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Can the HDHP plan save me money?

There are some ways that a high deductible health plan (HDHP) could save you money. As the name implies, HDHPs are plans that feature higher deductibles than traditional insurance plans.
  • HDHPs typically carry lower premiums than traditionally lower deductible coverage.
  • An HDHP can be combined with a health savings account (HSA) to allow you to pay for qualified out-of-pocket medical expenses on a pre-tax basis, saving you money. In fact, having an HDHP is a requirement to have an HSA. Savings in your HSA grow tax-free; you do not have to pay taxes on the interest you accrue. You also pay no taxes or penalties when you use HSA funds to pay for qualified medical expenses. HSA funds roll over from year to year, so they can be a tax-free way to build up long-term savings.
  • The Internal Revenue Service puts a limit on the amount you would be expected to pay in a year for your deductible and all out-of-pocket expenses if you have an HDHP. In 2016, that limit is $6550 for individual coverage and $13,100 for family coverage. Once you reach your deductible, the plan covers your medical expenses 100 percent. When you consider that the average cost of a three-day stay in the hospital is $30,000, an HDHP could save you significant amounts of money.
However, because HDHPs can require significant out-of-pocket costs, they are not a good option for some people. Talk to the benefits administrator at your workplace, or your own insurance company to help determine what is best for you and your covered family members. 

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.