Open enrollment guide · Updated Oct 27, 2026

HSA vs PPO 2027: Which Employer Health Plan Is Cheaper?

An "HSA plan" is a high-deductible health plan (HDHP) that lets you open a Health Savings Account. A PPO usually has higher premiums but lower costs when you use care. Here's how to compare them for 2027.

Step 1: Worst-case test

Annual premium + out-of-pocket max − employer HSA money, for both plans. If the HDHP is cheaper even here, it's usually cheaper in every year, so pick it if you can cash-flow the deductible.

Step 2: Typical year

Add up last year's care (Explanation of Benefits statements help). Run it through each plan: deductible, then coinsurance, capped at the out-of-pocket max. Add premiums.

Step 3: Add the HSA tax break

Payroll HSA contributions skip federal income tax and FICA (and most state tax). Putting $2,000 in at a 22% bracket saves about $600. For 2027 you can contribute $4,500 self-only or $9,000 family, plus $1,000 if you're 55+. Employer deposits count toward the limit.

Check the plan really is HSA-eligible

For 2027 the deductible must be at least $1,750 self / $3,500 family and the out-of-pocket max no more than $8,700 / $17,400 (IRS Rev. Proc. 2026-24). A spouse's general-purpose FSA can also make you ineligible.

Rules of thumb

• Healthy with some savings: HSA plan usually wins.
• Baby, surgery or pricey ongoing prescriptions: price the PPO carefully; assume you hit the out-of-pocket max.
• Can't cover the HDHP deductible from savings: lean PPO.

FAQ