Difference Between HSA and PPO

In today’s world, having health insurance and other plans, privileges, and provisions has become an essential part. Health issues are unavoidable. Thus, these health insurance plans and savings accounts help in saving some money for those unforeseen circumstances of medical emergencies. In such scenarios, plans and organizations such as HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), EPO (Exclusive Provider Organization), POS (Point of Service) come into existence.

HSA vs PPO

The main difference between HSA and PPO is that HSA refers to a savings account where people can accumulate money and use it at times of medical emergencies. In contrast, PPO refers to a network of healthcare facilitators & providers who offer healthcare services at low cost & discounts. The monthly premium expenses for the management of HSA accounts are high. However, in the case of PPO, the monthly premium expenses are too low in comparison to traditional health plans.

HSA vs PPO

HSA is a savings account where individuals can save money for times of medical emergencies. All the contributions, savings, withdrawals in these accounts aren’t taxable. Moreover, in case of being unleft, the amount saved gets accumulated and rolls over to the upcoming years. A person with an HDHP plan can open an HSA account. 

PPOs are healthcare providers and facilitators who provide healthcare facilities and services to individuals in the network at affordable prices and discounts. Availing the services within the network of PPA would cost low for an individual. Moreover, the expenses will be shared between healthcare providers and the individual. However, if the person avails services and facilities outside the network of PPA, then the providers don’t bear the patient’s expenses.

Comparison Table Between HSA and PPO

Parameters of ComparisonHSAPPO
DefinitionHSA refers to a conventional savings account where an individual can save and manage their hospital expenses and gain healthcare insurance coverage under HDHPs.PPO refers to the network of healthcare providers & facilitators offering health insurance plans just like HMOs. 
EligibilityAn individual needs to be under the umbrella of HDHPs in order to own an HSA account.Generally, employers offer PPO plans. Sometimes, individuals also purchase PPO plans from Healthcare.gov.
Provider NetworkHSA is a savings account and thus has no provider network. It just acts like a savings fund, which an individual can use at any time. PPO has a network of healthcare providers & facilitators where individuals can avail themselves of health care facilities with incentives and discounts.
AdvantagesThe advantages of HSA include:The contributions, withdrawals, and account management funds are non-taxable.HSA also has many investment potentials such as in stocks and investment funds such as mutual funds. The advantages of PPO includes:It’s more flexible as you don’t need any kind of referrals or connections with PCP.It has a specialized network of healthcare providers & facilitators who offer discounts to eligible persons.
DisadvantagesThe disadvantages of using HSA include:People who fall under any Medicaid or Medicare coverage aren’t eligible for HSA. Persons with HDHPs can only have an HSA.Sometimes, maintenance fees are even charged for the growth of the account.The disadvantages of using PPO includes:The expenses included in monthly premium and out of pocket are high.Sometimes, PPO plans don’t include basic Medicare expenses.

What is HSA?

HSA, standing for Health Savings Account, is a convenient savings account by which people can make some savings for handling their medical expenses well and gaining medical insurance coverage under HDHPs (high-deductible health plans). As HSAs fall under the ownership of individuals, they won’t stand taxable by federal income tax. Moreover, these funds stack upon and get rolled over to the upcoming years when saved unused.

In order to be eligible for opening an HSA account, an individual needs to be under the umbrella of HDHPs (high-deductible health plans), where the government has some minimum deductible amount. This deductible amount is updated in various years by the government. People who fall under any Medicaid or Medicare coverage aren’t eligible for HSA. Moreover, people who are dependent on someone else’s tax returns are also not eligible to open an HSA. 

HSAs over many tax advantages. Firstly, the contributions made through HSA are tax-deductible, in cases where the individuals open the account themselves, and is pre-tax, in cases where the employer opens it. Moreover, no taxes are levied on any kind of withdrawals, deposits, or account maintenance. HSAs also help in reducing the tax burden as the funds deposited in HSAs are non-taxable. HSA also has many investment potentials. People also invest funds of HSA in stocks and investment funds such as mutual funds. 

What is PPO?

PPO, the acronym for Preferred Provider Organization, refers to some healthcare providers & facilitators offering health insurance plans just like HMOs (Health Maintenance Organization). PPOs have a connected network of healthcare providers and facilitators ranging from physicians to labs and therapists to hospital equipment providers and surgery centers. 

When an individual uses the healthcare services to visit any of these healthcare providers falling under the network of PPO, he gets some incentives for his medical coverage. Moreover, PPO also has the feature of cost-sharing, where these healthcare providers share half of the medical expenses. This way, they keep individuals restricted to a group of specialized and top skilled health care providers and help them financially in choosing the best medical service. 

PPOs give an individual the freedom to choose the medical health provider, proving to be more expensive than other managed health care options. Moreover, in PPOs, the patient doesn’t need to be connected or have the referral of a PCP, a physician for primary care. In PPO, you don’t need to have any referral from PCP or a PCP. Moreover, it’s more flexible and has more control over your choices. However, there are some downsides to using PPO. The expenses included in monthly premium and out of pocket are also high. 

Main Differences Between HSA and PPO

  1. HSA refers to a conventional savings account where an individual can save and manage their hospital expenses and gain healthcare insurance coverage under HDHPs. Whereas PPO refers to the network of healthcare providers & facilitators offering health insurance plans just like HMOs. 
  2. An individual needs to be under the umbrella of HDHPs in order to own an HSA account. But, generally, employers offer PPO plans. Sometimes, individuals also purchase PPO plans from Healthcare.gov.
  3. HSA is a savings account and thus has no provider network. It just acts like a savings fund, which an individual can use at any time. On the other hand, PPO has a network of healthcare providers & facilitators where individuals can avail health care facilities with incentives and discounts.
  4. The contributions, withdrawals, and account management funds are non-taxable. HSA also has many investment potentials such as in stocks and investment funds such as mutual funds. On the other hand, PPO is more flexible as you don’t need any kind of referrals or connections with PCP. Moreover, it has a specialized network of healthcare providers & facilitators who offer discounts to eligible persons.
  5. HSA has some minor disadvantages, such as people who fall under any Medicaid or Medicare coverage aren’t eligible for HSA. Persons with HDHPs can only have an HSA. Sometimes, maintenance fees are even charged for the growth of the account. On the other hand, The expenses included in PPO’s monthly premium and out of pocket are high. Sometimes, PPO plans also don’t include basic Medicare expenses.

Conclusion

All health insurance plans and service providers have various privileges and features. While some offer out-of-network care and cost-sharing sharing, some demand paperwork, PCP, referrals, and pre-authorization. Before choosing a plan, it’s essential to know the plan’s details. It’s important to know the plan’s features, advantages, and disadvantages. 

In the end, it depends on the comfort zone, restrictions, and requirements of the person. Plans which offer more freedom are more preferable. Moreover, keep in mind to choose a plan which has low maintenance costs and proper in-network and out-network costs and privileges. 

References

  1. https://europepmc.org/article/med/31318506
  2. https://link.springer.com/article/10.1007/BF00385676
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