If you’re trying to decide between a PPO vs HDHP for your health plan, we have some good news: You can have both!
That’s because preferred provider organizations (PPOs) and high-deductible health plans aren’t mutually exclusive categories. Some PPOs are HDHPs, and some HDHPs are PPOs.
So if you want a plan that doesn’t require you to get a referral from your primary care provider if you want to see a specialist (a PPO), and you want to make tax-free contributions to a health savings account (HSA), then you can enroll in a plan that accomplishes both.
In fact, depending on your circumstances, selecting a PPO that is also an HDHP may be an excellent idea.
Let’s take a closer look at the definitions, so you can understand what is meant by each of these terms.
What is a PPO?
A preferred provider organization, or PPO, is a common type of managed care plan.
Managed care plans contract with a limited set of doctors, clinics, hospitals, and other providers who agree to discount their prices in exchange for a steady stream of referrals from the plan. The idea behind managed care plans is to keep provider fees down and pass the savings on to plan members.
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Types of Managed Care Plans
Common types of managed care plans include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and exclusive provider organizations (EPOs).
| Feature | HMO (Health Maintenance Organization) | PPO (Preferred Provider Organization) | EPO (Exclusive Provider Organization) |
|---|---|---|---|
| Primary Care Physician (PCP) Requirement | Yes, a PCP is required and acts as a gatekeeper for referrals to specialists. | No PCP is required; patients can see specialists directly. | No PCP is required, but patients must stay within the provider network. |
| Referrals Needed for Specialists | Yes, referrals are typically required to see specialists. | No, referrals are not needed to see specialists. | No, referrals are not typically needed. |
| Network Restrictions | Must use providers within the HMO network, except in emergencies. | Can use both in-network and out-of-network providers but pay more for out-of-network care. | Must use providers within the EPO network, except in emergencies. |
| Cost | Typically lower premiums and out-of-pocket costs. | Higher premiums and out-of-pocket costs compared to HMOs. | Moderate premiums, generally lower than PPOs but higher than HMOs. |
| Flexibility | Limited flexibility; services must be coordinated through the HMO network. | Most flexible; wide choice of providers and no referrals needed. | Less flexible than PPOs; requires staying within the network for coverage. |
| Out-of-Network Coverage | Not covered (except for emergencies). | Covered, but with higher costs. | Not covered (except for emergencies). |
| Best For | Individuals seeking low costs and comprehensive, coordinated care. | Those who want flexibility in choosing healthcare providers and don’t mind higher costs. | Individuals seeking lower costs and are comfortable staying within a defined network. |
Note: Any of these three plan types may be a high-deductible health plan if it meets the other requirements for HDHPs.
What Makes PPOs Different?
What sets the PPO apart from the other plan types, however, is the additional flexibility. Unlike HMOs, PPOs allow you to see a specialist directly, without having to get a referral from your primary care doctor.
And unlike EPOs, PPOs allow you to use your plan with an out-of-network specialist, though you may have to pay a higher copay.
These are significant advantages for PPOs. However, these advantages typically come with higher premiums compared to HMOs and EPOs. But the premiums may be worth it in the event you need care since you’ll have more flexibility to choose your own doctors and hospitals.
What is an HDHP?
A high-deductible health plan (HDHP) is one that preserves your eligibility to contribute to a health savings account.
These plans also have higher premiums than most standard health insurance plans. However, the ability to make tax-free contributions to an HSA potentially makes up for the higher premiums, over time.
HDHP Requirements
For tax year 2025, all HDHPs must have a deductible of at least $1,650 for individual plans and at least $3,300 for family plans.
In addition, the plan’s out-of-pocket limit (the maximum amount you would pay out of pocket in a given year, not counting premiums) must be no higher than $8,300 for an individual plan or $16,600 for a family plan.
If you want an ACA-qualified marketplace plan that potentially qualifies for subsidies, and you want to maximize your freedom to choose your own doctor and see a specialist without a referral, you should consider a high-deductible health plan that is also a PPO.
Finding such a plan is very easy, and you don’t need to spend hours researching available health plans. All you need to do is contact an HSA for America Personal Benefits Manager. Our expert PBMs can help you quickly narrow down the plans available in your area, and find the one that best suits your needs and budget.
How Do HSAs Work?
The HSA is a tremendously powerful savings and wealth accumulation tool.
Its tax advantages are unmatched by any other savings vehicle in the tax code:
- Contributions to an HSA are tax-deductible,
- Growth within the account is tax-deferred
- Money can be withdrawn tax-free for qualified medical expenses (a 20% penalty, plus income tax, applies to non-qualified withdrawals)
- Unused HSA assets are available to supplement your retirement income penalty-free once you turn 65.
2025 HSA Contribution Limits
The HSA contribution limits for 2025 are $4,300 for self-only coverage and $8,550 for family coverage.
Those 55 and older can contribute an additional $1,000 as a catch-up contribution.
For most people, contributing as much as possible to an HSA is a great tax move. It lowers current-year income tax liability, and allows you to pay for present or future healthcare effectively tax-free!
Meanwhile, your contributions lower your modified adjusted gross income, and depending on your income, possibly increase the amount of health insurance subsidy you may qualify for under the Affordable Care Act.
HSAs are a great tax deal all around. But you cannot contribute to an HSA unless you are enrolled in a qualified HDHP.
Can I Get Preventive Care in an HDHP?
Some people worry about having to pay for routine screenings or preventive care in a high-deductible health plan.
The good news is, that most preventive services are covered under an HDHP without a deductible.
Who Should Consider HDHPs?
Overall, the combination of lower premiums and the tax advantages of HSAs can make HDHPs a cost-effective option––provided you can afford to make significant HSA contributions.
The HDHP’s higher deductible is not normally a problem for currently healthy individuals with few medical expenses. It’s a good idea to take the savings from the lower premiums and contribute as much as you can to your HSA.
Then let your HSA compound as long as you can, until you need the money to pay tax-free for out-of-pocket medical expenses.
With regular contributions, it won’t be long until you have enough sitting in your HSA to easily cover your deductible.
If you can’t afford to contribute to your HSA, you may be tempted to skip needed medical procedures and preventive care because of the HDHP’s higher deductibles. This potentially creates a vicious cycle and higher healthcare costs down the road.
So the HDHP is best for people in good health, who don’t expect to consume much healthcare in the near future, and who have the disposable income to contribute to their HSAs, or who have employers who contribute to HSAs on their behalf.
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Conclusion: PPO vs HDHP
PPOs are a good choice if you want to see specialists without needing to go to your primary care doctor for a referral.
HDHPs are a good choice if you can afford to contribute to an HSA (or you have an employer who will make contributions on your behalf). They’re also good if you have enough savings so you won’t have to skip or delay important medical care.
The right choice depends on your priorities—whether you value lower upfront costs or long-term savings and flexibility.
For personalized guidance in selecting the best plan for your situation, contact an HSA for America Personal Benefits Manager today.
It costs nothing for a consultation. And we can help you compare options and make the most of your healthcare dollars.
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