What Is A High-Deductible Health Plan?

About High-Deductible Health Plans


A high-deductible health plan (HDHP) is a type of health insurance that can offer lower monthly premiums. You may want to understand how HDHPs work, the pros and cons of the plan depending on your situation, and how a health savings account (HSA) can be funded with pre-tax dollars to pay for medical expenses.

How Do High-Deductible Health Plans Work?

The amount of your yearly deductible depends on the plan you choose. The higher the deductible, the more out-of-pocket costs you pay before your insurer begins covering medical expenses.


The IRS defines high-deductible health plans for 2023 as:

  • Individual plans with deductibles of at least $1,500
  • Family plans with deductibles of at least $3,000 


The plan’s out-of-pocket maximum must be no higher than $7,500 for an individual plan and $15,000 for a family plan.


High-Deductible Health Plan Pros And Cons



Lower premiums. Pay less for health coverage monthly.

Tax-free spending account option. Eligible HDHPs help you save on medical expenses when paired with an HSA.



Higher deductible. You pay more toward your deductible before your healthcare plan begins paying for covered costs.

More out-of-pocket expenses. You may pay more out of pocket for non-preventive healthcare until you reach your plan’s yearly deductible amount.


Why Choose A High-Deductible Health Plan?


You mainly need health insurance for preventive care

If you expect to need health insurance mostly for preventive care, like annual checkups with your doctor, then you could benefit from lower monthly premiums offered with an HDHP. 


You have a health savings account (HSA)

With some HDHPs, you can use an HSA to help pay for eligible medical expenses. The money deposited into an HSA is tax-free, which can help you save money. A high-deductible health plan paired with an HSA is also known as a consumer-driven health plan. 


More About Consumer-Driven Health Plans

A consumer-driven health plan (CDHP) is a high-deductible health insurance plan that allows individuals and families to set aside pre-tax money to help pay for qualified medical expenses. CDHPs are HDHPs paired with HSAs. Members may use the pre-tax funds from their HSA to pay for medical expenses, like copays and other costs, not covered by their health insurance plan. 


What is the difference between an HDHP and a CDHP?

You can sign up for an HDHP for you and your family without using an HSA. A CDHP incorporates the added benefit of an HSA to help with medical expenses. 


How Do High-Deductible Health Plans Compare To Other Health Plans?

HDHPs (High-Deductible Health Plans) are available as PPO or HMO plans. Here are a few key details of each type.


PPO (Preferred Provider Organization) plans may offer:

  • Higher premiums – pay more monthly for your plan
  • Lower deductibles – pay less out of pocket for medical costs
  • Flexible provider network – access to a large number of doctors and hospitals


HMO (Health Maintenance Organization) plans may offer:

  • Lower premiums – pay less monthly for your plan
  • Higher deductibles — pay more out of pocket for medical costs
  • Most Anthem HMO plans are open access, meaning they do not require a referral to see a specialist 


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