Health Insurance Choices for a Tradesperson

Why this matters

Most techs pick a health plan once, in a hurry, during the first week on the job, by choosing whichever premium looks smallest or whichever plan their last employer had. That one choice can move more money in a year than a raise does, in either direction. Two plans offered side by side by the same shop can differ by weeks of pay depending on whether you are a healthy 24-year-old or the parent of a kid with asthma. This card shows how to run the comparison yourself in about twenty minutes, with the numbers off your own enrollment sheet.

This is general information, not personal financial advice. For reading the enrollment packet itself, see related: Reading a Benefits Enrollment Packet.

The five numbers that decide a plan

Every plan's Summary of Benefits and Coverage (the standard SBC document insurers must give you under federal rules from the Department of Labor and HHS) carries these, in the same format, so plans can be compared line for line.

• Premium. What comes out of your check every pay period whether you use the plan or not. Usually pre-tax, through your employer's cafeteria plan.
• Deductible. What you pay for covered care, at the plan's negotiated price, before the plan starts sharing costs. Preventive care (annual physicals, most vaccines, screenings) is covered with no cost sharing under the Affordable Care Act, even before the deductible.
• Copay and coinsurance. After the deductible, a copay is a flat amount per visit or prescription; coinsurance is your percentage of the bill, commonly 10 to 30 percent.
• Out-of-pocket maximum. The most you pay for in-network covered care in a plan year, counting deductible, copays and coinsurance but not premiums. Federal law caps it at a figure indexed every year. This is the number that tells you how bad a bad year can get.
• Network. Which doctors, hospitals and pharmacies count as in-network. Out-of-network care can cost far more and, in many plans, does not count toward the out-of-pocket maximum at all.

The two shapes most shops offer

A traditional plan (often a PPO or HMO). Higher premium, lower deductible, predictable copays. A PPO (preferred provider organization) lets you see out-of-network providers at a higher cost and usually without referrals. An HMO (health maintenance organization) usually requires in-network care and a primary-care referral for specialists, in exchange for a lower premium.

A high-deductible health plan (HDHP) with a health savings account (HSA). Lower premium, higher deductible, and eligibility for an HSA, which is the reason this plan exists. The IRS sets a minimum deductible and a maximum out-of-pocket for a plan to be HSA-qualified, both indexed yearly; your SBC will say whether the plan qualifies.

What makes an HSA unusual. Money goes in before income tax, and if it goes in through payroll it also skips Social Security and Medicare tax (7.65 percent). It grows without tax. It comes out tax-free for qualified medical expenses. That is a tax break at every step, which no retirement account matches. The account is yours, not the shop's: it goes with you when you leave, and unused money rolls over every year with no deadline. After 65 you can withdraw for anything, paying ordinary income tax like a traditional IRA; before 65, a non-medical withdrawal costs income tax plus a 20 percent penalty. Contributions are capped at an IRS annual limit, indexed, higher for family coverage, with an extra catch-up amount from age 55.

2025 federal law expanded HSA eligibility starting in 2026, including treating bronze and catastrophic marketplace plans as HSA-compatible. Current as of 2026; check IRS Publication 969 for the year you enroll.

Do not confuse an HSA with an FSA. A flexible spending account is also pre-tax, but it belongs to the employer's plan and is largely use-it-or-lose-it each year, with only limited carryover or grace-period options the plan may offer.

Running the comparison: worst case first

The mistake is comparing premiums alone. The useful comparison is total yearly cost, premium plus what you pay for care, minus any employer HSA contribution, under three years: a light year, your expected year, and the worst year, which is the premium plus the out-of-pocket maximum.

Run the worst case first, because it often settles the question by itself. If one plan is cheaper in the worst year, and also cheaper in a light year, it is cheaper in every year in between, and you are done.

To keep the units honest across both examples below, every figure is in days of take-home pay, the way a tech actually feels a medical bill. The plan figures are illustrative; use the ones on your own enrollment sheet.

Worked example 1: a healthy single tech, age 24

Light year. Two urgent-care visits and a generic prescription. On the HDHP this is all under the deductible, paid at the negotiated price: about 3 days. On the PPO, copays come to about 1 day.

• HDHP: 6 premium plus 3 care minus 5 deposit equals 4 days.
• PPO: 18 premium plus 1 care equals 19 days.

Worst year. An off-the-job injury with surgery hits the out-of-pocket maximum on either plan.

• HDHP: 6 plus 40 minus 5 equals 41 days.
• PPO: 18 plus 30 equals 48 days.

The HDHP wins both, so it wins every year in between. The reason is visible in the table: the premium gap (12 days) plus the employer deposit (5 days) is 17 days in the HDHP's favor, and the out-of-pocket maximum gap is only 10 days against it.

The catch. In a bad year the PPO spends its money evenly through the year in premiums, while the HDHP asks for up to 40 days of pay in a few weeks. A tech with no savings faces a hospital bill the size of two months' take-home. The answer is to fund the HSA: putting aside even 2 days of pay a month through payroll builds the cushion, and each day put in is worth more than a day, because it skipped 7.65 percent payroll tax and your income tax on the way in.

Worked example 2: a family of four, one child with asthma

The child takes a daily controller inhaler and sees a specialist four times a year.

Light year (the asthma is quiet, nobody else gets sick). HDHP care about 8 days, PPO copays about 4 days.

• HDHP: 30 plus 8 minus 10 equals 28 days. PPO: 50 plus 4 equals 54 days. HDHP by 26 days.

Expected year (normal asthma care plus ordinary kid illnesses). HDHP care at negotiated prices about 35 days; PPO copays about 10 days.

• HDHP: 30 plus 35 minus 10 equals 55 days. PPO: 50 plus 10 equals 60 days. HDHP by 5 days.

Worst year (a hospital stay, or a planned birth).

• HDHP: 30 plus 80 minus 10 equals 100 days. PPO: 50 plus 40 equals 90 days. PPO by 10 days.

Now the plans cross, which is the case the worst-case-first rule exists to catch. The tax saving on HSA contributions narrows the HDHP's worst-year loss: if the family puts 20 days of pay into the HSA through payroll and their combined tax rate on that money (7.65 percent payroll tax, 12 percent federal, 5 percent state) is about 24.65 percent, they save about 4.9 days, so the worst year becomes about 95 days against the PPO's 90. Still the PPO by about 5 days.

So the call depends on what you know is coming. A family expecting a baby next year, or with a scheduled surgery, should take the PPO: the worst year is the expected year. A family whose asthma has been stable for years leans HDHP, as long as they can cover a large bill if one arrives. If the expected-year gap is small (5 days here) and the worst-year gap goes the other way, the PPO is buying predictability for about a week of pay, which is a reasonable thing to buy if there is no savings cushion.

Two plan details that move the family math. First, IRS guidance lets an HDHP cover certain preventive medications for chronic conditions, including asthma controller inhalers, before the deductible; it is a plan option, so check the drug list. If this plan uses it, the expected-year HDHP figure drops and the HDHP pulls ahead. Second, read whether the family deductible is embedded (each person has their own cap inside the family total) or aggregate (the whole family deductible must be met before the plan pays for anyone). An aggregate deductible makes one child's care far more expensive.

Networks: the check that overrides the math

All of the arithmetic above assumes in-network care. Before you enroll:

• Look up each person's current doctors and specialists in the plan's own directory, then call the office and ask "Are you in network for [plan name] for next year?" Directories are often wrong.
• Check the pharmacy and each regular medication against the formulary, the plan's drug list, including which tier it sits on.
• Check the nearest emergency room and hospital.

The federal No Surprises Act, in effect since 2022, protects you from surprise out-of-network bills for most emergency care and for out-of-network providers working inside an in-network hospital. It does not cover ground ambulance, and it does not protect you if you choose an out-of-network doctor for planned care.

What changes the answer

• Your spouse's employer offers coverage. Compare covering each person on the cheaper plan for them, and check whether either employer adds a surcharge for covering a spouse who has their own coverage.
• You are leaving or between jobs. COBRA lets you keep the old plan, at up to 102 percent of the full premium, generally for up to 18 months at employers with 20 or more employees; some states require similar continuation from smaller employers. Losing job-based coverage also opens a 60-day special enrollment period on the marketplace (healthcare.gov or your state's exchange), where income-based premium tax credits may make a plan cheaper than COBRA. The enhanced marketplace subsidies of 2021 to 2025 were scheduled to expire after 2025; check the current rules there.
• You are self-employed or 1099. You buy coverage yourself and may deduct the premiums, but not for any month you could have joined an employer-subsidized plan. See related: Going 1099: The Tax Math a Tech Misses.

References

• U.S. Department of Labor and HHS, Summary of Benefits and Coverage requirements under the Affordable Care Act
• IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Notice 2019-45 (preventive care for chronic conditions)
• CMS, No Surprises Act consumer protections
• U.S. Department of Labor, COBRA continuation coverage guidance; healthcare.gov special enrollment periods
• See related: Reading a Benefits Enrollment Packet, Evaluating a Job Offer Beyond the Hourly Rate