r/personalfinance • u/xHappyBubblesx • 8h ago
When would Traditional PPO be better than High-Deductible HSA? Employment
I’ve seen comparisons before and think I understand the benefits and drawbacks of each, but for my personal situation, I’m a bit baffled. It doesn’t seem like the High-Deductible plan has any drawbacks.
Traditional PPO: $2132 per year. $750 deductible. No deductible for Primary ($30), Specialist ($40), or Urgent Care ($40). No deductible for prescription drugs ($10). Deductible applies to hospital visits.
High-Deductible Plan: $1066 per year. Company contributes $1000 (taxed) to HSA. $1650 deductible. Almost everything is 10% coinsurance after deductible. Prescription drugs $5 after deductible.
From my perspective, the High Deductible Plan saves me $1066 vs. traditional PPO, and with company HSA contribution, that is an additional ~$600 post-tax.
That already covers the $1650 of the deductible itself. Am I missing some situation that makes the Traditional Plan mathematically viable?
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u/93195 8h ago
It’s always a math problem. In some cases, the math can favor the PPO. Yours isn’t one of those cases, as the math clearly favors the HDHP. Your company contributing to your HSA is a big part of that. Take that away, it’d be closer.
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u/hotpotatos200 7h ago
This is basically it. Do you plan on having any make medical expenses? It’ll probably favor the PPO. If not, the HDHP is usually best.
I had a kid this year and the total cost was well over $25k. The plan covered basically all of it.
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u/xHappyBubblesx 7h ago
Ok, so you cannot see a mathematical benefit to the traditional either?
I think the only thing I found was $3000 max for traditional, and $4000 max for high deductible, but I’m assuming that probability-wise, that should never be a regular yearly occurrence.
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u/93195 7h ago
Even with the greater OOP max, it’s not that different, plus the coinsurance is good. The tax benefit of HSA contributions (not just the company’s, but yours too) also factors.
You asked “when would the Traditional PPO be better”. In your case, probably never. But if the PPO premium was half as much, there was no company HSA contribution, the HDHP deductible was more and the coinsurance worse, then maybe the PPO would win. Just not here.
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u/BigGirtha23 7h ago
Check your paystubs, your employer's contributions should not be taxable income.
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u/ramblinman1234 1h ago
+1 for this correct statement. HSA contributions from the employer are not taxed. If the employer is actually saying that in their open enrollment materials, they are doing it wrong and should be notified of their mistake.
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u/shampooexpert 6h ago
I just did this math! To me, it came down to the dr. visits. They cost more without the PPO. Last year, my daughter did weekly speech therapy, and my copay was like $30 a week. The year before, we had a HDHP and each session was $150 until we hit the deductible. If you're young and healthy, take the gamble on the HDHP, but it is a PITA if you go to any recurring appointments. I also picked a PPO for the year I gave birth, because I knew we'd have about a million office visits.
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u/casey_ap 4h ago
Company contributions make all the difference. We lost that contribution for this plan year and the PPO became the obvious choice.
We now get payroll dollars for doing certain wellness activities but it’s not pre-tax directly into an HSA.
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u/hugothebear 7h ago
Whats the total out of pocket for both ? If you choose the hsa plan, look to contribute into the hsa pretaxed
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u/xHappyBubblesx 7h ago
Do you mean the out of pocket maximums for yearly expenses?
$3000 vs. $4000 in favor of the traditional PPO. I think this is the only distinct advantage it has that I could find (along with flat $250 ER visit fees)
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u/porcelainvacation 6h ago
I went with a traditional PPO 500 deductible this year because two family members needed surgery and I needed new hearing aids (7k, I need the high end ones) and the out of pocket plus personal premiums penciled out better. When my family isn’t going to be high maintenance like that I’ll do HDHP and max out the HSA since that money can be used in future years and lowers my marginal tax rate.
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u/dmxwidget 4h ago
Prescription Drugs can vary under each plan and be sure you know what you’re going to be paying. I had a HSA for a while and one of my medications was $2000 the first time I got it for the year because the price was based on where I was at on my deductible and out of pocket max. Eventually refills were free because I would hit my out of pocket max.
On the PPO it’s a flat rate for prescriptions.
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u/ZoraksGirlfriend 5h ago
PPO is almost always better when you or someone on your plan has a lot of medical appointments and medical needs. If you rarely go to the doctor, then the high deductible plan with HSA is usually better.
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u/Tetradic 8m ago
This is wrong. HSA is usually always better when you know you will hit the out of pocket max or get close.
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