High Deductible Health Plan (HDHP) vs PPO: Pros & Cons
High Deductible Health Plans (HDHPs) and PPOs are two different kinds of medical insurance plans that are offered today. Each one has many pros and a few cons that require careful consideration before you choose the option that will work best for you.
For more information on HDHPs and PPOs or to receive a quote, contact Beckham Insurance Group today.
High Deductible Health Plans (HDHPs)
High deductible health plans, as its name implies, are a type of health plan that has higher deductibles and lower premiums. They have been rising in popularity over the last few years and are more commonly chosen by individuals who don’t anticipate needing a lot of medical services throughout the year. Typically, the group that chooses an HDHP will be healthy young people without their own families.
There are many great benefits to choosing an HDHP, including the following:
No matter a person’s job, age, gender, or family situation, everyone appreciates saving money. With an HDHP’s lower monthly premiums, anyone who has the plan can save money for countless other expenses, from debt and mortgage repayment to vacations or new vehicles.
Broader Provider Networks
Another benefit that HDHPs offer is a broader network of care providers. Through HDHPs, individuals are given much longer lists of providers to choose from, allowing them to secure the medical help they need both at home and while traveling.
Generally, any person who chooses an HDHP is eligible to open a Health Savings Account (HSA). By investing in an HSA, not only can individuals save a ton of money, but they can also do so virtually tax-free. HSAs allow people to make innumerable contributions, accumulate financial growth, and withdraw their money to cover medical expenses.
Employer HSA Match
Sometimes, employees with HDHP benefits will also be entitled to employer matches on HSA savings. This means that whatever money an individual puts into an account will automatically be matched, either in full or to a certain percentage, by the employer, providing the employee with free cash to cover any medical expenses.
Unfortunately, there are a few downsides to HDHPs as well, including the following:
The biggest downside of an HDHP is the higher deductible. With a higher deductible, individuals and families may end up needing to cover thousands of dollars worth of medical expenses with no financial aid from their insurance companies until these deductibles are reached.
Large Amount of Out-of-Pocket Expenses
Unlike other health plans, HDHPs require that individuals cover several key medical expenses out of pocket—at least until they reach their deductible. This can include anything from prescriptions, office visits, diagnostic tests, and more. Additionally, if individuals suffer from chronic illnesses, they will likely be stuck with incredibly expensive out-of-pocket costs.
Preferred Provider Organizations (PPOs)
Preferred provider organizations, or PPOs, are a type of health plan that offers policyholders an incredibly wide range of healthcare providers to choose from. Unlike many plans, PPOs don’t require that individuals seek out medical attention from providers within their network. Rather, policyholders can enjoy more freedom when it comes to servicing their medical needs.
There are several fantastic benefits to choosing a PPO, including the following:
While HDHPs have incredibly high deductibles, the same isn’t true of PPOs. PPOs allow individuals to receive financial assistance from their insurance companies much quicker than HDHPs, making them ideal for people who expect to need a lot of medical attention throughout the year. People who most commonly choose PPOs are those with their own families—especially if they have young children—and those who are more advanced in years.
Wide Range of Providers
PPOs allow beneficiaries to seek out medical help from an unlimited pool of healthcare professionals, no network required. That means individuals with preferred family doctors, dentists, or other providers who aren’t on the PPO’s network can still visit their doctors and receive medical insurance to cover visits and treatments.
No Referrals Required
Unlike many healthcare plan types, PPOs don’t require individuals to receive referrals from doctors or other healthcare providers before they seek treatment from a specialist or hospital.
While PPOs do feature several benefits, they do have downsides, as well:
Extra Costs for Out-of-Network Healthcare Providers
PPOs offer financial assistance to individuals regardless of whether their healthcare professionals are in or out of the plan’s network. However, this benefit comes with a cost. Typically, if any policyholder wants to see a doctor who isn’t a part of the PPO’s network, they will be charged an extra sum.
One of the greatest benefits of a PPO is the lower deductibles and out-of-pocket expenses. However, to balance that out, they also feature higher monthly premiums. This can end up costing individuals and families a lot of money if they aren’t frequently using their medical benefits to offset the high premium.
Employee Benefits Made Easy
We hope you now know more about the pros and cons of High Deductible Health Plans (HDHPs) and PPOs. At Beckham Insurance Group, our knowledgeable and experienced employee benefits representatives are here to help make your benefits administration as easy and stress-free as possible. Contact us today to learn more about how we can help you build a competitive and comprehensive benefits program.