Question 1

What is the difference between an HDHP and a PPO?

Accepted Answer

A High Deductible Health Plan has lower monthly premiums but requires you to pay a higher deductible before insurance coverage kicks in. A PPO has higher premiums but lower deductibles and covers more costs upfront. The HDHP is usually cheaper for healthy years; the PPO may be cheaper for years with significant medical use.

Question 2

What is an HSA and who can use one?

Accepted Answer

A Health Savings Account is a triple-tax-advantaged account — contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. It's available exclusively to people enrolled in a qualifying HDHP. The HSA's tax advantages are a major factor in many people's preference for HDHP plans.

Question 3

What is an out-of-pocket maximum?

Accepted Answer

The most you'll pay in covered in-network costs in a plan year. After reaching this threshold, the insurance covers 100% of covered in-network costs for the remainder of the year. Compare out-of-pocket maximums when evaluating the worst-case annual cost of each plan.

Question 4

How do I estimate my medical usage for the coming year?

Accepted Answer

Start with last year's actual claims as a baseline. Factor in any planned procedures, pregnancies, or known conditions. For young, healthy people with no planned care, a low-usage scenario is often reasonable; for families or people managing chronic conditions, model higher usage scenarios.

Question 5

What is the difference between a copay and coinsurance?

Accepted Answer

A copay is a fixed dollar amount per visit or service (e.g., $30 per office visit). Coinsurance is a percentage of costs you pay after meeting your deductible (e.g., 20% of a covered procedure). HDHPs often have coinsurance after the deductible; PPOs may have both copays and coinsurance for different services.

Question 6

How much should I contribute to an HSA with an HDHP?

Accepted Answer

The IRS sets annual contribution limits that change each year — verify current limits at irs.gov. Contributing the maximum, especially if you can afford to invest the HSA balance rather than spending it immediately on current medical costs, maximizes the long-term tax advantage of the account.

HDHP or PPO?

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