HDHP + HSA or PPO? Run your open-enrollment numbers at three claim levels

By DecisionSheet · Updated September 21, 2026 · 2026 tax figures

A benefits menu invites a wrong reading: that the PPO is the good plan and the high-deductible plan the cheap one. What separates them is where the cost sits. Premiums are fixed — twelve payments made whether or not anyone sees a doctor. Deductible and coinsurance are variable, paid only against claims, up to a ceiling.

This page runs two offers through the calculator. In the first the PPO costs $180 a month more and the employer puts $1,000 a year into the health savings account (HSA); it favors the high-deductible plan at every claim level tested. In the second the gap is $40, no employer money arrives and less goes into the HSA, and the PPO wins past $1,900 of claims. Both links open the calculator with the exact inputs behind every figure.

What actually differs between the two plans

Four things; the fourth exists on one side only.

Premium. $280 a month against $100 for the HDHP — a high-deductible health plan, which for 2026 the IRS defines as one with an annual deductible of at least $1,700 for self-only coverage and out-of-pocket expenses capped at $8,500 (Rev. Proc. 2025-19).

Deductible. $1,000 against $3,200: claims paid in full before the plan pays anything. Above it both plans leave 20% of each approved bill to the member, the coinsurance share.

Out-of-pocket maximum. The most a plan can cost in claims across a year, premiums excluded: $4,000 against $6,000. That difference, $2,000, is the worst the HDHP's medical bills can ever be relative to the PPO's. Packets print both ceilings but not the subtraction, which settles the comparison once it is set against the head start below.

HSA eligibility. Only HDHP enrollment can open an HSA, whose contributions escape income tax — and Social Security and Medicare tax when they run through payroll — and whose withdrawals for qualified medical expenses are untaxed.

The head start

Three amounts settle before a single claim:

• $2,160 of premium savings — the $180 monthly gap, twelve times.
• $1,000 from the employer, into the HSA.
• $1,076 of tax not paid.

Together, $4,236.

That tax figure is the member's own contribution — $4,400 into the account less the employer's $1,000, so $3,400 — times 31.65%: the 24% marginal rate entered in the calculator plus the 7.65% of Social Security and Medicare tax that payroll contributions escape (Publication 15-B, Table 2-1). The employer's share is never taxed, so it is not counted twice; it does count against the annual limit, which is why the calculator asks for the total going in (Publication 969).

Three kinds of year

Open this scenario

The advantage is widest in the light year, $4,236, narrowest in the bad one, $2,236, and never crosses zero. The light-year total is negative because $600 of claims plus the premiums came to less than the seed and the tax saving together: the account ends the year holding more than the plan cost. The bad year does not break the high-deductible plan, because both out-of-pocket maximums cap the damage — $4,000 of medical spending on the PPO, $6,000 on the HDHP. Past that, extra claims cost nothing on either plan, so the comparison can never be worse than $2,000 against a $4,236 head start.

When the PPO wins

The same model, three changes. The premium gap narrows from $180 a month to $40. The employer contributes $0. The member puts $1,200 into the HSA rather than $4,400, at a 12% marginal rate rather than 24%. The plan designs are untouched.

Open this scenario

The premium gap does most of the damage: $2,160 of annual savings becomes $480. Losing the employer's $1,000 is next, and the tax shield falls from $1,076 to $236. The head start ends at $716 — smaller than the $2,000 the out-of-pocket maximums differ by, so the bad year now goes to the PPO by $1,284. The average year goes to the PPO for a different reason: $3,000 of claims sits below the $3,200 HDHP deductible and is paid in full, against $1,400 on the PPO.

The break-even claim level

The break-even is the claim total at which the plans cost the same: below it the HDHP is cheaper, above it the PPO.

On the second offer it is $1,900, below that plan's $3,200 HDHP deductible: the PPO pulls ahead while claims are still being paid in full.

The first offer has none. The HDHP's medical bills can exceed the PPO's by at most $2,000, and the head start is $4,236, so the PPO never overtakes it. The cheaper plan is the same in a light year and a catastrophic one, so next year's claims need no guessing.

To use one, estimate a normal year from last year's explanation-of-benefits statements. Add the allowed amounts — the negotiated rate the plan recognizes (HealthCare.gov) — not the billed charges, because deductible and coinsurance are calculated on the allowed amount.

What to type in from your own enrollment packet

• Monthly premium, each plan — the employee-only payroll deduction, not the full premium.
• Deductible and coinsurance — in-network, individual.
• Out-of-pocket maximum — in-network, individual. Premiums do not count toward it (HealthCare.gov).
• Employer HSA contribution — the year's total, however it is paid.
• Total annual HSA contribution — what will actually go in, the employer's share included.
• Marginal tax rate — the rate on the last dollar of income, federal plus state.

Assumptions and limits

• Claim levels are fixed at the three amounts in the tables; the break-even covers everything between.
• Both plans are modeled as deductible, then coinsurance, up to the out-of-pocket maximum. Copays, separate prescription tiers and out-of-network accumulators are not modeled.
• The tax saving applies the marginal rate entered as a flat rate on the member's own contribution, plus 7.65% when contributions go through payroll. A direct contribution gets the income-tax deduction but not the FICA part.
• Contribution limits are the 2026 figures ($4,400 self-only, $8,750 family). A plan year starting in January 2027 uses the 2027 limits instead, $4,500 and $9,000 (Rev. Proc. 2026-24). Enter the contribution actually planned.
• Self-only figures throughout. Family coverage changes every input.
• The employer seed is counted at face value, though it arrives in the HSA, where it is tax free only when spent on qualified medical expenses.
• HSA eligibility has conditions the calculator does not check: HDHP coverage, no other health coverage beyond the permitted exceptions, not enrolled in Medicare, and not claimable as someone else's dependent (Publication 969).
• The comparison credits the seed and the tax saving in the year they occur; later compounding is a separate projection in the calculator.

Method and sources

The model is calculateHsaVsPpo in the HSA vs. PPO calculator: deductible, then coinsurance, then out-of-pocket maximum, run at three claim levels, with the premium difference, employer seed and HSA tax shield credited against the high-deductible plan. The break-even walks claim totals in $100 steps up to $50,000, and reports none when the HDHP stays cheaper throughout.

• Rev. Proc. 2025-19 — the 2026 HSA contribution limits and the tests a plan must meet to be an HDHP.
• Rev. Proc. 2026-24 — the 2027 figures.
• Publication 969 — who may contribute, how employer contributions count against the limit, and which withdrawals are tax free.
• Publication 15-B, Table 2-1 — HSA contributions are exempt from Social Security and Medicare tax up to the limits.
• Topic no. 751 — the 6.2% Social Security and 1.45% Medicare employee rates behind the 7.65% figure.

Open this scenario in the calculator

All figures on this page come from the HSA vs. PPO calculator. Change any input there and the numbers update.