What is a high-deductible health plan (HDHP)?
A high-deductible health plan (HDHP) is a health plan with a larger annual deductible. With a high-deductible health plan, you will end up paying more on your annual deductible than other health plans but will have a lower monthly premium. With an HDHP, you qualify for a tax-advantaged health savings account (HSA).
What is a deductible?
A deductible is the amount you pay before the health plan begins paying for health care services. Once you have paid your deductible, your cost is typically just the copay and coinsurance; your health care provider pays the rest.
The deductible is different than a premium, which is what you pay monthly for the plan itself and is the cost you pay to keep your health coverage.
Learn about other health plan terms you should know.
Should I choose a high-deductible health plan?
A high-deductible health plan can be a good option for people who are young and tend to be healthy. This plan is best for people who don't expect to need a lot of medical services but want reassurance in the case of a medical emergency. This plan is also a good choice for those willing to have a larger deductible in exchange for a lower monthly premium.
Benefits of a high-deductible health plan
Here are some of the most common benefits of an HDHP:
- Lower monthly premiums:
You will pay lower premiums each month. This will save you money if you are using your plan for preventive care rather than more expensive medical treatment or procedures.
- Pair with a health savings account:
You qualify for an HSA, which can be used to pay for certain medical expenses that your plan may not pay for. The money that goes into your HSA is untaxed and can be used for medical-related expenses. Some health plan providers, like Priority Health, offer a free HSA banking partner.
- Simple benefit structure:
An HDHP has a straightforward benefit structure that makes it easier to understand the maximum amounts you'll need to pay in a year.
- Federal Tax Benefits:
HSA accounts allow you to take advantage of federal tax benefits and any unused funds in your HSA can roll over to the following year.
Disadvantages of a high-deductible health plan
There a couple of disadvantages that come with enrolling in an HDHP:
- Higher deductible cost: With an HDHP, there is a higher annual deductible cost, and your health plan will not begin paying for most medical care until the deductible is reached.
- Higher out-of-pocket costs: With an HDHP, the deductible is higher than other types of plans so if an unexpected medical emergency does happen, the out-of-pocket cost could be very expensive until your deductible is met.
High-deductible health plan prescription drug coverage
Under an HDHP, certain prescription drugs that are considered "preventive" may be covered. However, prescription drugs that do not fall under the preventive category will need to be paid in full if your deductible hasn't been met. Chronic condition coverage on Rx prescriptions is covered before you meet your deductible with an HDHP.
Pairing an HDHP with an HSA
Health savings accounts are flexible, tax-free savings accounts that can be invested in low-cost mutual funds to increase potential earnings and can even be a powerful part of a retirement strategy. An HSA allows employers, employees and even family and friends to make contributions. You can pair a qualified high-deductible health plan with a health savings account to save on premiums and take advantage of all HSAs have to offer. Priority Health has partnered with HealthEquity to offer no-cost HSA accounts to members enrolled in our MyPriority HSA plans.
High-deductible health plans from Priority Health
It is important that you choose the right plan for you based on your medical and financial needs. A high-deductible health plan could be just the right plan for you. Priority Health has many different health plans options that allow you to find your perfect fit.
When your priority is getting coverage, our priority is having you covered.
Health coverage 101
- How to save on health coverage
- How to compare health plans
- OEP checklist
- 5 step guide to shopping
- Take a quiz to find your plan
- 5 health plan terms to know
- What's a high-deductible plan?
- Understanding metal levels
- 6 Affordable Care Act key terms
- MyPriority plan benefits
- 5 must haves in a plan
- Narrow Network plans