Selecting the wrong health insurance plan is one of the most common financial mistakes we see people make (physicians or otherwise). There are powerful financial incentives to choose a High-Deductible Health Plan (HDHP) with associated HSA account if you have one available to you. We find that the overwhelming majority of folks would save a substantial amount of money by choosing an HDHP regardless of annual health spending. It’s a common misconception that those with higher health costs should choose a lower deductible plan.

So do the math yourself. Use our calculator to compare your HDHP and non-HDHP options and choose the best one for you. The graph below will show which plan is best (i.e. cheaper) for any given assumption for annual health care costs. Line-by-line instructions are available below the calculator. In addition, some inputs have pop-up boxes with additional information.

Instructions

1. Enter your personal or joint “marginal” federal tax rate (12%, 22%, 24%, 32%, 35%, or 37%). Income thresholds are in the pop-up box on that cell. Remember that taxable income is wages minus certain paycheck deductions and also after taking into account a standard or itemized deduction. It’s ok to guess if you are +/- 1 “bracket” of the correct answer.

2. Enter your state and local income tax rates, if any.

3. Enter whether your wages are higher than than this years “social security wage base” ($160,200 for 2023). For this question it’s the actual “salary” of the person choosing the plan that’s important, not your taxable income, and only for the person who has the health plan. That is, do not count any spousal income.

4. Enter whether your personal/joint taxable income is higher than the amounts listed.

5. Enter the annual amount your employer contributes to your HSA, if any.

6. Enter the amount you would contribute to your HSA if you choose an HDHP plan. Remember that HSA dollars are your most valuable dollars, and thus you would always prioritize HSA contributions over any other savings/investments (assuming you otherwise are obtaining the full match on your 401k, if any).

7. Enter the amount you would contribute to your FSA if you choose a non-HDHP plan.

8. Enter the total annual premiums for the plans you are comparing

9. List the deductibles for each plan. If there are different deductibles for in-network and out-of-network care, you may want to do two sets of comparisons, one for in-network care and one for out-of-network care.

10. List the Out of Pocket Maximums (OOP) for each plan. Note that plans often have different OOPs for in-network and out-of-pocket maximums.

11. Finally, enter the co-insurance amounts for each plan. If your plan has co-pays rather than co-insurance for most items, selecting 10% is reasonable as “co-insurance” for most plans.

Notes:

— California and New Jersey do not currently allow deductions on state income taxes for HSA contributions, so results may be slightly off for residents of those two states.

— HSA contributions made to an HSA via payroll deductions are exempt from Social Security and Medicare taxes (aka “FICA”) while those HSA contributions made via “check” are assess the FICA tax. Calculator results will be slightly off if one makes HSA contributions via a method other than payroll deductions.