Please explain like I'm 5

[u/93ParkAvenueUltra]

I have two health plans to choose from.

Plan A: $11856 per year premium. Deductible is $1600 with 20% coinsurance afterward. Out of pocket max is $6250. Plan Type: PS1

Plan B: $8050 per year premium. Deductible is $7500. Out of pocket max is $7500. Plan Type: EP1

My wife wants to have another baby, but the last one she had pre-eclampsia and we spent a total of 3 weeks in the hospital.I am fairly confident that she will hit the Out of pocket max.

Question 1: Why does Plan B look like the better bet even though it is cheaper than Plan A? Am I missing something?

Question 2: Is the "out of pocket max" truly a hard limit? Or is there some way for them to weasel more money from us after that?

Question 3: I Plan to put the premium difference ($3805) in a HSA to offset the birth costs. Would it be wiser to go with plan A with less HSA savings? Or plan B with more HSA savings?

Sorry for the long first post and thanks for reading! I've been wracking my brain for hours and I think that I just need another set of eyes on it.

[u/93ParkAvenueUltra → u/[deleted]]

That was the route that I was considering. The premium savings is $3800 and the OOP difference is $1250. Does that work for you long term?

[u/[deleted] → u/[deleted]]

You can pull money out of your HSA for a car repair?

[u/Mysterious_Luck4674 → u/[deleted]]

The comment is misleading. You can pull money out of your HSA to reimburse yourself for medical expenses made any time while you’ve had an HSA. So, if you pay out of pocket and keep $1,000 in medical receipts now, and two years down the road you are short for cash because your car breaks down, you can submit the old medical receipts and get reimbursed for them. Then you can use that cash as you please.

You cannot submit a receipt for car repairs and get reimbursed.

[u/[deleted] → u/[deleted]]

Interesting I thought there was a IRS penalty if withdrawal for reasons that were not medical

[u/93ParkAvenueUltra → u/[deleted]]

Waittttt that's possible???? So theoretically, I could pay my OOP max with a credit card with cash back. Reimburse myself with my HSA. And use the cash back? Or is that not feasible?

[u/[deleted] → u/[deleted]]

You are allowed to use a receipt prior to your account being set up?

[u/dehydratedsilica → u/[deleted]]

I interpreted this situation as: they were eligible to contribute to HSA in 2021 and had the account established, but at the time that they got the insulin pump, the balance was less than 4k. Now it's a few years later and they have more than 4k. They can take 4k HSA distribution using the 2021 receipt as documentation for the qualified medical expense.

[u/[deleted] → u/dehydratedsilica]

I understand now, but could the irs audit you knowing that in 2021 you did not have the funds in your account and now years later you are submitting that rcpt?

[u/93ParkAvenueUltra → u/[deleted]]

I currently contribute the max ($4500) but in adding my wife that will bump it up to $8300. So if I go with Plan B then I'll be contributing a total of $8300 which will be the new max.

[u/NysemePtem → u/[deleted]]

Chronic health issues make for predictable expenses, meaning you're less likely to be in a situation where all of a sudden your best bet is to see an out of network doctor for a rare pregnancy related issue.

[u/NysemePtem → u/[deleted]]

Travelling is always a whole other ballgame, unfortunately. And the healthcare ecosystem has plenty of issues with care for chronic conditions. But when people aren't sure if they'll make the out of pocket max, it's because they don't have as many predictable expenses.