What is a High-Deductible Health Plan (HDHP)?
Researching affordable health care options? Then you’ve likely heard about High-Deductible Health Plans (HDHPs). A High-Deductible Health Plan plan has a higher deductible than a standard insurance plan. But these plans can be combined with Health Savings Accounts (HSAs) to maximize the amount of health care you can pay for with non-taxable dollars.
What is a High-Deductible Health Plan?
With a standard health insurance plan, a person meets their annual deductible before their plan starts paying out for their care. This is also true for a High-Deductible Health Plan (HDHP)—however, the annual deductible is much higher. HDHPs have higher deductibles and lower premiums than standard health plans.
According to the IRS, a high-deductible plan in 2020 is any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out of pocket-expenses can’t be more than $6,900 for an individual or $13,800 for a family. These numbers include all deductibles, copayments, and coinsurance. Once you meet this limit, an HDHP covers 100% of all in-network healthcare expenses. But be aware that this limit does not apply to out-of-network services. You’ll have to pay for those, even if you’ve hit your deductible.
If you’re looking for a health insurance plan, enter your zip code below to see all the health insurance plans available to you and their prices. Based on your income, you may qualify for government subsidies that lower the cost of insurance. Most people pay less than $50/month for a plan.
How do HDHPs work with Health Savings Accounts (HSAs)?
Because HDHPs may mean you’re paying a lot out-of-pocket for your healthcare, many people open a health savings account (HSA). An HSA is a kind of savings account only accessible to those who enroll in an HDHP. Though they have annual contribution limits, you can contribute pre-tax dollars to an HSA. This helps offset the healthcare costs that can emerge from having an HDHP. Also, any dollars not spent in a given calendar year in your HSA may roll over to the following year.
Keep in mind that HSAs are not the same as flexible spending accounts (FSAs). A FSA is a system through which employers allow employees to contribute to special savings accounts with pre-tax dollars for out-of-pocket medical expenses. Each employee gets to choose how much to contribute to an FSA, up to a limit pre-set by their employer. Not all the money leftover from an FSA can be rolled over into the next calendar year.
Are HDHPs affordable?
If you do not incur any major medical issues, an HDHP may be affordable. This is because of its low monthly premium amounts. If you do not go to the doctor often, are generally healthy, and do not have a large family covered by your plan, an HDHP may be affordable. However, an HDHP becomes significantly less affordable should you or anyone in your family experience any kind of catastrophic medical event requiring a high-level of care. This is because despite the low insurance premiums, you will end up incurring significant out-of-pocket costs. In addition, your annual limits will not include any out-of-network care.
It is essential to remember that until you meet your annual deductible, you will cover 100% of the cost of all care with an HDHP except for preventive care. That includes bearing the full costs of any surgeries, in-patient, or out-patient procedures or treatments you may need. In a worst-case scenario, you could end up with significant medical debt, even if you have health insurance via an HDHP.
However, some people may not have any options for coverage outside of an HDHP if that is all their employer offers.
Are HDHPs comprehensive in their coverage?
Thanks to the Affordable Care Act, you’ll still have coverage with no co-pays for preventive care services.
All ACA-compliant plans, including those HDHPs offered on the Marketplace, must also include coverage for these 10 essential health benefits. However, if you have an HDHP, your plan will not start paying for these things (except preventive care) until you have met your annual deductible:
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
What are my other health insurance options?
You have several other coverage options.
- Marketplace/Obamacare plan. You can enroll in a Marketplace health insurance plan, also known as Obamacare or Affordable Care Act insurance. See plans and prices here.
- Medicaid. You also may be eligible for Medicaid, depending on your income. You can see if you’re eligible and apply here.
- COBRA. If you’ve been laid off recently, you usually have the option of COBRA, where you pay the full premium of the same insurance your employer purchased for you. COBRA is typically much more expensive than Marketplace insurance, but it allows you to continue the coverage you already had. Learn more about comparing COBRA with Obamacare health insurance.
- Medicare. Once you turn 65, you’re eligible for Medicare. Call us to enroll at (855) 677-3060.