For a typical employer pairing, the high-deductible plan stops being the cheaper one at roughly $1,700 of medical care a year. Under that, you keep the premium savings. Over it, the PPO’s lower deductible has already paid for itself.
Your two plans will produce a different number, but not a wildly different one, and the arithmetic that finds it fits on one line. Here’s what you need to know.
Insurance Cost Disclaimer: This article covers the arithmetic of comparing health plan costs and the tax rules attached to a health savings account, for informational purposes only. It is not medical advice and does not recommend any plan, network or level of care, and it does not evaluate coverage adequacy for a specific condition. Consult your plan documents and consult a qualified professional regarding your specific situation.
The Comparison Only Two Numbers Actually Decide
Strip out the marketing and a plan choice comes down to two inputs: what you pay no matter what, and what you pay only if you use care.
The premium gap is fixed the moment you enroll. The out-of-pocket gap depends on a number nobody knows in November: how much health care you will actually use next year.
So “which plan is cheaper” has no single answer. The honest version of the question is “cheaper at what level of use,” and that one has a number.
The One Line That Finds Your Breakeven
Take the annual premium gap between the two plans. Divide it by one minus your coinsurance rate. Add the PPO’s deductible.
Breakeven = PPO deductible + (annual premium gap ÷ (1 − coinsurance rate))
That is the level of annual medical spending at which the two plans cost you the same. Below it the HDHP wins, above it the PPO does.
The formula holds while the answer lands between the two deductibles, which it does whenever your premium gap is smaller than the deductible gap multiplied by one minus coinsurance. When the premium gap is larger than that, the HDHP wins at every level of use and you can stop reading. That case is rarer than employers imply, but it happens.
You can calculate your plan pair’s exact crossover in seconds with our interactive HDHP vs. PPO Breakeven Calculator, which models your specific deductibles, coinsurance, and tax-adjusted HSA savings.
Setting Up the 2027 Math
To qualify for an HSA in 2027, a high-deductible health plan must carry a minimum annual deductible of $1,750 self-only or $3,500 family, and cap out-of-pocket spending at $8,700 self-only or $17,400 family (Rev. Proc. 2026-24). The 2026 tests were a $1,700 self-only minimum deductible, $3,400 family, and ceilings of $8,500 and $17,000 (Rev. Proc. 2025-19). The floor moved $50; the ceiling moved $200. The gap the plan may put on you widened four times faster than the gap it must clear before qualifying.
Those are floors and ceilings, not prices. An actual HDHP on your employer’s menu sits somewhere inside that range, and the number on your plan’s summary of benefits is the one to use.
Say your employer offers a PPO at $420 a month with a $500 deductible, and an HDHP at $340 a month with a $2,500 deductible. Both pay 80% after the deductible is met. The HDHP costs $960 less a year before you see a doctor.
Run the line: $500 + ($960 ÷ 0.80) = $1,700.
| Care used in the year | HDHP total cost | PPO total cost | Cheaper by |
|---|---|---|---|
| $0 | $4,080 | $5,040 | HDHP, $960 |
| $500 | $4,580 | $5,540 | HDHP, $960 |
| $1,000 | $5,080 | $5,640 | HDHP, $560 |
| $1,700 | $5,780 | $5,780 | dead even |
| $2,500 | $6,580 | $5,940 | PPO, $640 |
| $6,000 | $7,280 | $6,640 | PPO, $640 |
Two things in that table are worth more than the breakeven itself.
The coinsurance rate barely matters. Vary it from 0% to 30% and the crossover moves only from $1,460 to $1,870. The two deductibles and the premium gap decide almost everything, which means you can find your answer from the front page of the plan comparison and skip the fine print you were told to go read.
Past the HDHP deductible, the gap stops growing. At $2,500 of care the PPO is ahead by $640, and at $6,000 it is ahead by the same $640. Once both plans are in coinsurance, every additional dollar of care costs the same under either one. A catastrophic year is not the scenario where the HDHP choice hurts most. A mildly expensive year is.
The HSA Changes the Math, It Does Not End the Question
An HDHP’s real advantage is not the lower premium. It is that it is the only plan type allowed to carry a health savings account.
For 2027 you may contribute up to $4,500 self-only or $9,000 family to an HSA attached to a qualifying plan (Rev. Proc. 2026-24), and the contribution is deductible above the line whether or not you itemize (IRS Publication 969). We worked through that deduction, the last-month rule, and the filing-deadline contribution window in the full 2027 HSA numbers.
Fund the account by payroll deduction and the money escapes income tax and FICA both, so a dollar of HDHP deductible spending costs you well under a dollar of pay.
Take a household in the 22% federal bracket paying 7.65% in FICA, a combined 29.65% on the dollar. Apply that discount to the example above and the HDHP stops losing at any level of use: at $2,500 of care it is still ahead by about $100, and it widens from there.
That is the case for the HDHP at its strongest, and it comes with one condition most write-ups leave out. Your PPO colleague can put money in a health flexible spending arrangement, which is also pre-tax. If they do, the tax discount applies to both sides and cancels, and you are back at $1,700.
The difference that does not cancel is what happens to the leftover. An FSA is use-it-or-lose-it: a plan may offer a limited carryover or a grace period, but anything past that is forfeited at year end (IRS Publication 969). HSA money stays yours, invested, indefinitely. A light-usage year on the HDHP turns into banked savings rather than a wash, which is the real reason to run this comparison over several years rather than one.
Three Situations Where the Answer Is Not Close
You do not need the table if you fall clearly on one side.
You are healthy, will fund the HSA, and rarely see a doctor. The HDHP wins most years and the unused contribution compounds. This is the profile it was built for.
You have a standing prescription or a planned procedure that will hit the out-of-pocket maximum either way. Compare the two ceilings and stop. If the PPO’s is meaningfully lower and you are confident you will reach it, the PPO wins on cost before anything else is weighed.
You could not cover the deductible in cash if a bad year arrived. That is a liquidity question, not a cost comparison. A 2027 out-of-pocket maximum as high as $8,700 self-only under the statutory ceiling (Rev. Proc. 2026-24) that would force debt in a single emergency carries a cost the table does not price, and it argues for the lower worst case rather than the lower average.
Read Three Numbers Before November
Pull both deductibles and both annual premiums off the plan comparison, run them through the line at the top, and you have your crossover in about two minutes. Then ask yourself the only genuinely hard question in the exercise: in how many of the last five years did you spend more than that on care?
If the answer is most of them, take the PPO. If it is one or none, take the HDHP and fund the account.
If you buy your own coverage rather than picking from an employer’s menu, the same arithmetic applies, and it stacks with sizing a retirement contribution to manage the income the premium tax credit is measured against.
