Planning for your population: HDHP and PPO

With employee benefits, there is no such thing as a one-size-fits-all solution. Different clients have unique populations with individual needs, and that’s why we offer a wide range of options for employers. One major question we field from clients is about High Deductible Health plans (HDHPs) and preferred provider organizations (PPOs). What are the differences between an HDHP and PPO? What are the benefits of an HDHP over a PPO, and vice versa? The short answer is: there’s no short answer to these questions. What clients really need to consider is what will work for their members.

HDHPs: Risk and Reward

High Deductible Health Plans offer members the flexibility to pay a lower monthly premium, balanced out by higher deductibles for care, just like the name implies. For members who have chronic health conditions, this set up can lead to significantly higher out-of-pocket costs, as the amount they have to pay before the plan coverage kicks in can be significant. However, populations with younger, healthier members may see major savings under normal circumstances.
 
To help offset the risk posed by the costs of catastrophic care, HDHPs also allow members to deposit money in a health savings account (HSA). These member-owned accounts offer members a tax-advantaged way to set aside money for future healthcare bills and are only available to individuals enrolled in Qualified HDHPs. For 2023, IRS regulations[1] define qualifying plans as those with a minimum $1,500 deductible and $7,500 out-of-pocket maximum for individuals, or a minimum $3,000 deductible and $15,000 out-of-pocket maximum for families. For members who don’t normally hit those limits, the combination of an HDHP and HSA can be an effective way to not only save money but build wealth as well.
 

PPOs: Safety in Numbers

While HDHP solutions offer an attractive path for members with lower healthcare costs, a PPO may be a better fit for members with higher utilization rates. PPOs more evenly balance monthly premiums against deductibles and out-of-pocket maximums, keeping costs at a more predictable level for members.
 
Both PPOs and HDHPs focus on keeping member costs manageable by negotiating preferred rates with a network of providers, such that members get a much better deal by staying within their network rather than venturing elsewhere. Members may need to double check with their providers to make sure they are included in the network before opting to pay out-of-pocket.
 

Which is right for your client?

Employers will undoubtedly have questions about which of these plan options will best serve their members and their business goals. Figuring out the right balance is something we can help with. Our people have the information and industry experience to assist clients in building better benefits for their people.
 
Connect with us to get the conversation started.