HDHP vs PPO: How to Tell Which One Is Actually Cheaper

The high-deductible plan saves you $130 a month in premium and exposes you to $3,500 before the insurer pays for anything. Somewhere between “you never go to the doctor” and “you have surgery in March” those two facts swap places.

That somewhere is a number, it is specific to your two plans, and it takes about five minutes to find. Once you have it, the decision stops being a vibe about how healthy you feel and becomes one estimate you can actually make.

The Only Question That Matters

Strip both plans down to the pure trade — a lower premium against a higher deductible — and cost them across every level of spending:

Cost at charges X = net annual premium + min(out-of-pocket max, deductible + (X − deductible) × your share)

Deliberately leave copays out of this one. Copays muddy the comparison because they scale with visits rather than with dollars, and they belong in the full three-scenario costing instead. What you want here is the crossover — the point where the two lines meet.

The three plans from the full comparison:

The HDHP’s premium is net of $750 in employer HSA money. That $750 is real, it is cash in your account, and it belongs on this line — it is worth more than half the monthly premium gap on its own.

The Crossover: HDHP vs HMO 750

The crossover is $2,500. Below it the HDHP wins; above it the HMO wins and never gives the lead back.

Two details worth reading off that table rather than skipping:

The HDHP’s lead collapses long before the crossover. At $1,000 of charges it is ahead by $1,227. At $2,000 it is ahead by $327. The advantage is largest at zero and erodes dollar-for-dollar from the first bill, because below the deductible you are paying 100% of everything on the high-deductible plan while the HMO’s $750 deductible has already been satisfied.

$2,500 is a low bar. One specialist course, one round of imaging, one child’s minor procedure. Set against a household that thinks of itself as healthy, the crossover often sits below a single ordinary year’s spending — which is the part people misjudge.

The gap stops growing at $20,000 and then narrows. Both plans have capped out by then, so the difference settles at premium plus out-of-pocket max: $9,318 against $7,445. That $1,873 is your worst case, and it is the single most useful number in the whole exercise.

The Case Nobody Checks: A Plan That Cannot Win

Run the same test on the HDHP against the PPO 1500 and something different happens.

There is no crossover. The HDHP is cheaper at every level of spending from $0 to $40,000.

The PPO is dominated — beaten everywhere by a plan sitting in the same dropdown. Its premium is $2,310 higher and its out-of-pocket maximum is only $1,000 lower, so the extra premium can never be recovered. No estimate of next year’s health changes that, because there is no year in which it wins.

This is the argument for costing the whole menu rather than the two plans you happen to be torn between. A dominated plan is invisible from a premium list and obvious from a crossover test, and it is more common than it sounds — particularly with mid-tier PPOs that carry both a middling premium and a middling deductible.

Where a Single Break-Even Number Lies to You

A crossover is only trustworthy if the two lines cross exactly once. They do not always.

When the plan with the lower premium also has the higher out-of-pocket maximum — which is the usual shape of an HDHP against a copay plan — the lines can cross, separate, and then converge again once both plans cap out. In some pairings they cross a second time. Any tool that reports one break-even figure without counting the crossings is quietly wrong above the out-of-pocket maximums, which is precisely the region where being wrong is expensive.

The test is mechanical: walk the charge range in steps, record which plan is cheaper at each step, and count how many times the answer changes. One change, and the break-even number is the whole story. More than one, and only the full table is honest.

What to Do With the Number

You now have three figures for your own two plans. Use them in this order:

1. Estimate a normal year’s deductible-eligible charges from last year’s Explanation of Benefits statements. Not visits — dollars, at plan-allowed rates. Leave out in-network preventive care, which every ACA-compliant plan covers at 100%.
2. Compare that estimate to the crossover. Comfortably below it, the low-premium plan is the right answer. Comfortably above, it is not. Within a few hundred dollars either way, the plans are close enough that the cost difference is noise and the decision should be made on the non-cost factors — network, referral rules, prescriptions.
3. Look at the worst case separately. Premium plus out-of-pocket max is what a bad year costs on each plan. If you could not absorb the higher one, that matters more than any expected-value calculation, and it is a perfectly rational reason to pay more premium.

Then adjust for the HSA, and only then. An HSA-eligible plan lets you set money aside before tax — at a 34.65% combined marginal rate, $4,000 into the account costs about $2,614 of take-home pay. That discount is real, but it applies to money you would have spent on care anyway, so it moves the crossover rather than eliminating it. Sizing the contribution comes after the plan choice, not before it.

One last thing to check before you commit to the low-premium plan: run your regular prescriptions and must-keep doctors against its network and formulary. A single non-formulary drug can swamp a $1,452 premium advantage, and it is one of the mistakes that costs the most precisely because it is invisible until January.

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Open Enrollment & Benefits Comparison Planner — $14.99

The Break-Even tab is the one this page is about. Point it at any two of your five plans and it walks the charge range from $0 to $40,000, returns the crossover in dollars, and — the part most comparisons miss — counts how many times the two plans actually cross, warning you when a single break-even number would be misleading.

Around it, Plan Comparison holds five plans side by side straight off each Summary of Benefits and Coverage, with the IRS deductible and out-of-pocket checks run automatically. True Annual Cost costs every plan across a healthy, normal and bad year so you can see whether the ranking is stable — that is how the dominated PPO above became visible. Rx & Providers flags any plan that drops a drug or doctor you listed, and HSA Planner sizes the contribution once the plan is settled.

Fifteen tabs, 1,130 working formulas, and a worked sample already loaded — the three plans, the $2,500 crossover and every figure on this page. Works in Excel, Google Sheets, Numbers and LibreOffice. No macros, no add-ons.

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