Health insurance terms can already be confusing enough, that’s why we are here to break things down. This is the battle of HDHP vs PPO insurance. We will talk about everything regarding a High Deductible Health Plan (HDHP) and Preferred Provider Organization (PPO). Learn the differences, costs, benefits, and more.
This is your beginner’s guide on PPO vs HDHP in 2024. Let’s dive in.
Key Takeaways
- PPO plans offer the most flexibility for the highest premiums, while HDHP has the lowest premiums but the highest deductibles and out-of-pocket costs.
- You can have both a PPO and a high deductible health plan at the same time!
- A HDHP lets you have an HSA account which you can contribute to tax-free (also withdraw) which helps you pay for medical expenses.
- You can have an HSA account with a PPO plan if it has a high enough deductible.
What is a Preferred Provider Organization (PPO) plan?
A PPO is a type of health insurance plan that offers a network of doctors, hospitals, and providers that you can choose from. PPO plans are the most flexible choice of the 4 (HMO, EPO, POS) but also the most expensive. The most famous feature is that it allows you to visit any healthcare provider, (inside or outside the network), without requiring a referral from your primary doctor. And, just like any other plan, they still have copays, deductibles, and out of pocket costs that you must pay.
What is a High Deductible Health Plan (HDHP)?
HDHPs are health insurance plans that have a high deductible and low premiums. The deductible, which is the amount that you must pay out of pocket before your insurance kicks in, is much higher (usually $1,500+). The trade in this is that your monthly premiums will be much lower. HDHPs are typically paired with an HSA (Health Savings Account) or an HRA (Health Reimbursement Arrangement), which allow individuals to save money (tax-free) to cover medical expenses.
Can you have both HDHP and PPO at the same time?
Yes, you can have both a HDHP and a PPO because one of them is a type of plan and the other is a characteristic of a plan. What does that mean? Let’s explain.
A PPO is the actual plan type, while a HDHP is just the name for a plan (could be either PPO, EPO, or HMO) that happens to have a high deductible. So, you can have a Preferred Provider Organization plan while at the same time the deductibles on that plan are extremely high (so it is considered a HDHP as well). This works with any other plan as well (HMO, EPO, and POS).
Pros and Cons of PPO vs HDHP
Both high deductible health plans and preferred provider organization plans have their good side and bad side. After reading this section, you will be able to get a better idea of which one to choose in the marketplace.
Benefits of choosing a PPO
FLEXIBILITY: Like previously mentioned, PPO plans have the most freedom in the marketplace. You can visit any doctor, and still maintain the best care.
OUT-OF-NETWORK COVERAGE: While you may have to pay a little extra, you can still get coverage out-of-network. This is great for emergencies or when a specific provider you want to see is not in range.
NO REFERRALS: PPO insurance plans do not require you to get referrals to see a specialist or get any other service. This speed is one of the most sought out after features in Obamacare.
EASY COSTS: When you get a PPO, your costs will be more predictable and that is a huge plus. You can know how much your deductibles will be as well as copays and out-of-pocket costs.
Disadvantages of a PPO plan
HIGHER PREMIUMS: Out of the 4 types of plans, PPOs will be the most expensive because of the luxury they provide. While the difference may ot be crazy, it is still noticeable compared to the much cheaper alternatives.
OUT-OF-NETWORK COSTS: While it is the only plan that offers out-of-network care, you still must pay for this service (more than in-network).
Benefits of choosing a HDHP
LOW PREMIUMS: Compared to a more traditional plan, HDHP are the cheapest options in the health insurance marketplace. Since the out-of-pocket costs are so high, the tradeoff is low monthly premiums to balance things out.
HSA ACCOUNT: With a high deductible health plan, you can have a Health Savings Account (HSA). This pairing option allows you to save money that is tax-free, which lets you cover some medical expenses. Anything you contribute to an HSA is tax deductible and funds can be rolled over from year to year.
PREVENTIVE CARE: HDHPs are required to cover some preventive care services, (annual check-ups, immunizations, screenings, etc.) without requiring you to meet the deductible first.
Disadvantages of a HDHP
HIGH DEDUCTIBLE: I mean, are we surprised here? The worst thing about a “High Deductible Health Plan” is the high deductible! Compared to any other plan, you must pay large out-of-pocket expenses if you must receive any medical care. And some plans have a “no charge after deductible” feature for all the copays which means that you will end up paying everything at full price until your deductible is met.
OUT-OF-POCKET COSTS: It is normal to see a high deductible plan have high copays and an out-of-pocket maximum. This can mean a lot of medical expenses, which is not good (especially for those who require frequent care).
HARD TO PREDICT EXPENSES: With some plans it may be easy to predict what you will end up paying, but with an HDHP it is hard. The best way to get around this is to use the OOPM (out-of-pocket max) as a general guide. You can never spend more than the OOPM number.
PPO plans have a score of 4 goods and 2 bads, while HDHPs have a score of 3 good and 3 bads. The winner in the battle of pros and cons of PPO vs HDHP are the preferred provider organization plans. Remember, you can still have the 2 plans at the same time, so this list is more of a stand-alone than a comparison of the two.
HDHP vs PPO costs
Generally, a high deductible health plan will always be cheaper in terms of premiums, and a PPO will always be cheaper in terms of medical expenses. The main determining factor of price will be the household income of who is applying. It is very simple, the more you make, the more you will have to pay. Figuring out the cost will always be difficult, that’s why we suggest using our health insurance premiums calculator that tells you what you will pay and if you qualify.
Below is a chart for the estimated costs of both types of plans.
| HDHP | PPO | |
|---|---|---|
Premiums (Annually) | $4,000 | $6,750 |
Deductible | $3,000 | $1,000 |
Out-Of-Pocket Maximum | $8,700 | $6,000 |
Aside from this you also copays (fixed amount or percentage you pay for services) which can range depending on your specific plan. This is what you will pay for things like doctor visits, emergency rooms, and prescription drugs. Usually, these numbers will be lower on a PPO plan.
Also, as you can see, both have areas where they exceed. Your normal traditional Obamacare marketplace plan costs around $4,900 annually (without ACA tax credits) so these numbers are all close estimates. Give us a call or shoot us a message at (305) 970-8583 if you want to get a quote at no cost to you!
Should I choose a HDHP or PPO?
This question comes down to your needs. Some people want health insurance for worst case scenarios so they can be a little loose while comparing plans. However, some require frequent medical care so shopping for them is a bit more serious.
For example, if you have a chronic condition, it is best to choose health plans with 0 deductible, as you won’t need to pay anything upfront, and coverage begin straight away. A PPO plan could also be good as you can skip the primary doctor line and go straight to a specialist (especially for those who already know what medical problems they have).
You should only choose a HDHP if you want to save money and are not expecting frequent visits to the doctor. Also, a lot of the time people complain about having high deductibles, but you never heard of anyone complaining about having that sweet $0 in there. Overall, we recommend you stay away from a HDHP and spend a little extra on premiums for a low deductible plan or a PPO.
The best HDHP vs PPO plans in the marketplace
The first thing you should know is that in the Obamacare/ACA marketplace, only some companies offer PPO plans, and they are not available in all the states. It is hard to predict (besides getting a quote) which companies do offer, but as of recently these are the top 5 companies that offer PPO plans across the nation. Since these are also some of the bests in the U.S., even if you get a HDHP with them it will be a great choice.
UnitedHealthcare
The largest health insurance company in the world. It should come as no surprise that this giant is one of the few that offers preferred provider organization plans. It also has one of the largest network across the entire United States.
Cigna
One of the more known names is Cigna which carries out some PPO plans but only for employers. Still, if you happen to land on a HDHP with Cigna, know that you are covered!
BlueCross & BlueShield
Another national giant is BCBS, which has a larger network of doctors and providers. They are one of the few that sell PPO plans to individuals and families in the marketplace. Whether you get a high deductible plan or a normal one, it is a solid choice for coverage.
Aetna
Part of CVS Health, Aetna is one of the leading carriers mainly offering HMO plans. However, they do offer PPO plans for employers trying to cover their workers.
Humana
While they are found outside the marketplace, they offer many plans like vision and dental, Medicare, and more. Solid choice for those wanting to get medical plans.
Just because a company you know was not mentioned here does not mean it is not good! These are only a select few companies who sell PPO plans. Inside the marketplace, the main sellers are EPO (Exclusive Provider Organization) plans. They are very similar to a PPO except they are sold by almost every company at a reduced price. If we were to base it off that, it would be a whole different list.
Compare HDHP vs PPO plans with Cuspide!
Contact us today and you will be able to compare all the best marketplace health insurance plans. On top of that, we offer services like helping you find doctors, making payments, and more. Reach out to us at (305) 970-8583 and get covered today.
Frequently asked questions
If you have specific questions or want to know more, give us a call at (305) 970-8583!
Which is best for my family between PPO vs HDHP?
If you want coverage for your entire family, (especially with children) it is best to choose a PPO plan as you won’t need referrals to see specialists and you can go get out-of-network care which other plans don’t have. Different family members may be in different areas so this perk will always come in handy. You should not choose a HDHP for families because since it is usually a lot of people it will end up costing more when you eventually need medical care.
Are there tax advantages from choosing a HDHP?
Yes, there are a few tax advantages from choosing a HDHP, like lower premiums, a health savings account, and a flexible spending account. Lower premiums mean lower healthcare costs. Also with an HSA, you can reduce your taxable income by the amount that you contribute to the HSA (the more the better).
Another good thing is that any money you put in is tax-free as well as any money you take out. Another advantage is an FSA account, which lets you set aside pre-tax dollars to pay for medical expenses. Find out your needs before choosing a high deductible health plan just for the “tax advantages” you may get.
Could I have an HSA account with a PPO?
Yes, you can have a Health Savings Account (HSA) with a PPO, only if your PPO plan is considered a high deductible health plan. There’s also other requirements. Let’s get into it.
To be considered a HDHP, a deductible must be $1,600 and up for individuals and $3,200 for family plans. Aside from that, the out-of-pocket maximum cannot exceed $8,050 for individuals and $16,100 for a family plan. And lastly, the HDHP cannot cover any coverage other than preventive care before the deductible is met.
If your PPO plan meets all these requirements, then you will be able to open and contribute to an HSA account. Remember, that contributions to an HSA are tax-deductible, will grow tax-free, and can be withdrawn (also tax-free) when used for medical expenses.
How do HDHPs and PPO plans cover pre-existing conditions?
Under the Affordable Care Act (ACA) both plans must cover pre-existing conditions and they are different in the way that they do. PPO plans will provide coverage for pre-existing conditions just like any other medical conditions. You will be covered (copays still apply). With HDHPs the coverage will be subject to the plan’s deductible and out-of-pocket limits. Once the deductible is met, a high deductible health plan provides coverage for pre-existing conditions in the same way as it would any other medical expenses.
Wrapping things up...
See? It doesn’t have to be complicated when comparing HDHP vs PPO. We hope you learned a bit more about the costs, benefits, and compatibility in our guide.
While PPO plans offer the most freedom and coverage, they will come with higher premiums and out-of-network costs. On the other hand, HDHPs have the lowest premiums & offer tax advantages through an HSA but require individuals to have high deductibles & OOPMs.
At the end of the day, it will always come down to you and your needs/circumstances. And, if all this feels like a lot (we understand) you can always contact us at Cuspide and talk to an agent. For everything health insurance, Cuspide is #1
