A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. Show
Health Savings Account (HSA) A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums. .How High Deductible Health Plans and Health Savings Accounts can reduce your costs
What’s considered a High Deductible Health Plan?Under the tax law, HDHPs must set a minimum deductible and a limit, or maximum, on out-of-pocket costs. For calendar year 2023, these amounts for HDHPs are: HDHP deductibles are often significantly higher than the minimums shown above and can be as high as the maximum out-of-pocket costs shown above. A high-deductible health plan (HDHP) is a health insurance policy that has a lower monthly premium and a higher deductible. HDHPs typically cover all preventive, in-network care in full before the deductible is met. If a person needs any medical service outside of that, they must pay the full deductible before they receive coverage. The federal government defines the deductible amounts for HDHPs.  A high-deductible health plan (HDHP) keeps your monthly premium payments low while typically providing 100% coverage for preventive services in your plan’s network before you meet your deductible. Sounds good, right? But it’s not quite that simple. So understanding how these health insurance plans work is important. HDHPs have become more common in recent years. According to the National Center for Health Statistics, the percentage of people ages 18 to 64 enrolled in HDHPs with health savings accounts (HSAs) went up from about 4% to 19% from 2007 through 2017. During the same time frame, enrollment in HDHPs without HSAs rose from nearly 11% to about 25% in the same age group. Enrollment in traditional plans decreased during that decade. Employers also tend to like these plans because they cost less. And they still give employees basic, necessary services. Here’s a look at what an HDHP actually is, its pros and cons, and how to find the right plan for your needs. What is a high-deductible health plan?An HDHP is a health insurance plan with a high deductible. A health plan deductible is the amount you pay out of pocket before your insurance covers any cost. A premium is what you pay every month for your plan. An HDHP is a plan with at least a $1,400 deductible for an individual or a $2,800 deductible for a family in 2022. Some HDHPs come with HSAs attached. HSAs allow you to save money on qualified medical expenses. As mentioned earlier, if you’re enrolled in an HDHP, your in-network preventive care is covered without you having to pay the deductible first. Because of this, high-deductible policies can be a smart financial decision. For example, you might think you will have minimal healthcare needs, or your employer may make HSA contributions. But if you need services beyond in-network preventive care, you’ll have to pay the deductible to get further coverage. Your annual out-of-pocket expenses (which includes coinsurance, copays, and deductibles) in an HDHP can’t be more than $7,050 for an individual or $14,100 for a family in 2022. If you reach either of those limits, your plan will pick up 100% of future costs for the calendar year. But the limit doesn’t apply for services outside of your network. High-deductible vs. low-deductible plansHDHPs’ premiums are usually lower compared to other plans. Lower-deductible health insurance may have a higher premium that can also include preventive services. But you likely won’t have to pay as much out of pocket for your coverage to kick in. In short, if the HDHP gives you full coverage for annual preventive care and you think that’s all you’ll need in a given year, it may make sense to choose it. But if you’re worried about unexpected health issues, it may make more financial sense to pay more each month. That way, you can quickly reach the deductible for any added or unexpected services you may need. Health savings accounts and high-deductible health plansIf you are enrolled in an HDHP, you are eligible to contribute to an HSA. In fact, you can only contribute to one if you have an HDHP. HSAs allow you to move pre-tax earnings to an account that you can use to pay medical costs. If you want to lower your monthly health insurance premiums and have the opportunity to open an HSA, an HDHP might be a good option for you. Qualifying medical expenses for an HSA can range from copays and deductibles to hearing aids, bandages, acupuncture, therapy, and beyond. Additionally, contributions carry over from one year to the next, so you don’t lose the money if you don’t spend it right away. The pros of high-deductible health plansFor most people, the most appealing aspect of an HDHP is the low monthly premium. Because the deductibles are high, its monthly premiums are lower than plans with low deductibles and low out-of-pocket maximums. An out-of-pocket maximum is the most you’ll have to pay during your coverage year. If you’re relatively healthy and generally don’t have medical expenses beyond annual physicals and screenings, you’re more likely to save money by opting for an HDHP over a low-deductible plan. That’s because yearly checkups and screenings count as preventive services, which HDHPs typically cover. Your employer may also contribute to your HSA, which is another perk of going with an HDHP. A full list of qualifying preventive services and screenings for HDHPs is available at Healthcare.gov. But here are some examples of the medical care that may be completely covered before you meet your deductible. AdultsWomen
Children
The cons of high-deductible health plansYes, HDHPs keep your monthly payments low. But they can also put you at risk of facing large medical bills that you may not be able to afford. Since HDHPs generally only cover preventive care, an accident or emergency could result in very high out-of-pocket costs. For example, if you are diagnosed with a medical condition that requires expensive treatment, you’ll be on the hook for the cost of that care. Another possible downside is how HDHPs may impact your future health. You may not go to your medical visits to treat an infection or injury or experience dangerous symptoms because of high out-of-pocket costs. Avoiding healthcare visits and prescriptions could lead to an even larger medical bill for a hospitalization compared to an in-office visit. Unfortunately, you can’t tell if or when a medical disaster may strike. So that’s what makes picking a health plan a bit of a gamble. If you need emergency care, you’ll have to pay that deductible up front and any costs beyond that up to the out-of-pocket max. So looking at the out-of-pocket max — and seeing if you have access to that amount — can also be a good idea when trying to choose a health insurance plan. Is a high-deductible health plan worth it?Your current health is a major factor in determining if an HDHP makes sense for you. If you’re young and rarely see a healthcare provider or take prescription medication, this type of plan may save you a lot of money. However, there are other life events to consider. If you’re planning on getting married, you should consider your future spouse’s health and age before opting for an HDHP. If you’re planning to have a baby later on, an HDHP might not be the right choice. Hospital childbirth costs are high and you could wind up paying your plan’s annual out-of-pocket maximum. Also, an HDHP is generally not the right fit for families with young children because they are more likely to visit a pediatrician for colds and viruses. HDHPs are also not ideal for anyone with a chronic condition (or a family member) that needs ongoing treatment. As you age, you’re statistically more likely to have higher medical expenses. Before opting for an HDHP, you should consider how your health could change in the next year. But no matter your age, if you’re in good health and have no reason to anticipate expensive healthcare costs, an HDHP might be the right fit for you. What is a good deductible for health insurance?Trying to figure out what a relatively “good” deductible is? That depends on your confirmed healthcare needs, any anticipated healthcare needs, and your ability to handle high out-of-pocket costs in the event of an unexpected emergency. Because the federal government defines an HDHP as one with a deductible of at least $1,400 for an individual and $2,800 for a family, anything lower than that may be a good deal. But don’t just go by the deductible figure when looking at plans. If a provider, lab, or health system you love is not in the network and you want to stick with them, you may be better off opting for a plan with a higher monthly premium and a lower deductible. High-deductible health plan vs. PPOShopping for health insurance? You may have the option to choose between an HDHP and a preferred provider organization (PPO). While HDHPs have a higher deductible and lower monthly premiums, you’ll have to pay more for out-of-pocket medical expenses before your coverage kicks in. PPOs, on the other hand, have a lower deductible and higher monthly premiums, but they have lower out-of-pocket costs for medical services. PPOs tend to be more flexible, but you pay for that flexibility. You may have access to a larger pool of providers, hospitals, and other services to choose from. PPOs can give you some out-of-network coverage, as well. HDHPs can give similar coverage, but it depends on the plan. Another PPO perk is that, in most cases, you won’t need your healthcare provider’s approval to see a specialist or have a test done. If you decide an HDHP is right for youIf you decide an HDHP is best for your budget — and health — you’ll want to compare coverage options of all available plans in your area. Make sure to contact the plan administrator to find out if your current healthcare providers are included in the plan’s network. Keep in mind that if they’re not included in it, you’ll have to find a new provider if you want the care to be covered. If your employer doesn’t offer an HDHP, or you aren't covered through your employer, you can look for a plan on the health insurance exchange at HealthCare.gov. Many state-run exchanges also have options for HDHPs. Or a licensed insurance broker can help you find one that fits your needs. You can also use tools and services like GoodRx to help you save money on health expenses. If you are prescribed a medication that’s not covered by your HDHP, use a GoodRx coupon to lower your out-of-pocket costs. Learn more about how to use GoodRx with your HDHP. The bottom lineJust because your monthly premium may be lower with an HDHP compared to other plans, it doesn’t always mean you’ll save money on health-related expenses. You can save money by paying lower premiums and getting a tax break through an HSA. Your employer may contribute to your HSA, too. Plus, you may save money if the plan covers all of your routine care. But if something unexpected happens, you may wind up spending more out of pocket with an HDHP. Your best bet is to crunch the numbers based on your individual financial and health status to see which option may be best for you. GoodRx Health has strict sourcing policies and relies on primary sources such as medical organizations, governmental agencies, academic institutions, and peer-reviewed scientific journals. Learn more about how we ensure our content is accurate, thorough, and unbiased by reading our editorial guidelines. Was this page helpful?thumb_up_outlinedthumb_down_outlined Subscribe and save.Get prescription saving tips and more from GoodRx Health. Enter your email to sign up.By signing up, I agree to GoodRx's Terms and Privacy Policy, and to receive marketing messages from GoodRx. Why would you not choose a high deductible health plan?The cons of high-deductible health plans
Yes, HDHPs keep your monthly payments low. But they can also put you at risk of facing large medical bills that you may not be able to afford. Since HDHPs generally only cover preventive care, an accident or emergency could result in very high out-of-pocket costs.
Should you choose a high or low deductible health plan?Key takeaways. Low deductibles are best when an illness or injury requires extensive medical care. High-deductible plans offer more manageable premiums and access to HSAs. HSAs offer a trio of tax benefits and can be a source of retirement income.
Should I switch to a high deductible health plan?If you're in good health, rarely need prescription drugs, and don't expect to incur significant medical expenses in the coming year, you might consider an HDHP. In trade for lower premiums, HDHPs require you meet your deductible before you get any coverage for treatment other than preventive care.
Is there a benefit to a high deductible health plan?A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.
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Should i choose a high deductible health plan
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