The health insurance plan below has the following fees for an employee only coverage (excluding spouse + children plans to keep it simple):

  • PPO 250: $605/mo ($7260/yr)
  • PPO 2250 HSA: $351/mo ($4212/yr)
  • Cost difference ignoring non-taxable HSA: $3048

With a maximum out-of-pocket of $3,000, at the most, you'd still pay less on the HSA plan than if you never had to see a doctor on the PPO 250 plan. So why even choose the PPO 250?

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As you already figured out, your PPO HSA plan option is less expensive overall in every situation. The premium + out-of-pocket maximum (worst case cost) is less than the premium alone (best case cost) of the other plan, even before the tax savings of the HSA. Clearly, the PPO HSA plan is the best choice.

Why would anyone want to choose the other plan? With the PPO plan, you hit your deductible the first time you go to the doctor, and the insurance starts paying expenses right away. This means that you won't be getting large medical bills when you go to the doctor. With the HSA plan, you have to pay big medical bills. Some people are bad at managing their money and budgeting, and would rather have this money taken out of their paycheck than to risk spending it on something else and not have enough to pay their bills.

Just to be clear, your best bet is definitely the HSA plan. Just make sure that you take some of the money that you are saving in premiums and put it in the HSA, so that you have enough to pay those large medical bills.

  • Many thanks, Ben. The sanity check is much appreciated! – 8protons Dec 11 '17 at 5:45

As the policy details show, it's quite clear that the monthly premiums for PPO are much lesser than PPO HSA. Also after ignoring the non-taxable income, the cost difference between both is quite huge.

Moreover, the PPO doesn't provide protection for the spouse and children of the employee. Hence, I don't see any good enough reason to choose PPO over PPO HSA when there is already a cheaper plan available. Everyone wants more coverage for less price and that's what PPO HSA is providing, hence the smarter move is to go with the PPO HSA plan.

  • "the monthly premiums for PPO are much lesser than PPO HSA" - Did you get that backwards? – Ben Miller - Remember Monica Dec 12 '17 at 15:23
  • Both plans are available as either employee-only or as a family plan, so this does not differentiate one over the other. – Ben Miller - Remember Monica Dec 12 '17 at 15:28

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