PPO vs HDHP + HSA: How to Choose a Health Plan at Open Enrollment

Life in the USOct 18, 2026 · 8 min read

Open enrollment usually gives you a benefits guide with two to four plans and about a week to decide. The plans are built so that no single number tells you which is cheaper: one has a lower premium, another a lower deductible, a third better copays. This guide shows how to turn those numbers into one figure per plan, explains PPO, HMO, EPO and HDHP in plain terms, and lists the 2026 and 2027 HSA and FSA limits with their IRS sources. Our free Health Plan Picker does the arithmetic for you in the browser.

PPO, HMO, EPO, POS and HDHP in one minute

• PPO: see any doctor, no referrals; in-network care is cheaper, and out-of-network care is partly covered.
• HMO: in-network only, and your primary care doctor refers you to specialists.
• EPO: in-network only, usually without referrals. HMOs and EPOs generally don't cover out-of-network care except emergencies.
• POS: HMO-style referrals with some out-of-network coverage.
• HDHP: a high deductible health plan whose deductible is at least the IRS minimum. It is the only kind of plan that lets you contribute to an HSA. An HDHP can be built on a PPO or HMO network, so "HDHP vs PPO" is really a question about cost structure.

Network matters before money does. If your doctor or a hospital you rely on is not in a plan's network, that plan may be the wrong choice regardless of price. Check each plan's provider directory first.

The four numbers that decide your cost

• Premium: what comes out of every paycheck, whether or not you see a doctor.
• Deductible: what you pay for covered care each year before the plan starts sharing costs.
• Copay and coinsurance: a flat amount per visit (say $30) or your percentage of the bill after the deductible (say 20%). On most HDHPs everything except preventive care goes through the deductible first.
• Out-of-pocket maximum: the most you pay for covered in-network care in a year (deductible, copays and coinsurance combined). After that the plan pays 100%. Premiums don't count toward it.

In-network preventive care, such as an annual checkup, is covered without cost sharing under the ACA, on HDHPs as well. Copy every figure from the plan's Summary of Benefits and Coverage (SBC), a standard document every plan has to give you.

Compare total yearly cost, not deductibles

For each plan, work out:

Net yearly cost = premiums for the year + your out-of-pocket for care − employer HSA (or HRA) money − tax saved on your HSA or FSA contributions

Do it for three years you might have: a light year (a checkup and a couple of prescriptions), an expected year, and a heavy year (an ER visit, a surgery or a hospital stay). Then compute the worst case: premiums + out-of-pocket max − employer HSA money − tax saved. The worst case is the number that tells you how bad a bad year can get.

Here is what that looks like with the two made-up example plans the Health Plan Picker starts with, for self-only coverage paid every two weeks (26 paychecks), with no employee HSA contribution so taxes stay out of it. The PPO costs $80 per paycheck with a $750 deductible and a $4,000 out-of-pocket max. The HDHP costs $25 per paycheck with a $2,000 deductible, a $5,000 out-of-pocket max and $750 a year from the employer into the HSA. The care prices are the app's placeholder prices, not real data.

The HDHP's net figures already subtract the $750 employer contribution. A quick test explains the result: the HDHP saves $1,430 in premiums and adds $750 of employer money, a $2,180 head start, while its out-of-pocket max is only $1,000 higher. When the head start is bigger than the out-of-pocket gap, the HDHP costs less even in the worst year. Real plans can come out the other way, especially when the PPO premium is close to the HDHP's or the employer adds little or no HSA money, so run your own numbers.

Two cautions. On family coverage, many plans have an embedded per-person deductible, which can make your real cost lower than a simple pooled calculation. And out-of-network care, balance billing and services the plan doesn't cover are not limited by the out-of-pocket max.

HSA: limits for 2026 and 2027

An HSA is your own account. Money goes in before tax (through payroll it also skips FICA), grows tax-free, and comes out tax-free for qualified medical expenses in any year. Unspent money rolls over and stays with you if you change jobs.

The HSA limit covers you and your employer together. If your employer puts in $750 on self-only coverage in 2027, you can add up to $3,750. Excess contributions face a 6% excise tax unless withdrawn.

To contribute you must be covered by an HSA-eligible HDHP and have no other health coverage. A spouse's regular PPO or a general-purpose health FSA counts as other coverage; dental, vision and limited-purpose FSAs don't. You also can't be enrolled in Medicare or claimed as someone else's dependent. From 2026, bronze and catastrophic Marketplace plans count as HSA-compatible, and direct primary care memberships no longer disqualify you (IRS Notice 2026-5).

State tax is the exception. California does not follow the federal HSA rules, so contributions are not deductible on the state return and earnings are taxed each year. New Jersey's instructions exclude only Archer MSAs, so NJ residents should expect state tax on HSA contributions as well.

Health FSA and dependent care FSA

• Health FSA, 2026: up to $3,400. It is mostly use-it-or-lose-it: a plan may let you carry over up to $680 into the next year, or give a grace period of up to 2½ months, but not both (or neither). The full year's amount is available from the first day of the plan year. The IRS had not published the 2027 limit as of October 18, 2026.
• With an HSA: only a limited-purpose FSA (dental and vision) is allowed.
• Dependent care FSA: $7,500 per household from 2026 ($3,750 if married filing separately), up from $5,000. It pays for daycare, preschool, before- and after-school care or summer day camp so you can work, not medical bills, and the same expense can't also be used for the child and dependent care credit.

Because unspent FSA money can be forfeited, size a health FSA to costs you are confident about, such as prescriptions, glasses or a planned procedure.

Marketplace plans and visa holders: what changes in 2027

HealthCare.gov open enrollment for 2027 coverage runs November 1, 2026 to January 15, 2027; enroll by December 15 for coverage starting January 1. State-run exchanges set their own dates. Employer open enrollment dates are set by your employer.

If you are lawfully present, which HealthCare.gov says includes people with valid nonimmigrant visas, you can buy a Marketplace plan. The change is in subsidies. From January 1, 2027, premium tax credits and cost-sharing reductions are limited to U.S. citizens and nationals, green card holders, Cuban/Haitian entrants and COFA migrants. Other lawfully present people, such as most H-1B and F-1 holders, can still enroll but pay full price. Separately, the enhanced credits of 2021 to 2025 have expired.

For citizens and green card holders, employer coverage still blocks the credit if it meets minimum value and your share of the cheapest self-only plan is no more than 9.96% of household income in 2026, or 10.22% in 2027.

Changing jobs mid-year? Losing job-based coverage opens a 60-day special enrollment period on the Marketplace, and an employer plan must give at least 30 days to enroll after events such as marriage, birth or losing other coverage. If you were laid off on a visa, our guide to the H-1B 60-day grace period covers COBRA deadlines too.

How the Health Plan Picker helps

Enter two to four plans from your benefits guide in the Health Plan Picker: premium per paycheck, deductible, out-of-pocket max, coinsurance, copays and any employer HSA or HRA money. It shows each plan's net yearly cost for a light, expected and heavy year or your own list of visits, the worst case, a chart of cost as medical bills grow, and the bill level where two plans break even. An HSA calculator shows how much more you can contribute after your employer's share, and every limit links to its IRS or CMS source. It works in English and Chinese, saves only in your browser, and can produce a share link that carries plan numbers but never your tax rate or usage.

FAQ

Is an HDHP with an HSA cheaper than a PPO?

It depends on your numbers, not the plan type. Add up a year of premiums plus what you expect to pay for care, then subtract any employer HSA contribution and the tax you save. Do the same for a bad year using each plan's out-of-pocket max. If the HDHP's premium savings plus employer HSA money are larger than the gap between the two out-of-pocket maximums, the HDHP costs less even in a worst-case year.

What are the HSA contribution limits for 2026 and 2027?

For 2026 the limit is $4,400 for self-only HDHP coverage and $8,750 for family coverage (IRS Rev. Proc. 2025-19). For 2027 it is $4,500 and $9,000 (Rev. Proc. 2026-24). People 55 or older can add $1,000. The limit includes your employer's contributions.

What is the health FSA limit for 2026 and 2027?

The 2026 health FSA limit is $3,400, and a plan that allows carryover can let you carry up to $680 into the next year (Rev. Proc. 2025-32). As of October 18, 2026 the IRS had not published the 2027 limit.

Can I have an HSA and an FSA at the same time?

Not a general-purpose health FSA, which counts as other coverage and makes you ineligible to contribute to an HSA. You can pair an HSA with a limited-purpose FSA for dental and vision, and a dependent care FSA is a separate account that does not affect HSA eligibility.

Can H-1B or F-1 visa holders get ACA Marketplace subsidies in 2027?

They can still buy Marketplace plans if they are lawfully present, but from January 1, 2027 premium tax credits and cost-sharing reductions are limited to U.S. citizens and nationals, green card holders, Cuban/Haitian entrants and COFA migrants. Other lawfully present people, including most H-1B and F-1 holders, pay full price.

Sources

• IRS Rev. Proc. 2025-19: 2026 HSA limits and HDHP definition (IRB 2025-21)
• IRS Rev. Proc. 2026-24: 2027 HSA limits and HDHP definition (PDF)
• IRS Rev. Proc. 2025-32: 2026 health FSA limit and carryover (PDF)
• IRS Publication 969: HSAs and other tax-favored health plans
• IRS Publication 15-B: dependent care assistance limit
• IRS Notice 2026-5: bronze and catastrophic plans and direct primary care (PDF)
• CMS: 2027 maximum out-of-pocket guidance (PDF)
• HealthCare.gov: dates and deadlines for 2027 coverage
• HealthCare.gov: coverage for lawfully present immigrants
• CMS: noncitizen eligibility for APTC and CSRs, plan year 2027 (PDF)
• IRS Rev. Proc. 2026-26: 2027 required contribution percentage (PDF)
• HealthCare.gov: preventive care benefits
• California FTB Publication 1001 (2025): HSA nonconformity (PDF)

Last updated 2026-10-18. This guide is general information, not legal, tax, insurance or financial advice. Your plan documents and your employer's benefits team are the final word; IRS and HealthCare.gov rules change.