The money your employer gives you can only be spent on insurance or medical expenses. So in your example you can buy the $250 plan and have $250 / month leftover to pay for prescriptions, doctor visits, or other medical expenses. You wouldn't be able to pocket the remainder as cash.

I'd think you should be able to do that and put whatever is leftover in an HSA.

Correct, employers can pair their insurance reimbursements with HSA contributions if they wish.