Monday, April 12, 2010

Difference between HSA and PPO




HSA vs PPO

HSA - Health Saving Account

PPO - Preferred Provider Organization

With health care and medical costs continuing to rise, it is even more essential for every individual to have health care insurance. Fortunately, in the United States, you do have a lot of options when it comes to the type of health care that you will receive, depending on the type of health care insurance that you have. Here, we will take a look at the difference between using your HSA, or a Health Saving Account, and acquiring the services of a PPO, or a Preferred Provider Organization.
As the name implies, an HAS is a health savings account, the plan holder of which will be entitled to tax-advantages. An HSA is only available for those who are enrolled in a High Deductible Health Plan. When you have an HAS, the funds deposited to your account will not be subject to federal income tax.
On the other hand, a PPO is actually a managed care organization, which consists of hospitals, medical doctors and health care providers who have an agreement with an insurance company. The agreement allows the health care provider to offer services to plan holders at reduced rates. A PPO is a subscription-based arrangement for receiving medical care, while an HSA is typically paid for by a person’s employer.
An advantage that HSAs have over PPOs, is that if you do not use the funds that accrue over time, you can still use the increased amount for future medical expenses. So essentially, you get to keep the funds that are not spent. This is not the case with a PPO, which has a different set of rules for the funds that you do not use for your health care needs.
Both the HSA and PPO can be used for prescription drugs, dental or vision services, long-term care premiums and charges for medical expenses which are otherwise not covered. To determine whether it will be more beneficial for you to use HSAs over PPOs, you can go online, and look for rate calculators to help you find out which one will best suit your medical and financial needs.

Summary:
1. HSA is a health savings account, while PPO, or Preferred Provider Organization, is a group consisting of doctors, health care providers and hospitals.
2. HSA offers tax deductions, while PPOs do not.
3. HSA can be fully or partially paid for by your employer, while PPO is usually self-funded.

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