Any pointers from the health/life/pension experts?
For Health I’ll usually plot out the cost to me given assumed claim outcomes (so from $0 to $100k expenses in a year what do I pay) which usually boils down to me selecting the middle HSA plan (although after this year it’s tempting to just accept with my family up to 6 it makes sense to spend the extra premium now for the lowest deductible of the HSA plans)
For Dental I gripe about how much I hate dental insurance (max benefit instead of OOPM max, wtf?!) and then do the basic one, I think.
Vision is just me but I thank my coworkers for subsidizing my poor vision (pay in less in premium than I get back in credit on contacts).
I don’t buy any supplemental life through work (have a separate term life policy), nor any other supplemental coverages. Are any of these actually compelling?
Group term life is really cheap. I stock up as a just in case. Same with the AD&D and CI. For like $20 a month I get an extra like $750k in life benefit, double I think if I die in an accident or on public transportation. CI is neat because if you lose a limb or something you get paid. How often can you profit from an accident?
Is your separate term life cheaper than through your employer? I was under the impression that employer-sponsored group term was generally cheaper.
This year we’re taking a joint HDHP and maxing the HSA before we do anything beyond the minimum on 401ks or IRAs. Only makes sense. We each have enough term life to pay off the house and provide for at least a few months afterward. If we had kids I’d be tempted to get outside insurance too.
I typically do highest deductible HSA, given the premium is the lowest. If I was guaranteed to max it out I think the lowest deductible option saves me like $200 a year, but taking the higher deductible as long as I don’t max it out I come out ahead. I then just load up the HSA.
Life - I buy term life through my employer. Significantly cheaper than outside of it. I don’t do the AD&D or Critical illness policies though.
Dental - I get even though I think dental coverage is awful. Gets cleanings for the fam + helps in case of cavities / other major dental work which isn’t that uncommon.
Vision - I subsidize you. Congrats. I have perfect eyesight, but get coverage for me + spouse, since she needs it and the credit is like $20 more than the premium after the employer contribution.
Every year, I add up the cost of premiums and the cost of claims given the various levels of insurance…every year, it’s not even close-the highest deductible plan is the cheapest usually regardless of the amount of claims you have.
I might not have all of the analysis correct… I fear I’m missing some key piece of information, but it’s usually not even a close contest.
I think I had a thread on the AO about this…and maybe one here on GoA, too. I’ll see if I can find it.
If the plans are reasonably fair then the plan with the highest premium should be the most expensive at the lowest claim amounts but the least expensive at the highest claim amounts, and vice versa for the opposite.
When HSAs were new I remember mapping it out and seeing the HSA plans were strictly better at every possible claim amount (assuming you rightly incorporate the premium cost) so I think they were just trying to move us all to HSAs at the time.
I was a bit late in getting term life (given I’ve got 4 kids…) but I bought the policy a year ago and my first thought was to do it through my employer but the rate was higher than what NY Life quoted for a 10 year term. I’m guessing I’m relatively lower risk as a healthy 32 year old than my employer’s group so the group rate wasn’t as good?
Must vary based on employer and location? I just did a quick quote for a similar policy to my work life policy. 10 year term was just a little bit more. You might be in a community rated state for the group policy which makes your youth and health a disadvantage relative to the market. The AD&D coverage is a no brainer at like $2 a month though. I also don’t take health coverage through my employer because my spouse is a teacher. So I can be rich and buy the extra life coverage.
So some quick math. I think the group rate is about $1.10 per thousand or roughly 3 times what you are paying. So yes, as a healthy youngster you are doing better. Some of us are old and fat though so the $20 per month is reasonable. And there is no underwriting.
Under $25 per year is basically nothing. Even the $500 I put into the group life is basically nothing. I can make that in one weekend umpiring. The AD&D is a life benefit of 2x salary and works out to about $0.09 per thousand. I doubt that it is poorly priced and I really doubt that it is subsidized by my company at all. Most people just don’t die in an accident. That’s why I tell my family to make it look like an accident.
I was just thinking about the AD&D coverage the other day. Our neighbor lost her finger using a log splitter and I was trying to remember if the loss of a finger paid anything.
Be careful that you’re comparing apples to apples.
Most group term is ART, so the premiums will go up as you get older. Whereas most individual term is level-premium.
Level-premium essentially means you over-pay in the early years for the privilege of under-paying in the later years.
If you anticipate having the policy for 20 years, price it out both ways over the whole time, factoring in your increasing age.
If you are healthy, you might do better with a fully underwritten individual level-term policy. Especially if your employer sells such policies and you qualify for any sort of employee discount. But even if they don’t at least compare the premium.
Group doesn’t have that much underwriting… they know you’re healthy enough to do something that your employer believes to be productive, but that’s about it. So if you’re less healthy then group may be the better option. You may still have to provide evidence of insurability, but that’s pretty basic: you didn’t just get diagnosed with a terminal illness, that sort of thing. Not “you’re 15 lbs over your ideal weight” or “I see you had a seatbelt violation in 1998” type of stuff.
Hubs’ employer contributes enough more to the richer HDHP HSA that it’s a no brainer.
It’s something like:
Low plan premium: $3,000 per year
Low plan HSA contribution: $2,600 per year
High plan premium: $4,000 per year
High plan HSA contribution: $4,200 per year
You’re $600 better off with the high plan before you even darken the doorstep of a medical provider’s office, and the high plan has better coverage (lower deductible, lower OOP Max, lower coinsurance percentage) to boot.
The only way it’s even possible for the low plan to make sense is if you don’t qualify for the HSA and you have to take an HRA instead. Then it’s at least mathematically possible for the low plan to be better, but even then it’s a narrow range of outcomes where it’s better.
A very big if… even for employers who are in the business of selling insurance.
I was on some sort of employee feedback committee for a former employer. The exec who ran it was concerned with why more people weren’t signing up for the HDHP/HSA plan.
Well he got an earful from me about the way they had it priced, and the next annual enrollment they had completely revamped the pricing to make it much fairer.
Essentially… they had an expensive PPO plan that covered hangnails and they had a HDHP/HSA that did not.
And I had seen the numbers and it was like the total cost (employer plus employee premium and employer HSA contribution) for the HDHP/HSA was X.
For the PPO plan the total cost was 1.5X
The employer contributed 80% irrespective of which plan you chose.
So your out of pocket for the HDHP was 0.2X or for the PPO it was 0.3X
But the PPO was worth WAY more than 0.1X compared to the HDHP/HSA. It wasn’t rational for the employee to pick the HDHP/HSA.
The employer was paying 0.8X if you chose the HDHP or 1.2X if you chose the PPO. You’re getting way more bang for your buck if your employer kicks in an extra 0.4X!
The next year the difference between plan prices was much greater with the employer-paid portion much closer to even dollars than even percentage. PPO was much more expensive, HDHP/HSA was much cheaper. And surprise surprise… more employees signed up for the HDHP/HSA.
always pick a work health plan that allows for an HSA if you can. max that thing and save it for retirement. most plans incentivize you into the HDHP. but twig has examples - so do the math. I have it easy - my fam is hitting the OOP max for the year.
on other benefits - sure, get dental. and vision if anyone has glasses or contacts.
get the work term life at 5x if they offer. throw in the AD&D multiplier. but you aren’t done - you likely need to ladder some other term life outside of the work program.