Medical Plan 101: PPOs Compared to HDHPs with HSAs

September 25, 2019

At Ascension, we offer our associates a choice of two medical plans: a traditional PPO (Preferred Provider Organization) and an HDHP (High Deductible Health Plan). The choice is not between quality care–that’s a given with both plans. Whether you choose the PPO or the HDHP, you have access to Ascension’s vast network of providers—all devoted to providing top-quality healthcare—as well as free preventive care. You also have the option to see out-of-network providers, but will incur higher costs.

So what’s the difference and how do you choose?

The difference between the PPO and HDHP basically comes down to how you like to manage your risk and healthcare dollars. Do you want to pay more upfront? Or are you willing to take a risk and pay more when services are needed?

Why you may like the PPO

With PPOs, you have higher premiums—that’s the amount deducted from your paycheck each time—but lower out-of-pocket expenses over the course of the year. You also have copays for most services. Copays are set fees, so you generally know what you’re paying in advance. This plan allows you to visit an in-network physician or healthcare provider without first requiring a referral from a primary care physician. 

Another advantage with PPOs is that you can make contributions to a Healthcare Flexible Spending Account (FSA) to help pay for out-of-pocket expenses. You can contribute as little as $260 or as much as $2,700 per year. And if you participate in the SmartHealth Well-being Program, you can earn up to $225 from Ascension in wellness rewards deposited into a Health Reimbursement Account (HRA).

Why you may like the HDHP

With HDHPs, on the other hand, you have lower premiums, so not as much is being deducted from your pay. However, you may have higher out-of-pocket expenses initially because you have to pay the full cost until you reach your deductible. But, since the premiums are lower, this plan may allow you to save money in the long run.

Additionally, with HDHPs, you have the option of opening an HSA (Health Savings Account). There are many tax advantages to HSAs. Three, in fact:

• Your contributions are made on a pre-tax basis—meaning they are tax-free!
• When you use your HSA dollars for qualified expenses, your withdrawals are also tax-free!
• Any interest earned on the account is tax-free.

Another HUGE benefit of HSAs is that Ascension will contribute to it, too. If you contribute at least $26 annually, then Ascension will add another $600 (associate only coverage) or $1,200 (family coverage). Plus, the money is always yours, even if you leave Ascension. And it can accumulate year after year—also making HSAs a nice (and tax-free!) medical nest egg for future expenses. Additionally, if you participate in the SmartHealth Well-being Program, you can earn up to $225 in wellness rewards to your HSA.

How to decide

The best way to decide which plan makes sense for you is to look at your potential costs over the course of a year.

• Do you tend to have a high claim history and need to spread the cost out more evenly over the year? Then maybe the PPO is a better fit.
• Or do you generally have a history of low claims and could potentially save money? In that case, you may prefer the HDHP and the added benefit of the HSA. 

What’s important to realize is the answer is not the same for everyone—that’s why we give you a choice.

As you consider your decision, keep in mind that a higher premium doesn’t mean more coverage. Likewise, a higher deductible doesn’t always mean more costs. Whatever you choose, you’re receiving great coverage, free preventive care and the choice of providers both inside and outside of the Ascension network.

Understanding the two plans and how they work will help you take full advantage of your benefits. Remember, you can find SmartHealth specific information at mysmarthealth.org.

See how plans compare: HDHP and PPO Example