Hdhp Vs Ppo Calculator

Once a year, open enrollment hands nearly every employee with job-based coverage the same confusing menu: a High-Deductible Health Plan (HDHP), which charges a low monthly premium but leaves you paying the first several thousand dollars of care yourself, or a PPO, which charges a much higher premium for a much lower deductible. Almost nobody models the trade-off; they guess, or copy last year's choice. This lesson turns it into arithmetic: both plans are a premium you always pay plus a deductible you pay only if you get sick, and the total cost of each is a simple function of how much care you use this year. The simulator sweeps that one number — your expected annual medical spending — and plots each plan's total cost, which rises linearly and then goes flat once you've hit the deductible (the plan's effective ceiling on what you owe). The two ahas: low, predictable spenders win on the HDHP, because its lower premium dominates when you rarely touch the deductible; heavy, predictable spenders can win on the PPO, because once both plans max out, the PPO's lower deductible can beat the HDHP's much higher one even after its one real edge — the HSA. An HDHP is the only plan of the two that unlocks a Health Savings Account, which lets the deductible you do pay come out of pre-tax dollars, a discount a PPO's spending never gets. At the default numbers ($150/mo, $4,500 deductible HDHP vs. $350/mo, $750 deductible PPO, 22% tax rate), the two plans break even at about $4,038 of yearly spending — below that, the HDHP wins; above it, the PPO does. The durable lesson: pick a health plan by looking at what you actually spent on care last year (or expect to this year), not by the sticker premium alone.

Free and interactive — no sign-up, nothing to install. Read the full lesson for the plain-language explanation.