An HDHP is needed for an HSA. Oftentimes, plans with high deductibles make you meet the deductible before anything is covered. And they’re both intended to be used for qualified medical expenses. HRA is an IRS-approved, employer-funded, tax-advantaged health benefit that reimburses you (so long as you’re an employee) for out-of-pocket medical expenses and health insurance premiums. Thanks a bunch for this! Nope. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Yep. It acts as a designated health-related expenses bank account that employees can deposit money into and withdraw funds for medical care. Learn more about Summit, our groundbreaking solution for FSA, HRA, HSA, and COBRA administration. A PPO (Preferred Provider Organization), refers to the network coverage your health plan gives you access to. Need to pair it with an HDHP; Not the best choice for everyone; You may need long-term care, for which a low-deductible health plan may be a better choice; What Is an HRA? So, you can get a PPO that is also HSA eligible, but not every HSA eligible plan is a PPO, and PPOs aren't available in every state. I took the $2k I saved in premiums and contributed it to my HSA. "If you're somewhere in the middle, it's often best to go with a lower-deductible plan". Portability and 9 Other Important Things to Know About an HSA. A health savings account (HSA) is a bank account you own to pay for eligible health care expenses or you can use it to save toward retirement. At the end of this year, it goes away (except, I spent the remainder on other things like contacts/glasses etc - Since it's an FSA and not HSA). No, it requires more money. Then my other co-worker tries to explain that PPO is a lower deductible plan. The money in an HRA is provided solely by the employer. So in the end, a lower deductible is a little misleading. Shortening the names is a good start! Another thing to consider is whether you are the kind of person who plans ahead and has an emergency fund that can absorb that high deductible. Read this. It lowers your taxable income and the money used is tax free when you use it for qualified health expenses. Prior to enrollment with an HSA provider, you must certify that you have enrolled or plan to enroll under a HDHP and are not covered under any other health coverage that is not a HDHP. Join our community, read the PF Wiki, and get on top of your finances! It’s not a form of health insurance. Post navigation. What's the pass through of the premium to the HSA? Your PPO may not have a high deductible. Why would your HR lady have an agenda? We'd need to know the details of each plan to really help. Pretty often. I also ran drug formulary to see what each offer would cover. If you find yourself considering health insurance options that include a Health Savings Account (HSA) as well as a Health Reimbursement Account (HRA), you need to understand the differences between these medical savings accounts in order to make the right decision for your circumstances. If you can provide some details then you may get more detailed answers. Ultimately you need to look at the plans available to you and pick the one that best meets your needs, regardless of what the rule of thumb says. Out of network coverage is not usually offered. But as others have said, depending on OP's expected medical expenses, the PPO may be the better option. Also, shame on your employer for assuming they know your medical situation. She always has an agenda. Have I reached my deductible this year? An HSA account helps you save for medical expenses. Beyond that, as others have said, there's not much else we can say about your specific situation without numbers, but I'd figure out if your visits would be covered under the HDHP or no first and foremost, unless you're certain that they'll be out of pocket. Hopefully that helps straighten out some confusion. I was a little confused about how you were making the determination about which plan was better, but I think I finally wrapped my head around it. It seems like nobody can give a straight answer. My employer is offering these new Lumenous options and phasing out the Aetna over the next two years since I have to switch eventually I figured why not sooner and let these accounts build up savings. Plans vary widely, so any general statements should be taken with a grain of salt. Our qualifying HDHP is a POP. I can't believe the first top level comment to mention the tax advantage is this far down. So the entirety of the $800 is tax free, and my tax savings is estimated, let's say at $150 (for sake of a round simple number). If I had the funds in an HSA, it would roll over. He then tells me you can have a savings account that is tax-free AND have traditional insurance. Related. HSA vs. PPO: The Takeaway. Both Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) are two health benefit plans designed to offer affordable health care coverage to employees in the United States in order to cover their health care expenses. If you do, you can deal with the risk and the lower premiums are definitely worth it. So it's a no brainer for me to choose the HSA. With an HSA, you don't have to pay taxes on your investment when you deposit it or when you withdraw it (see the article linked above). But to know which one is right for you, what you really need is an explainer on HDHP vs. PPO. In-network docs are cheaper typically. I basically pay full price every visit. I just went through benefit selection at my work and ended up chosing the HSA over the EPO. (If I'm understanding this correctly) What is the best option for me? The part paid by me, goes towards the deductible (lots of labs because I'm pregnant and getting a ton of labs, heh): So the cost I have to pay out of pocket here, is $201.31. In a worst case scenario, I'll pay my $3000 deductible, have it reimbursed from my HSA, and have 90% coverage with $2k left on my out of pocket max, and another $1k still in the HSA. I'm currently setup to make the maximum contribution next year. To save money in an HSA you need to have a High deductible health plan. With the HSA, you pay out of the ass only when you actually use it, but you can be reimbursed from the HSA. Given my current medical needs as well as my income, what health plan would be best for me? Much like a PPO, this type of plan has a network that you must visit in order to be covered. Nice work on the spreadsheet, thanks. My friend does insurance for a school district and he hears the same thing. Obviously the HSA has a much cheaper monthly premium but the cost per doc visit is significantly higher. You need to look at both plans your employer offers, look at the premiums, deductibles, and how much is covered. I did hsa for 3 years with my last job... 3 years later I have about 3k still in my hsa account. You can also invest the money you contribute and it will grow over time if you don't use it. Can you provide the premium, deductible, coinsurance percentage, and max out of pocket for the two plan options? Some employers offer an HRA which would let her pay for things like co-pays and co-insurance with after tax dollars but it doesn’t sound like that’s the case here. Does the PPO plan pay you back for your expenses when you use it? So if my plan will cover 75%, do I plug 75% or 25% into that spot? So if you have a major, expensive medical situation, then you'll almost always come out ahead. HRAs are usually unfunded notional accounts, with no cash value. So the real question is your HDHP better than your PPO option? Thanks for the simple explanation on different health care networks! I'm at a pretty big company & the expensive plan wouldn't really make sense for me unless I spent more than $20,000 which seems pretty unlikely. This means your out of pocket medical expenses are are lowered by the amount corresponding to your marginal tax rate when you use an HSA. Analyze how much extra risk you're taking with the HSA and ask yourself if your savings on premiums is worth taking that extra risk. So I paid for the higher plan. HDHPs typically benefit healthier consumers who don’t expect much medical attention for the year. 1 The health reimbursement account (HRA) combines a health plan with an employer-funded HRA to help employees pay for covered health care costs. You shoulder part of the cost, but often less than a PPO. Ultimately though, it’s all a numbers game. Press question mark to learn the rest of the keyboard shortcuts. But … They're great if you're very sick because, though HSA plans have a high deductible, not only is the premium lower, but usually insurance will pay for 100% of most medical bills after the deductible. 9 Ways to Spend Your FSA Funds Before Year End. I usually only get my … Sometimes, an HSA is more beneficial, other times, the regular plan is more beneficial. If I have a medical emergency and burn through my deductible, my HSA will be used to cover the expenses. The key difference between HRA and HSA is that HRA is an employer funded health benefit plan that reimburses for medical expenses including personal health insurance policy premium… The HSA provider and/or trustee/custodian is solely responsible for all HSA services, transactions and activities. The deductible on the HSA's plan was $3000, with 90% coverage afterward, PPO was $2000 with 80% coverage afterward. These are all family rates, as that is all I looked at. So $150 kept away from the tax man, and I get to spend it. My company contribution to the HSA would be $1900. The deductible on the HSA's plan was $3000, with 90% coverage afterward, PPO was $2000 with 80% coverage afterward. The provider need not accept that, so you'd be responsible for the remainder of the bill. Once you go over the deductible both the plans that I'm offered are almost identical (same network etc), they just have a different deductible/copay structure, so one is really no riskier than the other if you need serious care. So now my boss asks why I had not set up an HSA. An HSA is different from the plan types of PPO, HMO or EPO. If you do not have an HDHP, you may have a Flexible Spending Account (FSA). I am 26 years old about to go off my parent's health insurance at the start of next year. It's not like they make more money whether you chose one or not. For example, if you are enrolled in the HSA Gold Plan for Employee Only, and you are paid weekly by Veolia, you will receive $14.42 per pay period deposited into your HSA account. I don't even have vision and they still covered my optometrist checkup because some of the possible complications it might turn up would be on their plate. Is a PPO best for most people? It's open enrollment time, which means many of us are reviewing health insurance options. Exactly This. Is the co-insurance value the amount you will pay out of pocket or the amount the plan is covering? You can only have an HSA on what is considered a high-deductible plan. Compare that to the co-pays for the PPO. Out of network deductible is double in-network. Compare that to the co-pays for the PPO. HSA vs PPO With health care and medical costs continuing to rise, it is even more essential for every individual to have health care insurance. My company contribution to the HSA would be $1900. When you have an HDHP, you’re eligible to open a Health Savings Account (HSA). I'm guessing OP meant that there is a higher deductible. An HSA is a tax-advantaged account that can be used to pay for IRS-defined health care expenses, including long-term care and COBRA premiums. However last year I had surgery to remove a bladder tumor and now I need to see a urologist every 3-4 months as well for preventative care. It took me a while to fully understand the benefits of an HSA but I think in most cases it's a great option if your employer offers it. I did a short hand version in Excel but nothing quite so comprehensive. Has the same story as a PPO for deductibles. Out of pocket max on the HSA was $5k, and $3600 on the PPO. You may not have both an HSA and FSA, unless your employer offers an FSA for limited types of expenses (detailed in that link above). Advantages include low premiums and the option of opening an HSA to save for medical procedures that encompass those not covered by your medical insurance. I'm making around 43k a year now, am single and have no massive debt (save for a credit card payment). For me, my total out of pocket cost is lower in my HSA plan than in my PPO plan. HSAs offer many distinct advantages for consumers. Piggy backing off of what others have said, PPO is the plan type, as is HMO. Yours could be totally different. The company I work for is offering me two options for health insurance... An HSA or a PPO. Hey Reddit, I've never been the best at selecting a medical plan, as I haven't always had insurance and am trying to do some research but wondering what others think: HDHP HSA vs. PPO. I am. We would need to see your out-of-pocket maximum, deductibles, etc to make that decision. The Best Retirement Account You’ve Never Heard Of. While PPO might be lower deductible plan, and likely more costly than that of the HSA, having a higher deductible is not neccessarily a bad thing. If this money is deposited into your HSA, you have $1,000 a year to pay for medical expenses. You must retain documentation to prove this if the IRS audits you. There's no amount of expenses that makes the traditional plan a better deal. Or HDHP instead of High Deductible Health Plan. I agree with this. that should definitely save you a couple hundred dollars off your taxes and help build a medical nest egg for when you have more medical bills down the road. DH's employer contributes an amount equal to our in network deductible. Here's a plot comparing the two plans, assuming 25% marginal tax rate: imgur.com. That is why I, personally, chose to go with an HSA this year. You health and risk tolerance need to be considered. You shoulder part of the costs and the plan shoulders some. HSA vs. FSA. Join our community, read the PF Wiki, and get on top of your finances! So I took what I thought was the best option, the PPO or "regular" insurance. Last week I had a small accident and had to go to the ER just to be sure I was ok. Also, make sure you have emergency funds sufficient to cover the out of pocket max for both plans. The more you earn, the more advantageous the tax savings become. PPO = Preferred provider organization. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. This type of plan usually lets you see any doctor you wish. The right choice depends on how healthy you are and how you want to pay for your healthcare. In addition, due to tax incentives, these plans are attractive for employers, so they may offer you free money each year to load into your HSA. Are you sure of this? Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. HSA is not a healthcare plan. If you're somewhere in the middle, it's often best to go with a lower-deductible plan. Never paid out of pocket for any medical visit.. (only went to dentist and Dermatologist a few times, plus an urgent care facility once). 263 a month vs 40 a month for one drug goes a hell of a way to paying premium costs. If you don’t have an HDHP, you can’t have an HSA. Or is it just a matter of personal preference? It's lower across the board, whether I have good health or I have a terrible accident. ._2JU2WQDzn5pAlpxqChbxr7{height:16px;margin-right:8px;width:16px}._3E45je-29yDjfFqFcLCXyH{margin-top:16px}._13YtS_rCnVZG1ns2xaCalg{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex}._1m5fPZN4q3vKVg9SgU43u2{margin-top:12px}._17A-IdW3j1_fI_pN-8tMV-{display:inline-block;margin-bottom:8px;margin-right:5px}._5MIPBF8A9vXwwXFumpGqY{border-radius:20px;font-size:12px;font-weight:500;letter-spacing:0;line-height:16px;padding:3px 10px;text-transform:none}._5MIPBF8A9vXwwXFumpGqY:focus{outline:unset} Nope. It's important to note that I rarely go to the doctor for emergency medical issues. You need to compare plan designs. Figure it's got less than a 10% chance of happening in a given year, but that it will cost you the out-of-pocket max if it does. HSA vs HRA When I was hired on, I chose the PPO option over an HSA plan, as it was nearly the same price and I am 34 and generally healthy. Trying to choose between an HSA and a PPO? This was the biggest help to me so far. Are your doctors in-network? Edit: The HSA cost also depends on your tax rate so if you could also provide your income it would help. Home » Resources – News, Blogs, and More » HRAs – A Look at the Pros and Cons. It may have a deductible and that deductible may even be high (for you). The health savings account (HSA) gives employees ownership of a tax-exempt savings account they can use to contribute pre-tax dollars to pay for covered health care costs. But, another thing to note, both employers have offered matching contributions for my HSA, which means the money I put away for my deductible doubles. Reader Question: Traditional PPO vs HSA Plan. While we’ve analyzed the HRA/HSA choice as an either/or proposition, the two plans can work in unison. I ran the medication cost and doctors visits alone on all the plans, and the cost diffrence between everything was less than 500 a year. For the PPO, I would spend $3850 on insurance premiums, then pay my $2000 deductible... and still be on the hook for 20% up to the next $1800. Check out the wiki page on Health Insurance. Then subtract the amount you would expect to spend on all your doctor visits and medications yearly with the HSA. My current and also previous employers both offered HSAs, and their deductibles were $2,600 (individual). Often considered the "Cadillac" of plans, since these plans have been dying out, due to their high cost. As others have mentioned, it really depends on the specifics of your plan. That's generally true, but if you have a high income, the tax savings may make the HSA plan more advantageous even if you are somewhere in the middle. 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