New Baby - Stay in HDHC Plan?

[Munthe]

Thanks in advance for any advice:

I’m a 37 yo married academic pediatrician expecting baby #2 in September.

Currently my 3yo and I are on a HDHC plan and love it. I’m eligible to apply for PSLF in 4 more years and it brings down my AGI.

My wife will stay on her heavily employer subsidized NON-HDHC plan (very affordable).

My two options are:
1) Me + kiddos stay in HDHC plan for $3k/yr. Plan has 80% coinsurance with $1500 ind / $3k family deductibles and maximum out-of-pocket of $4500 ind / $11k family

2) At birth (qualifying event) switch me + kiddos to the Cadillac PPO for $6k/yr. It has 90% coinsurance with (obviously) lower deductibles ($500/1000) and less out-of-pocket maximums ($3k/6k).

I know I’m fortunate to have these options and am leaning towards staying in the HDHC plan (we already have $3k in the HSA that can be used in a pinch) but wanted to get the forum’s thoughts. Thanks in advance!

[Dreamgiver]

What are your goals for the HSA money? Do you use it as you go or stealth IRA?

[jhwkr542]

Can you put the new kid on mom's plan only? Either way, unless you expect the baby to get some NICU time, keeping the HDHP/HSA will probably be more beneficial to you in the long run.

[Dusn]

Just to clarify -  if you and the kids switch off of the HDHC plan, I believe your wife can't continue to contribute to an HSA.  Someone correct me if I'm wrong.

Also your wife will have some expenses associated with the delivery.  Wouldn't it make sense to switch her to your Cadillac plan prior to the delivery?    There may be other questions to consider, such as if you can keep the HSA you contributed to this year if you switch out of your HDHP this year...    and hopefully someone who understands these details better than me can answer those questions..

[Munthe]

@Dreamgiver - stealth IRA, but we meet our retirement savings goals elsewhere so I wouldn’t feel bad about tapping it if need be

@jhwkr542 Mom’s plan is excellent for just her, add a dependent and it jumps to double what mine is.

[Munthe]

@Dusn - Mom’s plan is a PPO (and it’s pretty good, especially considering how cheap her premiums are for her - I would say it’s a solid “Honda” plan) so it’s never been HSA eligible. She likes her docs and wants to keep her plan.

[jhwkr542]

Munthe wrote:

@dreamgiver – stealth IRA, but we meet our retirement savings goals elsewhere so I wouldn’t feel bad about tapping it if need be

@jhwkr542 Mom’s plan is excellent for just her, add a dependent and it jumps to double what mine is.

Click to expand...

Then I would keep your HDHP plan. That's what we've done with our kids. Our expenses for them were minimal since most of their stuff was preventative care and covered under our HDHP. Any healthcare issues would make the cadillac plan the better option.

[tylerjw12]

If you and 1 child are already on the HDHP/HSA plan, it may not cost any extra premium for you to add a 2nd child. Many employers tier out premiums this way:

EE Only

EE + Spouse

EE + Child(ren)

Family

So you potentially wouldn't face any bump up in premium to add a 2nd child, and you would have 3 members on your plan to accumulate to deductible and OOPM. This seems like the smarter play to me. As far as HDHPs go, that's a pretty good level of coverage. Premium differential is $3k. That's a lot of claims to incur every year to make the PPO 'worth it'. Plus the tax $ saved on the HSA contributions. After two years, you've more than made up for the difference in the Family OOPM in premium differential alone. Pocket that, invest, and take on the risk. No reason to needlessly pay the insurance company to do that for you.

[Munthe]

@jhwkr542 - your first-hand experience is much appreciated, thank you for sharing!

@Tylerjw12 - my plan increases with the second kiddo but not the third.

Being able to stash $7k in an HSA saves me 2-3k/yr when factoring in taxes and PSLF IBR payments, and the delta between the family out-of-pocket maximums for the two plans is about $5k, so what I’m hearing from both of you makes a lot of sense.