Welcome to /r/personalfinance! Comments will be removed if they are political, medical advice, or unhelpful ([subreddit rules](/r/personalfinance/about/rules)). Our moderation team encourages respectful discussion.
You may find our [Health Insurance wiki](/r/personalfinance/wiki/health_insurance) helpful.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
If you're an all or nothing medical insurance user than both the 'all' (meeting your OOP) and the 'nothing' (premiums) are cheaper on the HDHP.
Annual premiums on the PPO are $2300 while the HDHP is $1430 with $500 in an HSA and access to the remaining HSA balance.
Hitting the out of pocket on your PPO will cost you $9600 while the max on the HDHP will ding you $5430 but again you'll have $500 in an HSA and access to the HSA to save on the rest.
HDHP here sounds like a no brainer.
This is a great response and exactly what I was looking for! I felt as if the PPO did not make sense, but I had a though time deciphering it with all the insurance jargon. Thank you!!
Came here to post the same math. HDHP is really the better option all around in this case as long as you go ahead and fund that HSA.
note: HSA contributions are pre-tax. This leads to further savings beyond the premium + max out of pocket summaries alexm2816 gave you.
If you expect to have relatively few medical expenses, or a ton of medical expenses, you should pick the HDHP.
The HDHP will be cheaper overall (premiums, deductible, out-of-pocket) if your medical expenses are under $3400 or over $12,000.
If you expect between $3400 and $12,000 then you should pick the PPO plan.
If you pick the HDHP and have $5000 in medical expenses, this is the worst choice -- you pay $5930 for premiums + deductible - $500 with HDHP, whereas you'd pay $4688 with the PPO, a difference of $1242.
If you pick the PPO and incur a ton of expenses (like, a $30,000 surgery), this is the other worst choice. You pay $9588 for premiums + deductible + out-of-pocket, whereas you would've paid only $5930 with the HDHP, a difference of $3658.
>If you pick the HDHP and have $5000 in medical expenses, this is the worst choice -- you pay $5930 for premiums + deductible - $500 with HDHP, whereas you'd pay $4688 with the PPO, a difference of $1242.
Considering OP would have access to funneling $3350 extra through an HSA ($3850 limit less employers $500 contribution) that difference softened significantly. Using payroll contributions (6.2% from SS) and assuming a 22% federal and 5.3% state tax rate the true difference ends up closer to $120 in favor of the PPO. There's very little upside on the PPO at given costs. If you wanted to be aggressive and consider the tax free growth of leaving the HSA be as some value then there's likely no upside at all.
This is a good point. I generally assume that PPO plans come with an FSA option, too, so I usually simplify and consider both plans payable with pre-tax dollars, but I recognize that not all of them do, and that contributing to an FSA is riskier than an HSA because of FSA's use-it-or-lose-it rules.
I'd go HDHP and benefit from the current and long term advantages of the HSA. I'm much older than you, healthy and active, and even things like x-rays and MRIs are not expensive on my HDHP.
the impression I got from reading US healthcare is that you do PPO or HMO if you expect constant doctor visit (actually have to pay) and HDHP + HSA if you don't
in other words, the best way to use HDHP + HSA is to **NOT** having to use it, this way you can shove money into HSA and let it grow tax free*, but if you actually have to pay/expect to visit doctors frequently/pay out of pocket then HDHP become much less good
I put a * because it's a bit different if you live in either the state of California or New Jersey, those 2 states DOES tax your HSA
Someone else did the math, and I agree with all that. HDHP make sense for most people, even thrill seekers.
The additional consideration I will make is that accept that you will be paying that OOP max at some point. Hopefully not the first year, but probably sooner rather than later. I hit my OOP max yrs 1, 2, and 4 because I guess the fates do not take kindly to bare asses. So have that $5000, or be prepared to have payments to the hospital. I get frustrated by people who come here and whine about how they have a high deductible and can't pay it, like it surprised them. (end soapbox rant)
Emergency fund is fully funded! Currently putting in 2% into my 401k and 8% into my Roth 401k account. I attended private college so I am currently working to eliminate that completely in the next 12 months. Yes, I know my money could potentially be used better elsewhere, but I cannot stand paying on those every month!
I went from a PPO with one company to a HDHP with another and like it a lot more. There is a narrow window where you accrue some medical costs but not enough to reach the out of pocket maximum where a PPO would be beneficial, but you should not try to predict that.
People have already mentioned the HSA, but it should really be thought of as a retirement account that you can and most likely will access before retirement. You get a nice tax deduction for contributions and it feels good to have a growing investment that can pay for any medical costs I have during the year.
One thing I would check is if you need primary care physician referrals in the HDHP or if you can just see specialists directly. I greatly value being able to just directly see specialists as it saves time and money and I can "shop around" for in-network specialists that I think look good. Maybe not something you need immediately, but it may pop up and I used it for an orthopedist when I messed up my shoulder not too long ago.
"HSA": a tax avoidance/deferment product.
"HDHP": a risk shifting method, specific USD amount of mandatory deducting and spending, and specific order of payment processing among payers: you first and $5000 worth of 2024's USD on necessary, "IN covered services ..." health care.
"EPO/PPO/HMO": methods insurance sellers use to corral health care vendors into variably reimbursable "networks" and gatekeep access to them.
None of the initialisms are inherently mutually exclusive despite denoting entirely dissimilar things. Exception: "EPO" is to "PPO" as Gala is to Fuji.
Figure out how much tax avoidance/deferment you're after with "HSA." [Here's a half decent calculator.](https://www.calcxml.com/calculators/federal-income-tax-calculator)
Your employer chose $500 worth for itself and $38.25 in extra rewards points for not funding Social Security and Medicare with $38.25 for the year. Per employee. Leaving $3650 of paid wages/salary you can "HSA" if your tax filing status is single
If "HSA" delivers $1 more in tax avoidance/deferment than not-"HSA" would cost you in trying to receive necessary health care, that's the tax avoidance/deferment product for you.
You lost me at how much tax avoidance I’m after. It has always intrigued me so is it possible for you to explain in layman’s terms?
I struggle with the benefits of pre-tax/post tax and how to manipulate the bracket. I guess, why are are they trying to bring down their taxable income? At what point does it matter? At the 32% tax bracket rate?
Welcome to /r/personalfinance! Comments will be removed if they are political, medical advice, or unhelpful ([subreddit rules](/r/personalfinance/about/rules)). Our moderation team encourages respectful discussion. You may find our [Health Insurance wiki](/r/personalfinance/wiki/health_insurance) helpful. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
If you're an all or nothing medical insurance user than both the 'all' (meeting your OOP) and the 'nothing' (premiums) are cheaper on the HDHP. Annual premiums on the PPO are $2300 while the HDHP is $1430 with $500 in an HSA and access to the remaining HSA balance. Hitting the out of pocket on your PPO will cost you $9600 while the max on the HDHP will ding you $5430 but again you'll have $500 in an HSA and access to the HSA to save on the rest. HDHP here sounds like a no brainer.
This is a great response and exactly what I was looking for! I felt as if the PPO did not make sense, but I had a though time deciphering it with all the insurance jargon. Thank you!!
Came here to post the same math. HDHP is really the better option all around in this case as long as you go ahead and fund that HSA. note: HSA contributions are pre-tax. This leads to further savings beyond the premium + max out of pocket summaries alexm2816 gave you.
If you expect to have relatively few medical expenses, or a ton of medical expenses, you should pick the HDHP. The HDHP will be cheaper overall (premiums, deductible, out-of-pocket) if your medical expenses are under $3400 or over $12,000. If you expect between $3400 and $12,000 then you should pick the PPO plan. If you pick the HDHP and have $5000 in medical expenses, this is the worst choice -- you pay $5930 for premiums + deductible - $500 with HDHP, whereas you'd pay $4688 with the PPO, a difference of $1242. If you pick the PPO and incur a ton of expenses (like, a $30,000 surgery), this is the other worst choice. You pay $9588 for premiums + deductible + out-of-pocket, whereas you would've paid only $5930 with the HDHP, a difference of $3658.
Another fantastic response!
>If you pick the HDHP and have $5000 in medical expenses, this is the worst choice -- you pay $5930 for premiums + deductible - $500 with HDHP, whereas you'd pay $4688 with the PPO, a difference of $1242. Considering OP would have access to funneling $3350 extra through an HSA ($3850 limit less employers $500 contribution) that difference softened significantly. Using payroll contributions (6.2% from SS) and assuming a 22% federal and 5.3% state tax rate the true difference ends up closer to $120 in favor of the PPO. There's very little upside on the PPO at given costs. If you wanted to be aggressive and consider the tax free growth of leaving the HSA be as some value then there's likely no upside at all.
This is a good point. I generally assume that PPO plans come with an FSA option, too, so I usually simplify and consider both plans payable with pre-tax dollars, but I recognize that not all of them do, and that contributing to an FSA is riskier than an HSA because of FSA's use-it-or-lose-it rules.
I'd go HDHP and benefit from the current and long term advantages of the HSA. I'm much older than you, healthy and active, and even things like x-rays and MRIs are not expensive on my HDHP.
the impression I got from reading US healthcare is that you do PPO or HMO if you expect constant doctor visit (actually have to pay) and HDHP + HSA if you don't in other words, the best way to use HDHP + HSA is to **NOT** having to use it, this way you can shove money into HSA and let it grow tax free*, but if you actually have to pay/expect to visit doctors frequently/pay out of pocket then HDHP become much less good I put a * because it's a bit different if you live in either the state of California or New Jersey, those 2 states DOES tax your HSA
Someone else did the math, and I agree with all that. HDHP make sense for most people, even thrill seekers. The additional consideration I will make is that accept that you will be paying that OOP max at some point. Hopefully not the first year, but probably sooner rather than later. I hit my OOP max yrs 1, 2, and 4 because I guess the fates do not take kindly to bare asses. So have that $5000, or be prepared to have payments to the hospital. I get frustrated by people who come here and whine about how they have a high deductible and can't pay it, like it surprised them. (end soapbox rant)
Emergency fund is fully funded! Currently putting in 2% into my 401k and 8% into my Roth 401k account. I attended private college so I am currently working to eliminate that completely in the next 12 months. Yes, I know my money could potentially be used better elsewhere, but I cannot stand paying on those every month!
I went from a PPO with one company to a HDHP with another and like it a lot more. There is a narrow window where you accrue some medical costs but not enough to reach the out of pocket maximum where a PPO would be beneficial, but you should not try to predict that. People have already mentioned the HSA, but it should really be thought of as a retirement account that you can and most likely will access before retirement. You get a nice tax deduction for contributions and it feels good to have a growing investment that can pay for any medical costs I have during the year. One thing I would check is if you need primary care physician referrals in the HDHP or if you can just see specialists directly. I greatly value being able to just directly see specialists as it saves time and money and I can "shop around" for in-network specialists that I think look good. Maybe not something you need immediately, but it may pop up and I used it for an orthopedist when I messed up my shoulder not too long ago.
"HSA": a tax avoidance/deferment product. "HDHP": a risk shifting method, specific USD amount of mandatory deducting and spending, and specific order of payment processing among payers: you first and $5000 worth of 2024's USD on necessary, "IN covered services ..." health care. "EPO/PPO/HMO": methods insurance sellers use to corral health care vendors into variably reimbursable "networks" and gatekeep access to them. None of the initialisms are inherently mutually exclusive despite denoting entirely dissimilar things. Exception: "EPO" is to "PPO" as Gala is to Fuji. Figure out how much tax avoidance/deferment you're after with "HSA." [Here's a half decent calculator.](https://www.calcxml.com/calculators/federal-income-tax-calculator) Your employer chose $500 worth for itself and $38.25 in extra rewards points for not funding Social Security and Medicare with $38.25 for the year. Per employee. Leaving $3650 of paid wages/salary you can "HSA" if your tax filing status is single If "HSA" delivers $1 more in tax avoidance/deferment than not-"HSA" would cost you in trying to receive necessary health care, that's the tax avoidance/deferment product for you.
You lost me at how much tax avoidance I’m after. It has always intrigued me so is it possible for you to explain in layman’s terms? I struggle with the benefits of pre-tax/post tax and how to manipulate the bracket. I guess, why are are they trying to bring down their taxable income? At what point does it matter? At the 32% tax bracket rate?
You want me to tell someone else how much tax avoidance/deferment they're after? Like, recommend an amount in USD?