How to Pick Your Health Insurance
It’s the most wonderful time of the year!
Halloween, Thanksgiving, Christmas, and everyone’s favorite: Open-Enrollment.
The time when your employer says “Please become a health insurance expert in 48 hours. Don’t mess up or it’s REALLY expensive!”
Thankfully, like most things money, learning just 60% of it will get you 95% of the results.
So today, we tackle two of the main characters in Health Insurance:
The High Deductible Health Plan (HDHP) and
The Preferred Provider Organization (PPO).
You’ll likely use both throughout your life as your circumstances change.
So, let’s get educated..
To start, definitions:
- Premium: Your subscription fee for insurance
- Deductible: What you pay before insurance starts helping
- Coinsurance: After you hit your deductible, the percent that insurance will cover. This is normally 70-95%.
- Out-of-Pocket Maximum: Your worst-case scenario for the year (excluding premiums)
- In-Network: Hospitals/Doctor’s Offices that your insurance company likes
- Out-of-Network: Hospitals/Doctor’s Offices that your insurance company does not (do your research and avoid these if at all possible)
How do those definitions affect our plan?
The PPO is built for predictability. You’ll have higher premiums but lower deductibles.
Because of that, many people will choose a PPO when they have chronic conditions, frequent specialist visits, or are family planning.
The HDHP has a High Deductible. So, you pay more until insurance kicks in (bad).
But because of that, you have a lower premium (good).
An HDHP is normally a bet that you will have a healthy year.
You hope to pay the low premiums and not need to pay your high deductible.
The HDHP also has a kicker: A Health Savings Account (HSA).
This can totally change the math.
Most health insurance calculators are (Annual Premiums + Estimated Out of Pocket Costs)
Pick the lowest one and be done.
But here’s where the HSA changes things:
- Your Employer may contribute money into your HSA (yes, actual free money - rare in personal finance)
- Your HSA Contributions reduce your taxable income
- Both contributions can compound as investments and grow tax-free
So the ACTUAL math is closer to:
(Annual Premiums + Estimated Out of Pocket Costs) -
(Employer HSA Contribution + Tax Savings)
This can make the HDHP better even if the PPO is “cheaper”.
Now remember, in order to take advantage of the Tax benefits you have to have the money to contribute to an HSA. Again, this strategy only works if you have the funds to invest in an HSA.
It's not a guaranteed best option, but it can be powerful if you have the savings for it.
So, all of that being said, which one is best for you?
I have no idea ¯\_(ツ)_/¯
But I’ll tell you how I’m deciding mine.
I’m using AI (and think you should too).
I am taking a PDF of my entire health insurance plan options and throwing it into ChatGPT.
From there I’m going to tell it about my life stage and plans for the next year and get its feedback.
AI works great on Text-Based questions and answers making health insurance text a perfect use-case.
This free, custom instance of ChatGPT will give you specific education on your health insurance options.
Give it a whirl here and let me know what you think.
Would love to make more of these.
No matter how you choose your insurance, do it from a place of confidence, not panic.
Do the work, learn your options, and you’ll be set for a great 2026!
