Should I pick a company paid premium or company paid deductible health insurance plan?

Question

I am switching companies in a month. Here is my current health insurance and here are my two options for when I switch (Note that I have a wife and infant child):

Current:

• Shared premiums at $310 cost to me per paycheck (biweekly). $3000 family deductible, $5000 OOPM. 90/10 split after deductible is met. Spent just north of $8000 on healthcare this year (to clarify, I was responsible for $8000 but was billed much more than that and had insurance cover a lot of it).

Two Options:

1. Annual deductible paid by company in monthly installments to health savings account. $1500 single/ $3000 family deductible. Company/Employee Shared Premium at $315 per paycheck (twice a month)

2. 100% Company Paid Premium for Employee and dependents - no premium
   deductions from employee paycheck. Employee fully responsible for deductible ($3000 single/$6000 family)

It seems to me that the second option is better because you get more in your paycheck every month and can decide what to do with that (but probably set it aside for healthcare). The deductible is high though, thus the dilemma and the reason for me asking here.

I realize that this is not an opinion site so to make this a more objectively answerable question, here are more details about my situation:

• So far, very healthy family. Only real medical costs we had last year had to do with having a baby.
• Currently pay over $600 a month between premiums and HSA contributions
• Generally avoid medication and doctors in general unless absolutely necessary
• My wife's only appointments last year were baby related which won't be the case in 2018
• Our baby will be going to the pediatrician with less and less frequency as the necessary checkups get spaced further apart as he gets older

If nothing else, pros and cons of each policy would be great.

Answer 1

Just to consolidate, here is the relevant information on the two options:

1. Employer HSA contribution option

• Employee annual premium: $7560. However, because your contributions to your health insurance are pre-tax, this will result in tax savings of $1890 (assuming you are in the 25% tax bracket). As a result, the real cost of your premium is $5670.
• Employer HSA contribution: $3000
• Deductible: $3000

2. Employer-paid premiums

• Employee annual premium: $0
• Employer HSA contribution: $0
• Deductible: $6000

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To analyze this, we need to look at some different scenarios and see how you would fare in each one. For this analysis, I am assuming that you will only contribute to your own HSA if needed for medical expenses.

First, let's look at the situation where you have no medical expenses at all for the year.

• Option 1: Cost: $5670 (premium). You will have $3000 in your HSA. End result to finances: -$2670.
• Option 2: Cost: $0. You will have $0 in your HSA. End result: $0

Option 2 wins this round.

Next, let's look at a major medical event, where you have hit your out-of-pocket maximum for the year:

• Option 1: Cost: $5670 (premium) + $8000 (Out of pocket expenses) - $938 (tax savings resulting from personal HSA contribution of $3750) - $3000 (employer HSA contribution) = $9732
• Option 2: Cost: $0 (premium) + $8000 (Out of pocket expenses) - $1688 (tax savings resulting from personal HSA contribution of $6750) = $6312

Option 2 wins this scenario as well.

For the third scenario, let's consider the case where your medical expenses for the year add up to $6000. This means that the option 2 plan will have covered nothing, but the option 1 plan will have paid out quite a bit.

• Option 1: Cost: $5670 (premium) + $3000 (deductible) + $600 (coinsurance) - $150 (tax savings from personal HSA contribution of $600) - $3000 (employer HSA contribution) = $6120.
• Option 2: Cost: $0 (premium) + $6000 (deductible) - $1500 (tax savings from personal HSA contribution of $6000 = $4500.

It looks to me like Option 2 is better in every scenario.