Key takeaways:
A high-deductible health plan (HDHP) offers lower monthly premiums, but a higher deductible. Preferred provider organization (PPO) insurance typically has higher monthly premiums with a lower deductible.
When choosing between an HDHP and a PPO, consider your health status, expected medical needs, and financial situation.
An HDHP may be a good option if you’re generally healthy, while a PPO might be better for those needing frequent medical care.
If you’re shopping around for health insurance, there are several options to consider. A high-deductible health plan (HDHP) and preferred provider organization (PPO) insurance are two common types of plans that you may want to explore. Most people with employer-based health insurance in the U.S. either have an HDHP or PPO. In 2025, nearly half of U.S. employees were covered by PPO plans, while about 33% were enrolled in HDHPs.
Both types of plans have pros and cons, but the best choice for you will depend on factors such as your healthcare needs and budget.
Main differences between HDHPs and PPOs
Feature | HDHPs | PPOs |
Premiums | Lower monthly payments | Higher monthly payments |
Deductibles | Usually higher than PPO deductibles | Generally lower than HDHP deductibles |
HSA eligible | Yes | No |
What is HDHP insurance?
HDHPs offer high deductibles in exchange for lower premiums. To qualify as an HDHP, a plan must meet the minimum deductible and maximum out-of-pocket limits set by the federal government.
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For example, in 2026, an HDHP must have a minimum deductible of $1,700 for individual coverage or $3,400 for family coverage. The yearly out-of-pocket costs (including deductibles, copays, and coinsurance — but not premiums) can't exceed $8,500 for an individual or $17,000 for a family. However, many HDHPs set their deductibles much higher than the minimum — and sometimes as high as the maximum out-of-pocket costs.
Like most health plans, HDHPs cover certain in-network preventive care services even if you haven’t met your deductible. But what’s covered may depend on your age and health risks.
Some examples of preventive services that are typically covered by HDHPs without meeting your deductible include:
Mammograms for breast cancer screening
Obesity screenings and counseling
HDHPs can come in various forms, including health maintenance organization (HMO), point of service (POS), and exclusive provider organization (EPO) plans. Starting in 2026, bronze and catastrophic plans on Affordable Care Act (ACA) marketplaces qualify as HDHPs, which makes them eligible for health savings accounts (HSAs). We will discuss this more later.
What is PPO insurance?
PPOs are the most common type of health insurance plan structures. They typically offer lower deductibles than HDHPs, but often have higher monthly premiums.
Unlike HDHPs, PPOs don't have federally mandated minimum deductibles. However, they must comply with out-of-pocket maximums — the limit enrollees can pay for in-network covered services in a year. For 2026, these out-of-pocket maximums are $10,600 for an individual and $21,200 for family coverage. Certain older plans and those exempt from ACA regulations don’t have to comply with these out-of-pocket maximums.
Like HDHPs, PPOs cover preventive care services before you meet your deductible.
What’s the difference between HDHP and PPO plans?
To help you better understand the difference between HDHP and PPO plans, here’s a chart comparing key features of these two health insurance options.
HDHPs vs. PPOs
Feature | HDHPs | PPOs |
Premiums | Lower monthly payments | Higher monthly payments |
Deductibles | Usually higher than PPO deductibles | Generally lower than HDHP deductibles |
Copays | May apply for certain services after the deductible is met | May apply for certain services even before the deductible is met |
Coinsurance | Typically applies for certain services after the deductible is met | May apply for certain services before or after the deductible is met |
Out-of-pocket maximums | Lower than PPO maximums | Higher than HDHP maximums |
Preventive care services | Generally 100% covered before meeting the deductible | Generally 100% covered before meeting the deductible |
Provider network | Depends on the plan | Generally broad choice of healthcare professionals and facilities |
Out-of-network services | Depends on the plan | Often covered, but at a higher out-of-pocket cost |
Primary care physician required | Depends on the plan | Not required |
Referral for specialty services and other care required | Depends on the plan | Not required |
HSA eligible | Yes | No |
FSA eligible | Limited-purpose FSA only | Yes |
Available through ACA marketplaces | Yes | Yes |
Pros and cons of a high-deductible health plan
If you have enough money to cover unexpected medical expenses, an HDHP could be a good choice for you. Here are a few advantages of an HDHP:
Pairing with an health savings account (HSA): You can only contribute to an HSA during the months you were enrolled in a qualified HDHP. An HSA is a triple-tax-advantaged account that allows pretax contributions, tax-free earnings growth, and tax-free withdrawals for qualified medical expenses. Unused HSA funds can be rolled over annually to help cover future healthcare expenses.
Paying lower monthly premiums: In 2025, employees with individual HDHP coverage paired with an HSA paid an average monthly premium of about $720.
Receiving employer contributions to your HSA: On average, employers in 2025 contributed around $690 to individual HSAs and $1,296 to family HSAs.
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While enrolling in an HDHP can reduce your monthly premiums, it’s important to be aware of the potential drawbacks, such as:
Paying higher out-of-pocket costs: Because HDHPs typically have lower monthly premiums but higher deductibles, you’ll likely pay more upfront for medical care before your insurance starts covering the costs.
Delaying necessary care: You may be tempted to postpone or skip medical care because of the high out-of-pocket costs, which can lead to more serious and higher-cost health issues in the future.
Facing potential financial risk: If you experience an unexpected illness or injury, you could be responsible for paying thousands of dollars out of pocket before your insurance begins cost-sharing.
Pros and cons of a preferred provider organization plan
A PPO might make more sense if you have ongoing health issues and need frequent medical care. Here are a few benefits of a PPO:
Having a lower deductible: A PPO plan will start covering your medical expenses sooner than an HDHP because the deductible is lower.
Not needing referrals to see specialists: You can visit any specialist without needing a referral from your primary care physician or healthcare professional.
Receiving coverage for out-of-network care: Generally, a PPO will allow more flexibility to have out-of-network care covered. But if you go out of network, you'll likely pay more and you may be subject to balance billing, which means you could be responsible for paying the difference between your charges and what the insurance plan picks up.
However, it’s important to consider these potential disadvantages before choosing a PPO plan:
Paying higher monthly premiums: In 2025, the average monthly premium for employees with individual PPO plans was about $818.
Not having access to an HSA: With a PPO plan, you don’t have access to an HSA. You can contribute to a flexible spending account (FSA) if your employer offers one, but you’ll have a lower maximum contribution limit compared to an HSA. You'll also need to spend the money before the deadline or you’ll lose any remaining funds, except for a rollover amount which is limited to $680 in 2026 if allowed by your employer.
Having a separate deductible for out-of-network care: PPO plans often have a separate, higher deductible for out-of-network care. This means paying higher out-of-pocket costs if you receive care outside your plan’s network.
Sample HDHP vs. traditional PPO health plan
Choosing between an HDHP and a PPO depends on your health needs and financial situation.
Let's say you’re deciding between the following HDHP and PPO plans:
An HDHP with an annual premium of $4,800 ($400 per month) and $5,500 deductible
A PPO with an annual premium of $7,200 ($600 per month) and a $1,200 deductible
Now, consider the scenarios outlined in the chart below.
Sample HDHP and PPO plans compared
Scenario | HDHP | PPO | Savings |
You only need routine checkups, which are usually covered at no extra cost, during the year. | Total cost: $4,800 (annual premium) | Total cost: $7,200 (annual premium) | You’ll pay $2,400 less with an HDHP |
You end up needing medical care that comes to $6,000 in charges for the year. | Total cost: $10,300 | Total cost: $8,400 ($7,200 annual premium plus $1,200 deductible) | You’ll pay $1,900 less with a PPO |
Though these are top-line basic figures, this comparison shows that an HDHP can be more cost-effective if you don't need much medical care during the year. However, if you have significant medical expenses, a PPO might save you money despite its higher premiums.
Questions to consider when choosing between an HDHP and a PPO
When choosing between an HDHP and a PPO, consider the following questions:
How much can I afford to pay in monthly premiums?
Can I afford to pay a higher deductible if I need unplanned medical care?
Will my current medical team or preferred healthcare professionals and facilities be included in my insurance network?
Do I want the flexibility to go out of network?
How often do I expect to need medical care?
Do I have any planned medical procedures coming up?
Do I have access to an HSA or FSA, and does my employer contribute to either account?
Answering these questions can help you understand which type of plan better fits your situation. If you're still unsure, consider talking to someone in your company’s human resources department or a licensed insurance agent.
The bottom line
Most people with employer-based health insurance have a high-deductible health plan (HDHP) or a preferred provider organization (PPO) plan. HDHPs have lower premiums and higher deductibles, which make them a good choice for generally healthy individuals who don’t need frequent care. PPOs typically have higher premiums with lower deductibles, making them better for those with ongoing health issues who need regular medical care.
When deciding between an HDHP and a PPO, consider your budget, health needs, desire for network flexibility in choosing healthcare professionals and facilities, as well as access to tax-advantaged accounts to pair with a plan. Ultimately, you should choose the type of plan that provides the best balance of coverage and affordability.
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References
Aetna. (n.d.). HMO, POS, PPO, EPO and HDHP with HSA: What’s the difference?
Claxton, G., et al. (2025). Employer health benefits: 2025 annual survey. KFF.
Claxton, G., et al. (2026). Employer-sponsored health insurance 101. KFF.
HealthCare.gov. (n.d.). New in 2026: More plans now work with Health Savings Accounts.
HealthCare.gov. (n.d.). Out-of-pocket maximum/limit.
HealthCare.gov. (n.d.). Preventive care benefits for adults.
HealthCare.gov. (n.d.). Understanding Health Savings Account -eligible plans.
Internal Revenue Service. (2025). Administrative, procedural, and miscellaneous: Rev. Proc. 2025-19.
