Which Health Plan Should I Pick for Next Year and Should I Use an HSA or FSA?
It’s time to make a decision about your health insurance plan. Open enrollment is coming up and you have to decide if you’re going to stick with your current plan or pick a new one. There are a lot of things to take into consideration.
Choosing a health insurance plan can feel overwhelming. Premiums, deductibles, co-pays, HSAs, FSAs … it’s a lot to take in. But with a little clarity, you can make a decision that fits your health needs and your wallet. Let’s break it all down step by step.
The Types of Health Insurance Plans Available
When your employer offers health insurance (or when you shop through the Marketplace), you’ll often see these main types:
- HMO (Health Maintenance Organization)
- Must use in-network doctors (except in emergencies).
- Requires a primary care physician (PCP) and referrals for specialists.
- Usually the lowest premiums.
- Best for: people who don’t mind a limited network and want lower costs.
- Must use in-network doctors (except in emergencies).
- PPO (Preferred Provider Organization)
- Flexibility to see in- or out-of-network doctors without referrals.
- Higher premiums and out-of-pocket costs.
- Best for: people who want freedom in choosing doctors and specialists.
- Flexibility to see in- or out-of-network doctors without referrals.
- EPO (Exclusive Provider Organization)
- Like an HMO but usually doesn’t require referrals.
- No out-of-network coverage (except emergencies).
- Best for: people who want lower costs but still want to skip referrals.
- Like an HMO but usually doesn’t require referrals.
- POS (Point of Service Plan)
- Hybrid between HMO and PPO.
- Requires referrals but offers partial coverage for out-of-network care.
- Best for: people who want some flexibility but can handle referrals.
- Hybrid between HMO and PPO.
- High-Deductible Health Plan (HDHP)
- Lower premiums, higher deductibles.
- Must meet a high deductible before insurance pays much.
- Eligible for a Health Savings Account (HSA).
- Best for: healthy people with minimal medical needs or those who want tax-advantaged savings.
- Lower premiums, higher deductibles.
Who Has Access and How to Enroll
In the U.S., most health insurance plans are tied to employment. This is where the majority gain access to health insurance and are able to sign up during the open enrollment period. There are three major avenues to get a plan.
- Employer Coverage: Most people get insurance through work. Enrollment typically happens during your employer’s open enrollment period (once a year).
- Marketplace/Exchange: If you don’t have employer coverage, you can shop through HealthCare.gov or your state’s exchange during open enrollment.
- Government Programs: Medicaid (income-based), Medicare (age 65+ or disability), and CHIP (for children).
When Can You Enroll Outside of Open Enrollment?
Normally, you can only sign up during open enrollment (usually in the fall). But certain Qualifying Life Events (QLEs) allow you to enroll or change coverage mid-year:
- Marriage, divorce, or legal separation
- Birth, adoption, or placement of a child
- Loss of other coverage (job loss, aging off a parent’s plan at 26)
- Moving to a new coverage area
- Eligibility change for Medicaid/CHIP
Deadline: You typically have 60 days from the event to enroll or make changes.
HSA vs. FSA: What’s the Difference?
Health Savings Account (HSA)
- Who can use it? Only people enrolled in a High-Deductible Health Plan (HDHP).
- What is it? A tax-advantaged savings account you own.
- Perks:
- Triple tax advantage (contributions are pre-tax, grow tax-free, and withdrawals for medical expenses are tax-free).
- Funds roll over year to year (no “use it or lose it”).
- Portable, you keep it even if you change jobs.
- Triple tax advantage (contributions are pre-tax, grow tax-free, and withdrawals for medical expenses are tax-free).
Flexible Spending Account (FSA)
- Who can use it? Employees whose employers offer it (not tied to HDHPs).
- What is it? An employer-sponsored account you fund with pre-tax dollars.
- Perks:
- Can lower taxable income.
- Can be used for eligible medical expenses.
- Can lower taxable income.
- Limitations:
- “Use it or lose it”—money must be spent in the same plan year (some employers allow a small rollover or grace period).
- You lose it if you leave your job.
- “Use it or lose it”—money must be spent in the same plan year (some employers allow a small rollover or grace period).
What Expenses Are Eligible?
Both HSAs and FSAs can be used for qualified medical expenses, including:
- Doctor visits, copays, deductibles
- Prescription medications
- Dental and vision care (glasses, contacts, cleanings)
- Over-the-counter meds and menstrual products (recently added)
- Some medical equipment (crutches, blood pressure monitors, etc.)
Tip: Always check the IRS’s full list of eligible expenses.
How Much Should You Contribute to an HSA or FSA?
Here’s a smart way to decide:
- Estimate predictable medical costs (prescriptions, ongoing treatments, glasses, etc.).
- Add a buffer for unexpected doctor visits or urgent care.
- For HSAs, consider contributing more; since the funds never expire, you can even use them for retirement healthcare costs.
2025 Contribution Limits:
- HSA: $4,300 (individual), $8,550 (family) + $1,000 catch-up if 55+
- FSA: $3,200 per year (set by employer, up to IRS limit)
Summary Chart: Which Plan + Account Is Best for You?
| Situation | Best Plan | Use HSA/FSA? | Why |
| Young, healthy, minimal care needs | HDHP | HSA | Save on premiums + build tax-advantaged savings. |
| Frequent doctor visits or ongoing prescriptions | PPO or HMO | FSA | Lower deductible + pre-tax help for copays/meds. |
| Want flexibility with providers | PPO | FSA | More options, plus pre-tax savings. |
| Family with kids, unpredictable needs | POS or PPO | FSA (or HSA if HDHP) | Covers a wider network + funds for copays, braces, etc. |
| Preparing for retirement healthcare costs | HDHP | HSA | HSA acts like a second retirement account. |
Final Tips
- Don’t just look at the premium. Add up the deductible, co-pays, and potential out-of-pocket maximums.
- Check your network. Make sure your doctors and hospitals are covered.
- Use your HSA/FSA smartly. Contribute enough to cover known expenses, then adjust if you expect bigger costs.
- Plan ahead for deadlines. FSAs often reset every year; HSAs roll over.
By carefully weighing your healthcare needs and financial goals, you can choose a health insurance plan and an HSA or FSA strategy that protects both your health and your wallet.
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