Good discussion topic! I recently went through a similar exercise and my conclusion is that the HSA scenario financially wins in all cases as long as my OOP cost remain below 90% of the max on average. In my case both plans had low/no premiums.
There is one major caveat though: The advantage the HSA plan has comes from tax savings on the pre-tax contributions and from the tax free growth of the HSA. This only works if you do not spend any of your HSA funds and instead invest them, paying for healthcare with post tax money. Meaning you need to have 1-2x your max OOP set aside at all time to be safe.
The HSA is a very advantageous account for tax saving but I think it’s fundamentally flawed for actual healthcare costs because no one can predict what their costs will be next year.
I think a better approach is to assume your costs can be anywhere from 0 to the max OOP and see how the numbers work out for different scenarios. Then you can make a decision based on financial (not health) risk tolerance.
This only works if you do not spend any of your HSA funds and instead invest them, paying for healthcare with post tax money.
In the ideal world, if I knew exactly when I’m going to die and how much I’m going to need to spend for healthcare every year - yes, I would totally do this to maximize the effectiveness of HSA.
However I don’t live in that world. It’s no use to me to spend my hard-earned post tax money and die having 100k in my HSA account. Maybe if I was making 200k+ a year to have enough to max out all tax-advantaged accounts AND cover medical expenses with post-tax dollars, sure, I would do it.
That’s why I spend my HSA money for medical expenses now. I’ve done the math and doing this it’s still costing me less than a PPO plan.
I think a better approach is to assume your costs can be anywhere from 0 to the max OOP and see how the numbers work out for different scenarios. Then you can make a decision based on financial (not health) risk tolerance
That’s exactly what I’m doing with the help of my spreadsheet.