Compare HDHP+HSA vs PPO total annual cost.
Best plan
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HDHP+HSA net cost
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PPO total cost
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Your breakdown
Updates live as you type| Component | HDHP + HSA | PPO |
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Premiums are the trap, total cost is the answer
Every open enrollment, people pick the plan with the lower deductible and feel responsible. That instinct is usually wrong. The number that should drive your decision is not the premium and it is not the deductible, it is the all-in cost of a year: what you pay in premiums no matter what, plus what you pay out of pocket for the care you actually use, minus any tax break the plan unlocks. This tool adds those pieces for both a high-deductible health plan paired with a Health Savings Account and a traditional PPO, then tells you which one costs less for the level of medical spending you expect.
The quiet edge of the HDHP is the HSA. Contributions go in pre-tax, so every dollar you route through it is discounted by your marginal income tax rate plus the 7.65% you would otherwise lose to Social Security and Medicare payroll tax when you contribute through payroll. That combined haircut is why the calculator treats the HSA contribution as a real reduction in the cost of the HDHP, not a side note.
A moderate year of medical spending
Take the defaults: an HDHP with a $3,000 premium, a $3,500 deductible, a $4,000 HSA contribution, and a 32% marginal rate, against a PPO with a $6,000 premium and a $1,000 deductible, with $3,000 of expected medical use. Here is the comparison the tool builds.
The HDHP wins by $2,786 here. Note one detail in the out-of-pocket line: the full $3,000 of care sits below the HDHP's $3,500 deductible, so no coinsurance kicks in on that plan. On the PPO, $1,000 hits the deductible and the remaining $2,000 is split at the plan's coinsurance, leaving $1,200. The PPO covers more of the bill, but its $3,000 premium head start, doubled, plus the HSA tax break, is too much ground to make up.
Where this model keeps things simple
Two simplifications are worth flagging so you read the result with the right caution. First, the calculator does not cap out-of-pocket spending at a maximum, and it uses fixed coinsurance of 20% on the HDHP and 10% on the PPO. Real plans publish their own coinsurance percentages and a hard out-of-pocket maximum that stops your spending in a catastrophic year, so a true worst-case comparison should use your actual plan documents. Second, the model takes your expected medical use as a single point estimate. Health spending is lumpy and unpredictable, which is the real argument for stress-testing both a healthy year and a bad year.
This is built for the employee staring at a benefits portal in November trying to choose. The classic mistake is anchoring on the deductible and assuming the low-deductible PPO is safer. For a healthy person with light, predictable use, the HDHP usually wins on total cost, and the HSA doubles as a stealth retirement account because the money rolls over forever and can be invested. Practical tip: even if you expect a heavy year, run both scenarios here, because the premium difference alone often decides it before any care is used.
At what level of medical spending does the PPO start to win?
Push the expected medical use figure up and watch the two net costs converge, then cross. The PPO only pulls ahead once your care is heavy enough that its richer coverage outweighs its much larger premium and the HDHP's HSA tax break. Because the HDHP here starts $3,000 cheaper on premium and gains roughly $1,586 from the HSA, you generally need a high-spend year before the PPO is the cheaper choice. Enter your own numbers and the calculator finds your personal break-even.
Should I count the employer HSA contribution too?
Yes, and it tilts the math further toward the HDHP. Many employers seed the HSA with their own money, often a few hundred to over a thousand dollars. That is free money that exists only on the HDHP side and lowers its effective cost further. If your employer contributes, fold their dollars into your view of the HDHP, since the PPO offers no equivalent. The HSA also has no use-it-or-lose-it rule, unlike a flexible spending account, so unspent balances are never forfeited.