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This health plan requires a soprano hiiiiiiigh deductible (typically around $1,000 to 2,500 or more) but has baritone bass looooow monthly premiums. These plans also typically have high ceilings, as high as $3 million in some cases, which means the insurer will continue to pay major medical bills up to this amount.
The HDHP is designed to work with an HSA (health savings account). The HSA is a special savings account meant to be used for costs related to your medical care and comes with a few tax benefits. First, any money you put into the HSA (up to $6,150 for a family getting coverage) is tax-deductible. As it’s sitting in your HSA, it can earn you interest that you do not pay tax on (tax-free interest). Finally, as long as you use the money on medical expenses, you won’t have to pay taxes on your HSA savings. Not to mention, they travel with you if you move to another state, don’t spend it by the end of the year, or if you change jobs.
Bottom line, look at your budget and the cost for coverage with an HDHP and see how they match up compared to other plans.
A high deductible health plan (HDHP) refers to a health insurance plan that typically pays for covered services after the member meets a minimum deductible. The plan will typically pay the full cost of covered services once the annual out-of-pocket maximum is met. It’s important to note that preventive care is usually not subject to the deductible.
The words “high deductible” may make some people nervous but HDHPs can offer valuable benefits. The monthly premiums are typically much lower. They give you control over the money you save. They protect you from major health care costs -- by providing an annual out of pocket maximum amount. HDHPs often require you to be more aware of health costs which may make you more aware of how you spend your health care dollars.
In addition, federal tax law allows HDHPs to offer special health spending accounts. These accounts will help you pay for medical expenses. The account can either be a health reimbursement account* (HRA) or a health savings account (HSA). Often, you may also see these plans referred to as consumer-driven health plans (CDHP).
* Also called a health reimbursement arrangement.
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.