Health Savings Account Compared to PPO

Health insurance is important to Americans, and it's not enough to simply get the easiest policy offered by your employer. There are many different kinds of health insurance plans, all with different benefits, restrictions, rules and monthly premiums. Preferred provider organizations plans, usually just called PPOs, are popular group insurance plans, but health savings accounts are touted as a viable alternative to traditional health insurance. They both have their advantages and disadvantages and which one you prefer depends on you, your health and your budget.

Insurance Plans

• Preferred provider organization are themselves health plans, which use a network of health care providers. These providers are under contract to the insurance company and have agreed to its terms. Customers may or may not have to pick a primary care physician with a PPO as they would with an HMO, and referrals to specialists may or may not have to go through him. But if you want services from an outside provider, you will definitely pay higher costs in the form of co-payments and deductibles. Health savings accounts are simply bank accounts that contain funds earmarked for health care. They must be paired with a high-deductible health insurance plan, but this can be any kind of health insurance plan. The high-deductible plan can require a network or have no network. Any kind of high-deductible plan will work with a health savings account. The minimum deductible must be $1,100 for a single person and $2,200 for a family, but there is no rule saying the plan has to be any particular kind of health insurance. As of 2010, Cigna and Aetna offer health savings account high-deductible plans in both HMO and PPO style.

Taxes

• There are no tax advantages to having PPO health insurance. However, the money that goes into your health savings account is tax-free. Since you are supposed to put the money you are saving on premiums into your health savings account for future health care services, the money deposited into the account is not taxed. But you cannot deposit as much as you want. There are yearly contribution limits to health savings accounts. In 2009, the contribution limit for a single person was $3,000, and $5950 for a family.

Other Insurance

• PPO are usually easy to combine with other kinds of insurance for comprehensive coverage. There are more restrictions concerning combining insurance with a health savings account, though. You cannot be covered by any kind of health insurance which is not a high-deductible plan and still keep your health savings account. You are allowed to have automotive, vision, dental, long-term care and disability insurance, as well as insurance for a specific disease. You can also participate in a wellness program, too, as long as it does not pay a significant amount of medical benefits.

Medicare

• If you set up a health savings account before you qualify for Medicare, you should be able to select health savings plan supplements that will work with it. Many Medicare Advantage plans are offered as PPOs, allowing seniors to keep their long-time physicians and to make lower co-payments for regular preventive services. Monthly premiums for a PPO Medicare Advantage plan will more than likely be higher than one for a health savings account plan. With a Medicare health savings account supplement, Medicare makes deposits straight into your account that you can then use for co-pays and deductibles. These funds can also be carried over from year to year. You cannot decide to set up a health savings account after you are enrolled in Medicare.