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What is High deductible health plan?

High deductible health plan
High deductible health plan

Do you ever wonder why people still choose a high deductible health plan despite their high costs? This article aims to explore these reasons.

More so, it identifies what it covers as well as the distinct features that make it different from a regular health plan. From here you’ll figure out its mechanics down to its cost structure.

By the end, you should have enough information to decide if this option will provide you with enough coverage for your needs. Keep reading to get more details.

What is a high deductible health plan?

Signing up for a high-deductible health plan means you are ready to pay more out-of-pocket costs in exchange for affordable premiums. A high annual deductible is a major feature of this plan.

Therefore, you must ensure you are financially capable of footing your bills or healthy enough to minimize your visits to the doctor. It may not be a sufficient plan if you require frequent healthcare services.

As an HSA-eligible plan, most people sign up to access a saving option with tax benefits. Despite being expensive, it helps you manage your health better, as you’re responsible for part of the cost.

What an HDHP covers

On this plan, you will encounter high out-of-pocket costs, especially for special treatment. This is because a high deductible plan only has provision for preventive care.

Services that count as preventive care may not require charges like copays or coinsurance. Additionally, you will also receive free screenings even without meeting your deductibles.

Other procedures covered by HDHPs include;

  • Immunization for measles and chickenpox
  • Nutritional counseling
  • High blood pressure test
  • Diet screening
  • HIV screening
  • Depression screening
  • Flu shots

Also Read:  Health insurance plans in USA

How does a high deductible health plan work?

High deductible health plans charge sizable deductibles for lower premiums. For instance, a healthy young man with a clean health record signs up for this plan to save on premiums.

The insurer covers his basic needs including screenings and preventive care at no cost. With this, he can also save up in case of rainy days if his deductible is not met.

However, he must pay 100 % of other health care costs until he reaches the fixed dollar amount. By settling his deductible, he invites providers who cover 80% of the costs until he exceeds his out-of-pocket limits.

Some HDHPs operate on a first-dollar coverage structure. What this means is that all basic medical care is covered without the need for copays and coinsurance

Benefits of a high deductible health plan

Extra savings account

Most people choose a high deductible health plan because it pairs with a Health Savings Account

This allows them to save money to cover future health expenses. The best part? It also offers tax advantages.

Lower premiums

One of the best parts of HDHP benefits is the ability to cover significant costs which pay off with lesser monthly premiums. This option enables people to save more money especially if you use in-network services.

Tax benefits

Policyholders enjoy tax benefits and are eligible to join an HSA. This account comes with tax benefits both at deposit or withdrawal. With this, you can divert the extra funds saved from taxes to qualified medical expenses

Reduced expenses

Due to the high out-of-pocket costs most people under HDHP try their best to avoid expenses. They pay more attention to their health to reduce unnecessary claims.


To wrap up, it is essential to consider whether this plan is as good for your financial needs as much as it is for your healthcare needs. Sacrificing one for the other may expose you to risks in the future.


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