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HDHP vs PPO for 2027: How to Pick a Health Plan at Open Enrollment (With the New HSA Limits)
Add up each plan's total annual cost: premiums + the medical costs you expect to pay − any employer HSA contribution − the tax savings on HSA contributions. Do it for a low-use, typical and worst-case year. An HDHP with an HSA usually wins if you're generally healthy, can cover the deductible from savings and want the HSA's triple tax break. A PPO often wins if you expect high, frequent medical costs, need specific providers, or couldn't afford the HDHP's higher out-of-pocket maximum. For 2027, the HSA limit is $4,500 (self-only) and $9,000 (family), plus a $1,000 catch-up at 55+.
Why this decision matters
Open enrollment is the one time a year most people can change their health plan. Picking the wrong one can cost you thousands of dollars in premiums and taxes, and most people just roll over last year's choice.
The biggest decision is usually between a PPO (or similar low-deductible plan) and a high-deductible health plan (HDHP) paired with a health savings account (HSA).
The 2027 numbers
The IRS set the 2027 HSA and HDHP figures in Revenue Procedure 2026-24:
| 2027 self-only | 2027 family | 2026 self-only | 2026 family | |
|---|---|---|---|---|
| HSA contribution limit | $4,500 | $9,000 | $4,400 | $8,750 |
| Catch-up (age 55+) | $1,000 | $1,000 | $1,000 | $1,000 |
| HDHP minimum deductible | $1,750 | $3,500 | $1,700 | $3,400 |
| HDHP maximum out-of-pocket | $8,700 | $17,400 | $8,500 | $17,000 |
Source: IRS Rev. Proc. 2026-24.
The contribution limit counts both your contributions and your employer's.
PPO vs HDHP in one table
| PPO | HDHP + HSA | |
|---|---|---|
| Monthly premium | Higher | Lower |
| Deductible | Lower | Higher (at least $1,750 / $3,500 in 2027) |
| Copays before deductible | Common | Usually not, except preventive care |
| Out-of-pocket maximum | Often lower | Often higher |
| Tax-advantaged savings | Health FSA (use-it-or-lose-it) | HSA (yours forever, can be invested) |
| Best for | High, predictable medical costs | Low-to-moderate costs, people who can save |
How to compare: a 4-step method
Step 1: Gather each plan's numbers
From your benefits portal, note for each plan: your annual premium, deductible, coinsurance, out-of-pocket maximum, and any employer HSA contribution.
Step 2: Estimate three scenarios
- Low year: checkups, a few prescriptions.
- Typical year: look at what you actually spent the last two years.
- Bad year: you hit the out-of-pocket maximum.
Step 3: Calculate total cost for each
Total cost = premiums + your share of medical bills − employer HSA money − tax savings
Step 4: Weigh the risk
If the HDHP is cheaper in the low and typical years but slightly worse in the bad year, the HDHP usually wins, as long as you have savings to cover the higher deductible.
A worked example (single person)
Hypothetical plans, for illustration:
| PPO | HDHP | |
|---|---|---|
| Your annual premium | $1,800 | $600 |
| Deductible | $1,000 | $2,000 |
| Coinsurance after deductible | 20% | 20% |
| Out-of-pocket maximum | $4,000 | $6,000 |
| Employer HSA contribution | — | $750 |
Total cost by scenario (before HSA tax savings):
| Medical bills for the year | PPO total | HDHP total |
|---|---|---|
| $500 (low) | $2,300 | $350 |
| $3,000 (typical) | $3,200 | $2,050 |
| Hit the out-of-pocket max | $5,800 | $5,850 |
The HDHP wins by about $1,150–$1,950 in low and typical years, and roughly ties in a bad year.
Then add the tax savings. If this person contributes the remaining $3,750 to reach the $4,500 limit through payroll, and is in the 22% federal bracket, they save roughly $825 in federal income tax plus about $287 in Social Security and Medicare taxes, over $1,100 in total, before any state tax savings.
Who should pick the HDHP + HSA
- You're generally healthy and don't expect big bills.
- You have emergency savings to cover the deductible. See how big your emergency fund should be.
- You want a long-term, tax-free investment account for future healthcare. The HSA is the only account with a deduction going in, tax-free growth and tax-free withdrawals for medical costs.
- Your employer contributes to the HSA.
Who should pick the PPO
- You have a chronic condition, a planned surgery or a baby on the way, and expect to hit high costs.
- You couldn't afford the HDHP's deductible if something happened.
- You need specific doctors only in the PPO's network.
- The PPO's premium difference is small.
HSA rules worth knowing
- Use it or keep it. Unlike an FSA, HSA money never expires and stays with you if you change jobs.
- Invest it. Most providers let you invest above a cash minimum. Our guide on how to open and invest an HSA walks through it.
- Save receipts. You can reimburse yourself tax-free years later for qualified expenses paid out of pocket, as long as the HSA was open when you incurred them.
- After 65, you can withdraw for any purpose, paying ordinary income tax on non-medical withdrawals, like a traditional IRA.
- Medicare stops contributions. Once you enroll in Medicare, you can't contribute anymore.
- FSA vs HSA: You generally can't have a regular health FSA and contribute to an HSA in the same year, though a limited-purpose FSA (dental and vision) is allowed.
Key 2027 enrollment dates
- Employer plans: usually a few weeks in November; check your HR portal.
- ACA Marketplace (HealthCare.gov): typically November 1 to January 15.
- Medicare: October 15 to December 7.
The bottom line
Don't default to last year's plan. Run the three-scenario comparison. For many healthy workers with some savings, an HDHP plus an HSA funded to the $4,500 / $9,000 limit for 2027 is both cheaper today and a powerful retirement account. If you expect big medical bills or can't cover a high deductible, the PPO's predictability is worth paying for.
This article is educational and not personalized tax or insurance advice. Plan details vary by employer; check your plan documents.
Frequently asked questions
What is the HSA contribution limit for 2027?
$4,500 for self-only HDHP coverage and $9,000 for family coverage, per IRS Revenue Procedure 2026-24. People 55 or older can add a $1,000 catch-up contribution. The 2026 limits are $4,400 and $8,750.
What counts as a high-deductible health plan in 2027?
For 2027, an HSA-eligible HDHP must have a deductible of at least $1,750 for self-only coverage or $3,500 for family coverage, and out-of-pocket costs capped at no more than $8,700 for self-only or $17,400 for family coverage.
Is an HDHP or PPO better?
It depends on your expected medical costs. HDHPs have lower premiums and allow HSA contributions, so they usually cost less for people with low to moderate health spending. PPOs have higher premiums but lower deductibles and copays, which can cost less if you have high, predictable medical bills.
What is the triple tax advantage of an HSA?
Contributions are tax-deductible (and free of payroll taxes when made through work), the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. After 65, you can withdraw for any purpose and pay only ordinary income tax, like a traditional IRA.
When is open enrollment for 2027?
Employer open enrollment usually runs for a few weeks in November, but dates vary by employer. ACA Marketplace (HealthCare.gov) open enrollment typically runs from November 1 to January 15. Medicare open enrollment runs October 15 to December 7.
Can I invest my HSA money?
Yes. Most HSA providers let you invest balances above a minimum cash amount in mutual funds or ETFs. Many people pay current medical bills from regular savings and let the HSA grow for retirement healthcare costs.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Oct 28, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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