HDHP vs PPO Calculator
Compare an HDHP with an HSA against a PPO on total annual cost, including premiums, out-of-pocket, and the HSA tax break.
Want to understand the concept, not just the number? Read The Insurance Decisions Guide .
How it's calculated
Choosing between a high-deductible health plan and a PPO comes down to the total annual cost, not just the premium. The HDHP has a lower premium but makes you pay more out of pocket before coverage kicks in. The PPO costs more each month but covers care sooner. The tie-breaker is often the HSA, which only the HDHP allows, and its triple tax advantage.
Add up each plan. Take the default. The HDHP premium is 300 dollars a month, or 3,600 a year, plus 5,000 dollars of expected medical costs, which is under its out-of-pocket max, for 8,600 dollars. But contributing 4,000 dollars to an HSA saves 880 dollars in taxes at a 22 percent rate, dropping the real cost to 7,720 dollars. The PPO premium is 500 dollars a month, or 6,000 a year, plus 4,000 dollars of costs capped at its lower out-of-pocket max, for 10,000 dollars. The HDHP comes out about 2,280 dollars cheaper for the year.
The answer flips with your health. If you expect heavy medical spending, the PPO lower out-of-pocket max can win, since the HDHP makes you pay more before its coverage limits kick in. If you are generally healthy and can fund an HSA, the HDHP usually costs less and builds a tax-free medical nest egg on top. Enter your own premiums and expected costs to see which fits your year.
Assumptions
- Each plan cost is its annual premium plus expected out-of-pocket spending, capped at the plan out-of-pocket maximum. The HDHP also gets an HSA tax break at your marginal rate.
- Coinsurance between the deductible and the out-of-pocket max is simplified to full payment up to the max. Employer HSA contributions and premium differences invested are not modeled.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
Is an HDHP or PPO cheaper?
It depends on how much care you use. For healthy people with low expected costs, an HDHP usually costs less overall, especially with the HSA tax break. For those who expect heavy medical spending, a PPO lower out-of-pocket max can make it the cheaper choice.
Why does the HDHP come with an HSA?
Only a qualifying high-deductible health plan lets you contribute to a Health Savings Account, which offers a triple tax advantage. The HSA offsets the higher out-of-pocket exposure of the HDHP and can be invested to grow tax-free for future medical costs.
What if I have a chronic condition or expect surgery?
Then the PPO often wins. Heavy, predictable medical spending means you hit the deductible and out-of-pocket max regardless, and the PPO usually has a lower max. Run both with a realistic estimate of your costs to see the difference.
Should I count the HSA as savings or cost?
The HSA contribution itself is money you keep, not a cost, and its tax break lowers your real spending. This calculator counts only the tax break as a benefit to the HDHP. The bigger long-term advantage is investing the HSA, which the HSA vs FSA calculator explores.