HSA vs PPO

November 19, 2021
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Open enrollment is coming up soon, and it's important to know about all your insurance plan options before deciding which one is right for you. Two options you could have are a Health Savings Account plan (HSA) and a Preferred Provider Organization plan (PPO). When choosing between the two, you need to understand the advantages and disadvantages of both.

We'll outline each of these options so you can make an informed decision about which plan is right for you.

What is an HSA?

HSAs are tax-advantaged accounts where you save money specifically for healthcare costs. They work by putting in pre-tax dollars every month and using the funds for any medical expense. Because the funds are in the account pre-tax, the money grows without being taxed and can result in more savings than if they were in an ordinary bank account. Much like with other types of investing accounts, there is a yearly contribution limit. In the case of HSAs, the annual limit is $6,000.

You have some control over how you spend the funds in your HSA. You can buy medication, pay for doctor's visits or pay medical bills.

HSA Advantages

  • You have more flexibility in how you spend your medical funds.
  • Your funds grow tax-free, giving you more to spend on health costs.
  • In some cases, you can choose the bank where you keep your HSA account.

HSA Disadvantages

  • They don't cover as many medical expenses as other health plans.
  • It takes discipline to save for your future medical expenses.
  • You may have to pay more up front due to high deductible premiums or co-pays.

What is a PPO?

PPOs allow plan members to see almost any doctor or go to any hospital. When you go to a doctor that's in-network, you pay less. You can still see doctors that aren't in the network, but you will likely have to pay more. In short, you pay more for some flexibility in the doctors you can see. 

PPOs offer some coverage by paying up to $30,000 per year in medical expenses. These health plans can be less expensive than other types of plans since members may not have to pay out-of-pocket for provider services.

PPO Advantages

  • You can see any doctor, in or out of your network.
  • There's more flexibility in providers.

PPO Disadvantages

  • Members pay higher premiums.
  • You pay more for seeing doctors who are not in your network.

When deciding between insurance plans, make sure to do all the research you can to make the best decision for yourself.