PPO vs. HDHP: what’s the difference?

HealthMarkets Fills You In on PPO and HDHP: Which One Is Right for You?

Shopping for health insurance during the Open Enrollment Period can be stressful. You have to predict how much insurance you’ll need in the coming year. That’s not easy since you can’t know the future. Plus, you need to understand all those acronyms before buying anything. Two common ones are “PPO” and “HDHP.”

Understanding PPO and HDHP

A PPO stands for “Preferred Provider Organization.” This means your insurance plan is built on relationships with preselected, or preferred, medical providers. PPOs don’t stop you from going to the doctor of your choice, but they cost less if you stick to the preapproved network.

HDHP stands for “High-Deductible Health Plan.” This type of plan has a higher deductible than other comprehensive insurance plans. A deductible is the amount you pay for covered services before your insurance shares the cost with you. In exchange for a high deductible, you’ll pay a lower premium and have access to a Health Savings Account (HSA). We’ll discuss HSAs more below.

Let’s take a closer look at the differences between PPOs and HDHPs. We’ll weigh the pros and cons of each. Plus, we’ll see which one (or both) might fit your needs. If you need help finding an insurance plan, call a licensed insurance agent at (877) 537-0496 to discuss available plans, or browse your options online today.

Preferred Provider Organization: Pros and Cons

When considering a health insurance plan with a PPO, start by looking at the list of in-network providers. These are the doctors, clinics, and hospitals that have negotiated rates with your insurer. If you see an out-of-network provider, you can still visit them, but your insurer will pass more of the cost on to you.

As with any plan, PPOs come with trade-offs.

Pros: PPOs typically make it easy to get the care you want. They allow you to see specialists without a referral. As long as you stay within the plan’s network, you can access a wide range of health services. This often makes PPOs good for people managing health conditions, such as cancer or heart disease, that require frequent or specialized medical care.

Cons: Compared to plans like HMOs (Health Maintenance Organizations), PPOs often have higher premiums and out-of-pocket costs. HMOs usually limit coverage to providers and clinics in their network and don’t cover out-of-network providers or services outside of emergencies.

High-Deductible Health Plan: Pros and Cons

First, you’re probably wondering what counts as a high deductible. Here’s how it looks for 2024:

An HDHP plan has a deductible of:

• At least $1,600 for an individual

• At least $3,200 for a family

  
  

One upside is that HDHP plans limit your maximum out-of-pocket expenses. Per year, it can’t cost more than:

• $8,050 for an individual

• $16,100 for a family

  
  

Pros: HDHP plans have lower monthly bills (premiums). So, if you’re in good health, they might save you money. “Choose an HDHP if you want lower monthly premiums, are generally young and healthy, and can afford higher out-of-pocket costs,” says Michael Orefice. He’s the senior vice president of operations at SmartFinancial.com in Newport Beach, California.

Additionally, HDHP plans offer you the option to open an HSA. This is a type of health account where you can contribute pretax dollars. You can use the funds to pay for medical bills that accrue during the year, or you can save the money for the future. The money earns interest and rolls over every year. It can be a great way to save for future medical expenses.

For 2024, you can put up to $4,150 in an individual HSA or $8,300 in a family HSA.

Cons: If you have a medical emergency or develop a chronic condition, such as cancer or type 2 diabetes, you may end up facing large medical bills that you’ll have to pay out of pocket, says Gross. Make sure to read your plan’s brochure closely to ensure you’re comfortable with the coverage and out-of-pocket expenses.

You can always call a licensed insurance agent at (863) 746-7873.

PPO vs. HDHP: Another Way to Look at Your Plan

Regardless of whether you choose a PPO or HDHP, consider the tier or category they’re in. All Affordable Care Act (ACA) plans come in one of four “metal” options: bronze, silver, gold, or platinum. Here’s how they break down:

• Bronze plans provide the lowest monthly bills but have the highest out-of-pocket fees. They typically cover about 60% of essential health care costs. “Bronze plans are a good choice for individuals who are generally healthy and don’t expect to use health care services frequently,” says Orefice.

• Silver plans cover around 70% of essential health care costs. They have moderate monthly bills and out-of-pocket costs.

• Gold plans have higher monthly bills but cover about 80% of essential health care costs. “They are suitable for individuals who anticipate using health care services more frequently or have ongoing medical needs,” says Orefice.

• Platinum plans have the highest monthly bills but offer the most comprehensive coverage. They usually cover about 90% of essential health care costs. This plan is best if you anticipate having significant medical expenses, says Orefice.

  
  

PPO vs. HDHP: Which Plan Is Best for You?

There’s no perfect plan for everyone. But both Orefice and Gross agree on the following:

• HDHP plans are great if you want lower monthly bills, are generally young and healthy, and can afford higher out-of-pocket costs. They are also useful if you want to take advantage of an HSA. Just keep in mind that you’ll need to put pretax dollars into it.

  
  

• PPOs work well if you anticipate using your coverage more often or seeing out-of-network providers. They’re also beneficial if you’re willing to pay higher monthly bills for lower out-of-pocket costs or if you want the flexibility to see who you want, when you want. Remember: PPOs still offer some coverage for out-of-network providers.

  
  

Once you find a plan you like, it could serve you well for many years to come. If you still need help making up your mind, you can always call a licensed insurance agent at (863) 746-7873.

Final Thoughts on Choosing the Right Insurance Plan

Choosing the right health insurance plan can feel overwhelming. But it doesn’t have to be. Take your time to weigh your options. Think about your health needs, budget, and preferences.

Remember, whether you choose a PPO or an HDHP, the goal is to find a plan that fits your lifestyle and financial situation. If you have questions, don’t hesitate to reach out to a licensed insurance agent. They can help clarify your options and guide you toward the best choice for you and your family.

If you’re ready to explore your options, browse your options online today. You deserve the best coverage that meets your needs!