Guides & answers
All 19 guides →How to compare an HSA plan with a PPO
Short answer: compare the total yearly cost of each plan, not the premium. That is premiums plus what you pay for care, minus any employer HSA money and the tax you save on your own HSA contributions. The plan with the lower total at your expected level of care costs less.
The formula
Worked example (default numbers)
| At $2,000 of care | HSA plan | PPO |
|---|---|---|
| Premiums (12 × $80 / $200) | $960 | $2,400 |
| Out-of-pocket | $2,000 | $1,200 |
| Employer HSA money | −$500 | — |
| Tax saved on $2,000 (22% + 7.65%) | −$593 | — |
| Net yearly cost | $1,867 | $3,600 |
Even in a worst-case year, the HSA plan tops out at $5,867 against $6,400 for the PPO, so with these numbers the HSA plan wins at every level of spending.
Key terms
- HDHP: a high-deductible health plan that meets IRS rules, which lets you open and fund a health savings account.
- HSA: a tax-advantaged account. Money goes in tax-free, grows tax-free and comes out tax-free for qualified medical costs. It's yours to keep, even if you change jobs.
- Out-of-pocket maximum: the most you pay for covered in-network care in a year, not counting premiums.
- COBRA: a federal law that lets you keep your employer's group plan after leaving a job, at up to 102% of the full cost.
- Benchmark silver plan: the second-lowest-cost silver marketplace plan in your area. It sets the size of your premium tax credit.
What changed for 2026 and 2027
- HSA limits rise to $4,500 / $9,000 for 2027 (from $4,400 / $8,750).
- Bronze and catastrophic marketplace plans count as HSA-eligible starting in 2026.
- The enhanced marketplace subsidies expired at the end of 2025, so the 400% of poverty level "cliff" is back.
- The affordability threshold for employer coverage rises to 10.22% of income for 2027.
Official sources
All figures checked .
- 2026 HSA and HDHP limits: IRS Rev. Proc. 2025-19, irs.gov/pub/irs-drop/rp-25-19.pdf
- 2027 HSA and HDHP limits: IRS Rev. Proc. 2026-24, irs.gov/pub/irs-drop/rp-26-24.pdf
- Bronze and catastrophic plans HSA-eligible: IRS Notice 2026-5, irs.gov/pub/irs-drop/n-26-05.pdf
- HSA catch-up and rules: IRS Publication 969, irs.gov/publications/p969
- 2026 applicable percentages and 9.96% affordability: IRS Rev. Proc. 2025-25, rp-25-25.pdf; 2027 and 10.22%: IRS Rev. Proc. 2026-26, rp-26-26.pdf
- Federal poverty guidelines: HHS ASPE, aspe.hhs.gov poverty guidelines (2025: $15,650 + $5,500 per person; 2026: $15,960 + $5,680)
- COBRA premiums and duration: U.S. Department of Labor, A Worker's Guide to Health Benefits Under COBRA
- FICA 7.65%: Social Security Administration, ssa.gov tax rates
- Marketplace plans and quotes: HealthCare.gov
Frequently asked questions
What are the HSA contribution limits for 2027?
For 2027 the IRS HSA contribution limit is $4,500 for self-only coverage and $9,000 for family coverage (Rev. Proc. 2026-24). People 55 or older can contribute an extra $1,000. Employer contributions count toward the limit.
What are the HSA contribution limits for 2026?
For 2026 the limit is $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up at age 55 or older (Rev. Proc. 2025-19).
What counts as a high-deductible health plan (HDHP) in 2027?
For 2027 an HDHP must have a deductible of at least $1,750 (self-only) or $3,500 (family) and an out-of-pocket maximum no higher than $8,700 or $17,400. For 2026 the figures are $1,700/$3,400 and $8,500/$17,000. Starting in 2026, bronze and catastrophic marketplace plans also count as HSA-eligible (IRS Notice 2026-5).
How do I find the break-even point between an HSA plan and a PPO?
Add each plan's yearly premiums and the out-of-pocket cost at a given level of medical spending, then subtract employer HSA money and the tax you save on HSA contributions from the HSA plan. The break-even is the spending level where the two totals are equal. Below it the HSA plan usually costs less; above it the PPO may.
How much tax does an HSA save?
HSA contributions are not subject to federal income tax, and payroll contributions also skip 7.65% Social Security and Medicare tax. At a 22% federal rate plus 7.65% FICA, $2,000 of payroll HSA contributions saves about $593. Most states also exempt them; California and New Jersey do not.
How much does COBRA cost?
COBRA can cost up to 102% of the full plan premium, meaning your share plus your former employer's share plus a 2% administrative fee. During an 11-month disability extension it can be up to 150%. Coverage after a job loss generally lasts up to 18 months.
Is COBRA or a marketplace plan cheaper?
It depends on your income and how much of your deductible you have already met. A marketplace plan may be much cheaper if a lower income qualifies you for a premium tax credit, but switching mid-year resets your deductible and out-of-pocket maximum to zero. COBRA keeps your current plan and progress.
What does 'affordable' employer coverage mean?
For plan years starting in 2027, employer coverage is generally considered affordable if the employee-only premium for the lowest-cost plan is no more than 10.22% of household income (9.96% for 2026). If your employer plan is affordable and meets minimum value, you usually cannot get a premium tax credit for yourself.
Who qualifies for a premium tax credit in 2026?
For 2026 coverage, households with income between 100% and 400% of the federal poverty level generally qualify if they lack affordable employer coverage. The enhanced credits expired at the end of 2025, so there is no credit above 400% of the poverty level. For one person that line is $62,600 in 2026 (400% of $15,650).
Is this insurance advice?
No. These calculators are general education using simplified math. They do not know your plan's network, drug list or exact rules. Check your plan's Summary of Benefits and Coverage and talk with a licensed professional before you decide.
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