California Health Saving Accounts
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California Health Savings Accounts - Relative Cost

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HSA compatible health insurance plans are expensive compared to what? Let's look at some comparative costs using the example of a family of four with a husband and wife in their 30's with two children under age 18, all of whom live in Santa Monica, California.

A Blue Shield of California Health Savings Accounts compatible health insurance plan (Shield Spectrum Savings) costs $300 per month for this family. This plan has a $4,800 deductible to which all members of the family contribute. Further, the "Out of Pocket Maximum" (i.e., after which generally the plan pays 100 percent of medical expenses) is $5,800 including the deductible (or the deductible plus $1,000).

Compared to other medical insurance plans in California, the HSA compatible health plan could be more or less expensive. There are many reasons that health insurance is expensive. (For excellent articles on some of the cost drivers click on the HR Professional section of By way of comparison, let's compare the HSA compatible health insurance plan to two other plans: Blue Cross of California's PPO Share $1500, which costs $596 per month; and, Blue Cross of California's Right Plan 40 with generic prescription medicine (Rx), which costs $256 per month.

The PPO Share $1,500 has a $1,500 deductible per member, two per family. The "Out of Pocket Maximum" is $6,000 per member, $12,000 per family. Members can go to a "doctor's office visit" which includes: history, diagnosis and treatment, and pay only 30% of the billed amount, probably about $20 - $50, before they must pay the deductible. Also on the Blue Cross of California PPO 1500 Share Plan members can access prescription medicine before the pay they deductible. Neither the doctor's office visit charge, nor the prescription medicine count towards the out of pocket maximum, which is significantly higher ($12,000) than the Blue Shield HSA plan out of pocket maximum ($5,800). Also, on the HSA compatible health plan, all of the family members contribute to a single deductible and a single out of pocket maximum. Also, on the HSA plan the prescription medicine costs apply to that single deductible.

Finally, the Blue Shield of California Health Savings Accounts compatible Shield Spectrum Savings plan costs $296 per month less than the Blue Cross of California PPO $1500 plan. This is a $3,552 annual savings. Subtract that from the $4,800 deductible and for the same monthly premium the family could enroll in the HSA compatible plan and have a single $1,248 deductible plan with a significantly lower out of pocket maximum ($5,800 vs. $12,000). So, compared to the Blue Cross of California PPO 1500, the HSA compatible HDHP is inexpensive.

What about compared to the Blue Cross of California Right Plan 40 with generic Rx? This plan has $0 (zero) deductible and pays 40 percent of medical expenses immediately. Members pay $400 plus 40 percent of the cost for hospital inpatient and out patient charges. Brand medication is not covered. The out of pocket maximum is $7,500. The Right Plans are individual only policies, however, and there is no family out of pocket maximum. This means that if all four people in the family were to get sick they would be facing $30,000 in medical expenses before the plan paid 100 percent of medical costs for remainder of the calendar year. Granted, each person would have to have incurred $18,750 in medical expenses ($7,500 divided by 40 percent) but this is possible.

Finally, and perhaps most importantly, the Right Plans DO NOT cover maternity. So, if the family had another baby, the health insurance plan would pay nothing. The monthly savings is only $44 per month or $528 per year. Accordingly, for the added benefits of the Blue Shield Spectrum Savings HSA compatible health plan, it is significantly less expensive than the Right Plan 40 with generic prescription medicine.

So, HSA plans may actually be inexpensive - it depends to what you are comparing them. See the next article for a comparison of HSA compatible health plans with other costs.



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