PPO or HDHP? Choosing the Healthcare Plan That’s Right for You

November 1-18 is “Open Enrollment” for all eligible Baylor faculty and staff. This is a brief period of time during which Baylor employees are able to make changes to their existing benefits selections, such as health, dental or vision coverage, using SmartBen — Baylor’s online benefits enrollment system. As Open Enrollment approaches, Baylor News asked Randall Brown, manager of benefits and vendor management in the Office of Human Resources to help outline the major distinctions between Preferred Provider Organization (PPO) coverage and a High-Deductible Health Plan (HDHP) through Blue Cross Blue Shield of Texas.

What is a high-deductible health plan (HDHP)?

We get this question a lot. Simply stated, a High-Deductible Health Plan, or HDHP, is an arrangement that allows you to pay less money each month for health insurance premiums, in exchange for higher deductibles when you need care.

HDHPs allow you to save money in a Health Savings Account (HSA) to pay for out-of-pocket costs. Your HSA is like a bank account with a debit card that you use for HSA-eligible purchases. The HSA can be funded with pre-tax employer and pre-tax or after-tax employee contributions.

What is a PPO plan?

PPO stands for Preferred Provider Organization. This means that Blue Cross Blue Shield has developed a network of preferred providers. By using one of these “in-network” providers, you enjoy a lower deductible.

In comparison to the HDHP, you pay higher monthly premiums in exchange for lower deductibles.

How do you estimate how much to contribute to your HSA each month?

My wife and I are low utilizers of healthcare, so I took a simplified approach. I fund my HSA using the difference between PPO and HDHP monthly premiums for employee + spouse coverage. Since I had previously deferred money into a Flexible Spending Account (FSA) — FSAs are different from HSAs mainly in that FSA money does not accumulate year to year, but rather must be used before the end of the calendar year — I decided to redirect those dollars into my HSA. By combining my own contributions with Baylor’s contributions, I have plenty of money in my HSA to pay for any out-of-pocket expense that we may incur.

Why would someone choose a high deductible (HDHP) over a lower one (PPO)?

In general, people who want to be in control of how they spend healthcare dollars may be more inclined to enroll into the high deductible health plan.

Is there any event (e.g., childbirth) or condition that’s not covered by either or both plans?

The design of our medical insurance plans (PPO and HDHP) exclude long-term care and private-duty nursing. Both plans exclude cosmetic surgery that is not medically necessary, dental care unless it is related to an accident, and routine foot care without a diagnosis of diabetes.

What are the top two advantages of choosing an HDHP over a PPO?

One way to have more money is to spend less money. The HDHP costs less on a monthly basis than the PPO and provides protection for you and your family when you need health insurance. The other advantage is that the HDHP gives you access to the HSA, which Baylor helps to fund. Having a Health Savings Account is like having a healthcare emergency fund, or a retirement healthcare account because the amount you save in your HSA accumulates year to year (unlike an FSA).

You may view your existing healthcare coverage and make changes to your coverage during Open Enrollment by logging in to SmartBen at baylor.edu/smartben.

Baylor’s comprehensive employee benefits are part of why the University was named among America’s "Great Colleges to Work For" by The Chronicle of Higher Education for the seventh year in a row. baylor.edu/hr/benefits. --> If you have specific questions, feel free to contact the Office of Human Resources at askHR@baylor.edu or by calling (254) 710-2000.