5

My employer offers two health plans:

  1. PPO with optional FSA
  2. HDHP (high deductible health plan) with an HSA option.

The plans have identical coverage, the difference is in the premiums, deductibles, and oop (out-of-pocket) maxes. The PPO has a deductable of 2k individual, 4k family and an oop max of 4k individual and 8k family.

I am in the process of running the numbers, but so far it is looking like I am going with the PPO plan, after having been on some form of HDHP for the last decade.

If I do go with the PPO plan, am I allowed to open my own HSA (like the one with Fidelity: https://www.fidelity.com/go/hsa/why-hsa for example), since the deductable and OOP max is within the IRS rules for HSA eligibility? Here is the IRS publication: https://www.irs.gov/publications/p969

enter image description here

  • In my experience, the HSA 9.9 times out of 10 always wins in being the most beneficial for employees. – Michael Sep 30 at 0:53
4

In order to be considered an HSA-compatible High Deductible Health Plan, there are very specific features that a health plan needs to have (or not have). Since you have two options, and only one is labeled as “HDHP with HSA option,” it is most likely that the other plan is not compatible with HSA eligibility. The feature that usually trips up “PPO” plans are discounted copays before you hit your deductible. As you can see from the comparison images you provided, your PPO plan does indeed have copays which is why it isn't HSA compatibile. But if you still aren’t sure, ask your employer (or the health insurance company), as they should be able to tell you if the plan is an HSA-compatible HDHP.

If you currently have money in an HSA, you won’t lose that money if you become HSA ineligible. You would still be able to use that money on medical expenses until it is gone. You would just be unable to contribute new money to your HSA.

  • I will ask. They just raised desicables as a cost control measure. I believe they are trying to avoid raising premiums. I added a screenshot of the fact sheet, and I don't see anything about discounted copays. – Sean Sep 25 at 13:12
  • 2
    @Sean In the screenshot you posted, look under “Physician Services.” For the PPO plan, each of these lists a “copay.” With the PPO plan, when you go see a doctor, you pay the copay and the insurance pays the rest, even if you have not yet hit your deductible. This is what makes the plan ineligible for HSA. With the HDHP, the plan pays nothing (except for preventative care) until you have reached your deductible. – Ben Miller - Reinstate Monica Sep 25 at 13:22
  • @Sean If you haven’t already seen it, check out Comparing HDHP vs PPO Plans: Am I missing something? in which I show an example of how to effectively compare insurance options like the ones you have. – Ben Miller - Reinstate Monica Sep 25 at 13:26
  • @BenMiller - I updated your answer to show why it isn't compatible since the screenshots weren't there at the time you answered, and then I just saw your comment. Better to have that info in the answer anyway. ;) – TTT Sep 25 at 14:11
  • @TTT Agreed. Thanks! – Ben Miller - Reinstate Monica Sep 25 at 15:53
3

It's not your root question, but be sure not to ignore the HSA match you get with the HDHP. Yes, you might pay an additional $1,000 in deductibles over the year, but you are eligible for a $500 match, plus your contributions are tax-free. So depending on the difference in premiums, the HDHP still might be a better deal, since you've only got $500 to make up in premium savings and/or cost differences.

I typically plan for using 50% of the deductible when comparing plans - it's rare that anyone in my family uses that much health care, but we are pretty healthy. So this plan would be a wash from a deductible standpoint (I have a $500 higher deductible but would get a "free" $500 in my HSA), and the difference in premiums would be the deciding factor.

It seems like the biggest difference may be in the office visits. The PPO has a copay (but does not count toward your deductible) while the HDHP does not pay until you've hit your deductible. Think about how often you go to the doctor (for non-preventative care) and see if that's a big factor for you.

  • Nice info. Just want to point out that even though copays typically don't count towards the deductible, they do count towards the MOOP. – TTT Sep 25 at 14:21

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.