![]() The tax-free money in this savings account rolls over year-to-year, although there is an annual max contribution, which per IRS guidelines differs between individual plans ($3,650) and family plans ($7,300) in 2022.Īn HSA plan can be useful when paired with an HDHP since these plans come with higher deductibles and out-of-pocket costs. An HSA is a pre-tax savings account that’s used as a payment method for eligible medical expenses. When you choose an HDHP, you may also be able to elect to use a health savings account (HSA) with an employer contribution. And if your medical needs change suddenly, this would be a less financially beneficial plan. Keep in mind that you may not have a copayment on doctor’s visits with an HDHP plan until you meet your high deductible. Typically, HDHPs are a good option for younger people, individuals without families, and those who are generally healthy. “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.” Pros and cons of HDHP with HSAĪn HDHP is a better deal for those who do not anticipate having many medical expenses throughout the coming year. With a PPO, you pay more money each month but have lower out-of-pocket costs for medical services and may be able to access a wider range of providers. With an HDHP, you will pay less money each month for premiums, but you will pay more out-of-pocket for medical expenses before your insurance begins to pay for care.Ī preferred provider organization plan comes with lower deductibles but higher premiums each month. A premium is what you pay monthly for your healthcare coverage. A deductible describes out-of-pocket costs for health services, with a predefined maximum after that maximum is reached, insurance coverage kicks in. PPOĪ high-deductible health plan is a type of health insurance plan with higher deductibles but lower premiums. Here, we discuss the benefits and drawbacks of HDHPs and PPOs to help you understand what factors to consider when making your selection. 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 and healthcare costs. When it comes to choosing between an HDHP vs. ![]() One of these plans is not necessarily always better than the other. Two common health insurance options employers provide are the high deductible health plan (HDHP) and the preferred provider organization (PPO) plan. After sitting through a benefits overview meeting at your company, you may leave with more questions than answers. PPO costs | How to save more moneyĬhoosing the best employer-provided healthcare plan can be tricky. PPO | HDHP pros and cons | PPO pros and cons | Which plan do I need? | HDHP vs. You should seek advice based on your particular circumstances from an independent tax advisor regarding the tax consequences of specific health insurance plans or products.Share on Facebook Facebook Logo Share on Twitter Twitter Logo Share on LinkedIn LinkedIn Logo Copy URL to clipboard Share Icon URL copied to clipboard Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials. These materials, and any tax-related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. Blue Cross and Blue Shield of Texas does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. * Health Savings Accounts (HSA) have tax and legal ramifications. Learn the difference between an HSA and an FSA (Flexible Spending Account). No "Use It or Lose It": Your HSA funds roll over annually, regardless of the amount.Portability: You take your HSA account with you, even if you change jobs or health plans. ![]()
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