{"id":11179,"date":"2020-05-08T18:46:42","date_gmt":"2020-05-08T22:46:42","guid":{"rendered":"https:\/\/www.singlecare.com\/blog\/?p=11179"},"modified":"2024-04-22T13:03:40","modified_gmt":"2024-04-22T17:03:40","slug":"hdhp-vs-ppo","status":"publish","type":"post","link":"https:\/\/www.singlecare.com\/blog\/hdhp-vs-ppo\/","title":{"rendered":"What\u2019s the difference between a PPO plan and a high deductible health plan?"},"content":{"rendered":"

HDHP vs. PPO<\/a> | HDHP pros and cons<\/a> | PPO pros and cons<\/a> | Which is better?<\/a> | Cost comparison<\/a>\u00a0\u00a0<\/span><\/p>\n

Choosing the best employer-provided healthcare plan can be tricky. Two common health insurance options employers provide are the<\/span> high deductible health plan (HDHP)<\/span><\/a> and the<\/span> preferred provider organization (PPO) plan<\/span><\/a>. When choosing between an HDHP vs. PPO plan, what is best differs by individual, and it may even vary year-to-year for a person based on his or her circumstances, financial goals, and healthcare costs.\u00a0<\/span><\/p>\n

HDHP vs. PPO<\/span><\/h2>\n

What is an HDHP?<\/span><\/h3>\n

A high-deductible health plan (HDHP) is a type of health insurance plan with higher deductibles but lower premiums. A deductible describes out-of-pocket costs for health services with a predefined maximum; after that maximum is reached, insurance coverage kicks in. A premium is what you pay monthly for your healthcare coverage.\u00a0<\/span><\/p>\n

With an HDHP, you will pay lower premiums but more out-of-pocket for medical expenses before your insurance begins to pay for care.\u00a0<\/span><\/p>\n

What is a PPO?<\/span><\/h3>\n

A<\/span> preferred provider organization (PPO) <\/span><\/a>plan comes with lower deductibles but higher monthly premiums. With a PPO, you pay more money each month but have lower out-of-pocket costs for medical services.<\/span><\/p>\n

“HDHPs typically benefit healthier consumers who do not expect to need much medical attention for the year, and the advantages include lower monthly premiums,” explains Susan Beaton, a former VP of provider services at Blue Cross and Blue Shield of Nebraska.”A PPO, especially one with a low deductible, may suit those who expect frequent doctor visits and prescriptions due to something like a chronic condition.”<\/span><\/p>\n

HDHP pros and cons<\/span><\/h2>\n

An HDHP may be better suited for those who do not anticipate having many medical expenses throughout the coming year. Typically, HDHPs cover routine preventive care, so they are a good option for younger people, individuals without families, and those generally healthy.<\/span><\/p>\n

When you choose an HDHP, you are eligible to contribute to a health savings account (HSA). An<\/span> HSA<\/span><\/a> is a pre-tax savings account for eligible medical expenses such as vision care, dental care, and prescription drugs. The tax-free money in this savings account rolls over year-to-year, although an annual max contribution<\/span>\u00a0differs between individual and family plans. An HSA is especially advantageous because it uses pre-tax dollars and accrues tax-free earnings. Your HSA funds will also stay with you even if you change health care plans or move jobs, and they can also be shared with your family.<\/span><\/p>\n

Nevertheless, if you use your HSA for non-qualified expenses before the age of 65, you will be faced with taxes plus a 20% penalty. Some HSAs may also charge fees for transactions or account maintenance.\u00a0<\/span><\/p>\n

PPO pros and cons<\/span><\/h2>\n

PPOs are usually a better choice for those who anticipate having more medical bills throughout the year due to health needs. These plans are typically beneficial for older people, those with family members, and people with health conditions that require treatment on a regular basis.\u00a0<\/span><\/p>\n

As you age, encounter health issues, or support a family, a PPO may make more sense. PPOs come with higher premiums, but they can be the right plan in the long run if you utilize healthcare services more regularly.\u00a0<\/span><\/p>\n

You wouldn\u2019t be eligible for an HSA with an employer-sponsored PPO plan, although you may be able to use flexible spending accounts (<\/span>FSA<\/span><\/a>).<\/span><\/p>\n

PPOs also come with added flexibility advantages over a more traditional health plan, like a Point of Service (POS) plan. POS plans allow participants to pay lower costs for network care, but require your primary care physician to write referrals to see specialists. On a PPO plan, you have the freedom to choose the doctor or hospital of your choice. Even if they aren’t in your network, your insurance frequently will still offer coverage. PPOs also allow you to see a specialist or have a procedure or test done without a referral from your primary care provider. If flexibility in your healthcare choices is important to you, a PPO plan may be a better choice than an HDHP.<\/span><\/p>\n

\"HDHP<\/a><\/p>\n

Is an HDHP or PPO better?<\/span><\/h2>\n

Now, we’ll review how you <\/span>decide whether an HDHP or PPO plan<\/span><\/a> would be better for you. First, consider the following questions:\u00a0<\/span><\/p>\n