Which is better a Health Savings Account based health plan or a PPO?

As I discuss the two key designs of health insurance in Texas people often ask which is better. Ultimately is a personal choice of what plan is better for your specific needs. However lets discuss the differences so you have some idea about what each general design includes so you can make a more educated decision about what plan best first your needs.

First some common things that you find with each of these plan designs. For managed care both use networks and divide care between in-network and out-of-network care. Both are offered to those seeking individual health insurance plans. Both are covered by insurance carriers. Both have deductibles which must be met and both have maximum out of pocket levels at least for in-network care.  Both designs also provide an annual check-up to members regardless of age at no cost.

Let’s examine what makes a PPO plan a PPO plan. Most PPO plans allow you to go see the doctor for only a co-payment. The Co-payment may be the same for primary and specialty care or it may be different. That varies on carrier plan design. You will then have a deductible for care obtained outside of the doctor’s office which is not preventive care.  Once you meet the deductible you will depending on the exact plan structure, share costs with the insurance company on a percentage basis. Ultimately you will hit a maximum out of pocket cost limit. The total maximum limits are not set by law and in some cases they can get quite high. They can be as high as the insurance company wants to make them for the specific plan design.

Health Savings Account (H.S.A.) plans are designed with a deductible for all care other than the annual preventive visit. In some rare cases, some chronic condition medicine is covered first dollar by the insurance company as well.  Generally all doctor visits, care outside the physician office as well as medicine goes towards the deductible. In most plans once the deductible is met you have no additional costs for the year. Some designs do offer cost sharing after the deductible but they are rarer and regardless ultimately you do get to a point that your out of pocket maximum is met. The annual maximum limits are established by law and revised annually.

These are two totally different plan designs when it comes to when the bulk of your out of pocket care costs kick in. Generally for similar deductible levels the H.S.A. plans are a lower financial risk for the same or similar premium expense levels.  But ultimately, you have to decide what plan is best for your specific needs.