HDHP or PPO? Choosing a US health plan at open enrollment as an international worker

How are an HDHP, a PPO, an HMO and an EPO different?

PPO, HMO and EPO describe the network: which doctors the plan pays for. HDHP describes how costs are shared: a high deductible, usually with a lower premium.

So "HDHP or PPO" mixes two questions. An HDHP can have a network too: Publication 969 counts only in-network costs toward its limit "if the plan uses a network of providers".

What makes a plan an HDHP in 2027?

For 2027, an HDHP has a deductible of at least $1,750 for self-only cover or $3,500 for family cover. Its out-of-pocket costs, premiums aside, may not exceed $8,700 or $17,400 (Revenue Procedure 2026-24).

You need HDHP coverage to put money in a health savings account (HSA). For 2027 the HSA limit is $4,500 for self-only cover or $9,000 for family cover, and your employer's deposits count toward it. An HDHP may still pay for preventive care before the deductible (Publication 969).

A plan that is not an HDHP may set a higher maximum. For 2027 the Affordable Care Act's limit on in-network out-of-pocket costs is $12,000 for self-only cover or $24,000 for other cover (CMS).

How do you work out a plan's total yearly cost?

Total yearly cost is premiums plus out-of-pocket costs, minus employer HSA money and the tax you save. Work it out twice for each plan: once for the care you expect, once for a bad year.

1. Add up 12 months of your share of the premium.
2. Add the out-of-pocket costs for the care you expect: the deductible first, then copays or coinsurance, never more than the out-of-pocket maximum.
3. For a bad year, use the out-of-pocket maximum instead.
4. Subtract any money your employer puts into your HSA.
5. Subtract the tax you save on premiums and HSA deposits taken from your pay through your employer's cafeteria plan.

Premiums and HSA deposits taken through your employer's cafeteria plan (a Section 125 plan) are free of federal income tax and FICA, meaning Social Security and Medicare tax (Publication 15-B). So the tax you save is your top federal income tax rate, plus 7.65% if you pay FICA. This guide leaves out state income tax.

HSA deductions taken from pay outside a cafeteria plan are wages and are taxed, Publication 15 says. Ask payroll which kind yours is. Money you deposit yourself saves nothing through payroll, and whether a nonresident can deduct it is not settled.

An F-1 student on OPT who is a nonresident alien pays no Social Security or Medicare tax on that pay (IRS), so they save the income tax only. H-1B pay generally owes both taxes. The pre-tax benefits guide shows the difference at three salaries.

Which plan costs less in a light year and in a heavy one?

With the made-up plans below, the HDHP costs less in a light year and the PPO in a heavy one. Every plan price here is a hypothetical round number, not a typical price.

The single plans are the ones in the chart. The HDHP costs $100 a month, with a $2,000 deductible, 20% coinsurance, a $5,000 out-of-pocket maximum and a $500 employer HSA deposit. The PPO costs $200 a month, with a $500 deductible, 20% coinsurance and a $2,000 out-of-pocket maximum.

For a medicine, ask whether each plan covers it: some plans have a separate prescription deductible or charge a copay instead of coinsurance. A health FSA beside the PPO would also save tax on out-of-pocket costs, which this example leaves out.

If you are on OPT and become a resident alien in 2027, you pay FICA from your residency starting date, and every cafeteria-plan dollar then saves 7.65% more.

What if you are planning a pregnancy or a baby in 2027?

If a birth is likely in 2027, compare the family plans at their out-of-pocket maximum, since a year with a birth may reach it. Check that your hospital and doctors are in the network: out-of-network care does not count toward the limit.

Every Marketplace plan covers "Pregnancy, maternity, and newborn care (both before and after birth)" as an essential health benefit (HealthCare.gov).

Employer plans can differ. HealthCare.gov says large employers who "self-insure", paying employees' health care costs directly, "don't have to provide essential health benefits. But many do."

A larger HSA deposit, up to the $9,000 family limit, or a health FSA beside the PPO, would lower each total.

After a birth, an employer plan must give at least 30 days to enroll the child, and cover starts on the date of birth (29 CFR 2590.701-6). A cafeteria plan may let you change your premium election for the birth, but the regulation does not require plans to allow it.

What is different on a J-1, or with insurance from home?

A J-1 exchange visitor, including one on academic training, must carry insurance with a deductible of no more than $500 per accident or illness. A 2027 HDHP's deductible is at least $1,750, so no HDHP meets the rule.

The same rule, 22 CFR 62.14, also requires:

• $100,000 of medical benefits per accident or illness;
• $25,000 for repatriation of remains;
• $50,000 for medical evacuation home.

J-2 family members must be covered to the same amounts, and a J-1 who wilfully fails to keep the cover is subject to termination as an exchange visitor. A policy "Backed by the full faith and credit of the government of the exchange visitor's home country" can qualify.

If you keep a plan from home beside an HDHP, it may affect your HSA. Publication 969 says that with an HDHP you "can't generally have any other health coverage", and we found no IRS text that says whether a home-country plan counts. Ask your benefits office before you open an HSA.

If you buy your own plan instead, from 2027 F-1, J-1, H-1B and H-4 holders get no premium tax credit (subsidies end for visa holders).

What to do next

1. Download each plan's summary from your benefits site and note its premium, deductible, coinsurance or copays, out-of-pocket maximum, network type and any employer HSA deposit.
2. List the care you expect in 2027, such as a regular medicine or a planned birth, and check that your doctors are in each network.
3. Work out each plan's total yearly cost twice, for an expected year and for a year at the out-of-pocket maximum, using your own tax rate. The take-home calculator shows how premiums and an HSA change your paycheck.
4. On a J-1, check the $500 deductible cap and the other 22 CFR 62.14 amounts first.
5. Enroll before your employer's open enrollment closes. With an HSA, Publication 969 says to report all contributions on Form 8889 with your return, Form 1040-NR included.

F1TaxReturn prepares Form 1040-NR and Form 8843 for free once the IRS publishes the final 2026 forms. It does not prepare Form 8889.