(This post was originally published in May, 2013 and was updated in Nov, 2016, Oct, 2017, and Aug 2018)
A high-deductible health plan (HDHP) is just what the name implies. It is a health insurance plan that has a higher deductible than traditional insurance plans. An HDHP also has lower premiums than traditional coverage.
In plain English, when you’re covered by an HDHP, since you pay for your medical costs up to the amount of the deductible, you’re basically getting catastrophic coverage. In other words, coverage for an unexpected or out-of-the ordinary medical event(s) that would cause your costs to exceed your deductible.
The minimum and maximum deductible amounts and out-of-pocket expenses for high-deductible health plans are set by the IRS.
For 2017, 2018, and 2019, here are the amounts:
|HDHP minimum deductible||
|HDHP maximum out-of-pocket (deductibles, co-payments and other amounts, but not premiums)||
HDHPs can be bought by individuals, or they may be offered by an employer as an option under group coverage. Whether your get your coverage on your own or through your employer, however, a critical feature of having an HDHP is that you are eligible to set up and contribute to a Health Savings Account (HSA).
Click here to learn what an HSA is, how it works, and why it is beneficial.