.
An expensive brand name prescription
This is the honest exception. Someone taking one or more costly brand name medications that are not on the formulary is usually better served by the traditional plan.
We will tell you when that is the case rather than push the default.
The benefits that never appear on a premium comparison
A premium spreadsheet only compares premiums. These are the things an HSA adds that a spreadsheet has no column for.
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The employee can plan and save for future expenses, including the health care costs that come after 65.
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Substantially better value for the healthy employees who make up most of a workforce.
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The ability to remove future financial risk by building a pool of tax free money ahead of the claim rather than after it.
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A reward for good health, since money the employer contributes and the employee does not spend simply stays theirs.
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A personal wellness budget. HSA dollars can pay for qualified expenses the plan itself does not cover, which gives people a reason to spend on their own health.
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Room for care outside the plan. The account is yours to spend on qualified expenses even when the plan would not have paid, though what the plan covers is a separate question worth asking first.
Where the detail lives
The full argument behind this comparison is set out by Robert Hopper, Ph.D. in his article The Case for HSAs, or why nearly everyone can benefit from owning a health savings account. Ask us and we will send you a copy.
Most employees are in good health in any given year, and good health is the thing an HSA lets them convert into savings. That is the whole case in one sentence.
How to run the numbers on yourself
Pull your explanation of benefits statements from last year and add up what you actually paid, not what you were afraid you might pay.
Then compare that total, plus twelve months of the affordable plan's premium share, against twelve months of the richer plan's premium share. The comparison usually resolves itself the moment it is written down.
We do this exercise with employee groups before enrollment rather than during it. It is the step most people skip, and it is the one that makes every year afterward cheaper.
Want this run against your own group?
We will compare the HSA qualified plan and the traditional plan across the scenarios your employees actually fall into.