Why the HSA usually wins for healthy people
Healthy households (under ~$2,500/yr in claims) usually pay $1,500-3,000 less per year on an HDHP, because the premium savings vs. PPO ($150-300/mo × 12) exceed expected out-of-pocket spending. On top of that, every dollar you put in your HSA is pre-tax (state + federal + FICA = ~30-40% savings), grows tax-free if invested, and rolls over indefinitely. Most HSA accounts let you invest balances over $1-2k in index funds — this is the closest thing to a free retirement account the US tax code allows.
When the PPO is the right call
Three cases: (1) you have a chronic condition with predictable $5k+/yr in claims — the PPO's lower deductible and OOP max usually win even after HSA tax savings; (2) you're planning a baby, surgery, or major procedure this year — the PPO front-loads the spending into a lower deductible; (3) the HDHP's network is meaningfully narrower (check first — sometimes the same insurance company has wildly different networks for HDHP vs PPO).
The FSA use-it-or-lose-it trap
FSAs feel like free money (~30% tax savings) but any unspent balance vanishes Dec 31. Most plans allow up to $640 carryover (2025) or a 2.5-month grace period — check yours. The optimal FSA contribution is the most-pessimistic estimate of guaranteed medical spending: prescriptions, eye exams, dental cleanings, copays you know you'll incur. Don't elect speculative amounts hoping you'll find a use; you'll lose 50-70% of that 'savings' to forfeiture.
What this calculator doesn't model
Network differences (the biggest real-world variable — out-of-network can blow up either plan), prescription drug coverage tiers, mental health coverage, fertility benefits, and the value of HSA investment growth over multiple years. Long-term HSA strategy (contribute max, pay current claims out of pocket, let HSA grow tax-free for decades) can add $50k+ to retirement net worth and is not captured in single-year math.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
Can I have both an HSA and an FSA?
Generally no. To contribute to an HSA you must be enrolled in an HSA-eligible HDHP and not be covered by any other non-HDHP plan — including a general-purpose FSA (yours OR a spouse's). The one exception is a Limited-Purpose FSA (dental/vision only) which is HSA-compatible. If your spouse's PPO offers an FSA they elect, you can't contribute to an HSA.
What counts as a qualified medical expense for HSA/FSA?
Doctor visits, prescriptions, dental, vision, mental health, physical therapy, OTC meds (since 2020), menstrual products, sunscreen with SPF 15+. Not covered: cosmetic procedures, vitamins (unless prescribed), gym memberships, most over-the-counter supplements. IRS Pub 502 has the full list.
Does the HSA tax savings really work?
Yes — contributions reduce your federal and state taxable income (except CA, NJ which tax HSA contributions at the state level), AND they reduce FICA-taxable wages when contributed via payroll deduction. That's a ~30-40% combined savings for most middle-income households, ~42-45% for high earners. Self-funded HSA contributions (made directly, not payroll) save federal/state but NOT FICA.
Should I invest my HSA?
Yes — once balance exceeds your year's expected claims. Most HSA providers (Fidelity, Lively, HealthEquity) allow investing balances above $1-2k in index funds. A 30-year-old maxing the HSA at $4,300/yr and investing at 7% real has ~$420k in HSA assets at age 65 — completely tax-free for medical use, or treated like a traditional IRA for non-medical withdrawals after 65.
What about the FSA carryover or grace period?
The 2025 IRS carryover limit is $640 (up from $610 in 2024). Some employers offer a 2.5-month grace period instead — you have until March 15 of the next year to spend prior-year FSA dollars. Employers can offer one or the other, never both. Check your plan documents before electing.
Does the HDHP cover preventive care?
Yes — all ACA-compliant HDHPs cover preventive care (annual physicals, recommended vaccines, basic screenings) at 100% with no deductible. The high deductible only applies to non-preventive care. Many HDHPs also have pre-deductible coverage for specific drugs and chronic-care services under the 'safe harbor' expansions.
Can I use HSA for non-medical expenses?
Before age 65: yes, but you pay income tax + 20% penalty. After age 65: yes, you pay only income tax (like a traditional IRA). That's why maxing the HSA is a stealth retirement strategy — worst case it's a tIRA, best case it's tax-free medical spending in retirement.
What's the difference between HSA and HRA?
An HSA is yours, portable, and rolls over forever. An HRA (Health Reimbursement Arrangement) is funded by your employer, stays with the employer when you leave, and may have use-it-or-lose-it rules. If your employer offers 'HSA contribution' it's an HSA; if they offer 'HRA contribution' it's not portable.
How accurate is this calculator?
Best for plans with standard structures (deductible → coinsurance → OOP max). Real plans often have copays for office visits and Rx that bypass the deductible, separate Rx deductibles, and tiered networks. Use this as a first-pass comparison; check the SBC (Summary of Benefits and Coverage) for each plan to verify.
What if I'm Medicare-eligible?
You cannot contribute to an HSA once enrolled in any part of Medicare (including Part A only). Stop HSA contributions the month Medicare starts. You can still spend existing HSA balances tax-free on medical including Medicare premiums (except Medigap).
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.