20+ Differences between HSA and PPO (Explained)

The benefits and drawbacks of various health insurance plans should be weighed against your specific requirements before making a final decision. Here, we’ll contrast two of the most well-liked choices.

In return for a monthly premium and potentially high deductibles and copayments, preferred provider organizations (PPOs) is a common kind of health insurance that allows participants to get treatment from a network of healthcare providers and hospitals. However, participants are not restricted to in-network medical professionals.

In This Article

Comparison Between HSA And PPO

Parameter	HSA	PPO
Features	The minimum deductible for an HDHP is $1,400 for a person and $2,800 for a family. To cover the deductibles and other healthcare expenditures that aren’t covered by insurance, enrollees may be able to open a health savings account (HSA).	An example of a health insurance plan is a preferred provider organization, or PPO, which establishes a network of in-network healthcare providers by contractual agreements with practitioners like hospitals and medical clinics. You can visit in-network doctors and hospitals for less money, but you’ll have to pay more if you go outside.
Eligibility criteria	HDHP participants are entitled to save pretax monies in an HSA. Contributions from individuals are limited to a maximum of $3,650 for 2022. The maximum contribution per household is $7,300. Catch-up donations of up to one thousand dollars may be made by those 55 years old or older.	PPO coverage may be made available to employees by their employers or bought independently via the HealthCare.gov website. Participants don’t have to pay anything extra to utilize the network providers.
Cap on out of pocket	For the year 2022, the maximum out-of-pocket limit for an individual is $7,050, and the maximum out-of-pocket limit for a family is $14,100. This limit does not include premiums for covered treatments from in-network providers.	The out-of-pocket maximum for a person covered by a HealthCare.gov plan cannot exceed $8,700, and the maximum for a family is $17,400.
Packs	In general, the monthly premiums for HDHPs are less expensive than those for other types of health insurance.	If you have a larger deductible or other out-of-pocket payments, your PPO rates can be higher as a result.
Advantages	An HSA can contribute to the funding of eligible medical costs. For example, acupuncture, ambulance services, blood sugar test kits and strips, chiropractic therapy, hearing aids and batteries, infertility treatments, X-ray costs, dental and vision examinations, and treatments, and coinsurance plan fees are some of the services and procedures not covered by insurance.	The PPO network assists participants in locating healthcare providers who, to be a part of the network, is required to satisfy a set of criteria.
Disadvantages	According to many studies, the high deductible that comes with an HDHP might discourage policyholders from using their health insurance for medical treatment. Those who do not adequately fund their HSAs risk depleting their funds.	The health and medical issues, as well as the providers that are named in the insurance, are the only ones that are covered. Therefore, it is possible that services such as dental care, eye care, and other services are not included.

Major Difference Between HSA And PPO

What exactly is HSA?

Individuals hold HSAs. High-deductible health insurance accounts are tax-advantaged. Both the account owner and their employer may make annual contributions.

These are like IRAs for medical bills. This money is for medical expenditures. These programs help customers with high deductibles afford their healthcare bills before their insurance kicks in.

Key Difference: HSA

In most cases, there is no cost for preventative care provided by providers in the network. However, you will pay less when you use a service that is part of the network.

May obtain treatment from any certified provider of their choosing. You are responsible for payment of services up to the deductible amount.

After the deductible has been met, you are responsible for payment of a percentage of the cost for each covered treatment up to the out-of-pocket limit.

A Health Savings Account (HSA) allows individuals to set aside money before it is taxed to save it for current or future medical expenses.

You will receive the maximum yearly contribution to your Health Savings Account (HSA) from Veolia if you enroll in the HSA Gold Plan.

What exactly is PPO?

PPO plans provide you access to a “network” of doctors and hospitals at lower costs. PPO out-of-pocket payments vary per insurance carrier. PPOs are flexible and convenient.

Unlike an HMO, you don’t need a referral to visit a specialist. As a result, specialist copayments may be lower than with regular plans. However, PPO premiums are high because of reduced in-network expenditures.

Key Difference: PPO

In most cases, there is no cost for preventative care provided by providers in the network.

May obtain treatment from any certified provider of their choosing (doctors, hospitals, and other health care facilities)

You are responsible for payment of services up to the deductible amount.

After the deductible has been met, you are responsible for payment of a percentage of the cost for each covered treatment up to the out-of-pocket limit.

You will pay less when you use a service that is part of the network.

Contrast Between HSA And PPO

What it means:

HSA- An HSA is a tax-advantaged health savings account for individuals and families. Only people with a High Deductible Health Plan may open an HSA. When you open a HAS, the money you put into it is exempt from federal income tax.

PPO- A PPO, on the other hand, is a managed care organization comprising hospitals, physicians, and other medical professionals who have made a deal with an insurance carrier.

With this arrangement, the healthcare provider may charge less for its services to the plan’s customers. While an HSA is often funded by an employee’s company, a PPO is a subscription-based plan for accessing medical care.

Expenses:

HSA- You may use your HSA for medical expenditures, including OTC drugs. Before 2020, OTC medications weren’t included. Your doctor advises omeprazole, which was formerly prescription-only but is now OTC. You can use the money in your HSA to pay for your medicines.

PPO- PPOs should cover appropriate in-network and out-of-network service charges. Before insurance pays, you must reach your deductible.

Although the visit and any related services count against the out-of-network deductible, you won’t obtain a lesser price with these providers. Even though you’re still paying your deductible, the PPO negotiates reduced prices with in-network providers.

Rules:

HSA- The regulations governing an HSA are easy to understand. You may save up to $3,600 on your own premiums or $7,200 for your family by switching to an HDHP. You are only permitted to use it to pay for medical-related goods using it.

This may also include pharmaceuticals available over the counter and do not need a prescription, such as ibuprofen, cold treatments, and first-aid supplies.

PPO- A PPO does not have limits as an HMO; rather, it has varied pricing depending on the provider’s participation in the network.

Pocket threshold:

HSA- The highest out-of-pocket cost an individual was responsible for in 2022 is $7,050, while the maximum out-of-pocket cost a family is responsible for is $14,100.

This limit does not include premiums for covered treatments provided by in-network providers.

PPO- An individual enrolled in a HealthCare.gov plan cannot have out-of-pocket costs of more than $8,700; the maximum out-of-pocket cost for a family is $17,400.

Subscription:

HSA- The monthly rates for HDHPs are, in most cases and across the board, less costly than the premiums for other kinds of health insurance.

PPO- Your PPO prices can be higher as a consequence if you have a higher deductible or make other types of out-of-pocket expenditures.

Frequently Asked Questions (FAQs)

Q1. In other words, what does FSA stand for?

An FSA is a tax-advantaged savings account that may be used for medical expenses, childcare costs, or several other qualified expenses. A flexible spending arrangement, or FSA, may be established by an employer for its employees.

Aside from the optional contributions from both you and your employer, the main function of the account is to facilitate savings by deducting a predetermined amount from each paycheck and putting it in a separate account.

Q2. How much money should be put into a health savings account?

What you feel most at ease giving is the amount we should accept. Employees over the age of 55 may make additional yearly payments of up to $1,000 in the form of “catch-up contributions.”

Any contribution beyond that threshold is not eligible for a tax deduction and will be hit with an excise charge of 6%. The best course of action is to make the maximum feasible contribution toward covering legitimate medical costs.

Q3. Why should someone get health insurance?

Health insurance, for example, is meant to safeguard against the high expense of medical treatment in the case of illness.

It’s possible that these costs stem from things like doctor’s visits, prescription medicine, and overnight stays in the hospital.

Q4. To what extent do indemnity policies protect parties?

One kind of health insurance, known as an “indemnity policy,” reimburses the policyholder for the costs of medical care.

Subject to the policy’s maximum level of coverage, the plan will reimburse the policyholder for the actual amount of money spent on medical treatment and other expenses incurred during a hospitalization stay.