What are the pros and cons of high-deductible health plans?
Pros
- Lower monthly premiums: Most high-deductible health plans come with lower monthly premiums. If you anticipate only needing preventive care, which is covered at 100% under most plans when you stay in-network, then the lower premiums that often come with an HDHP may help you save money in the long run.1
- Tax-free spending account: Some qualified high-deductible health plans may be paired with a Health Savings Account (HSA). You can use the funds in an HSA to help pay for eligible medical expenses. The money deposited into an HSA is tax-free, which can also help you save money.2
Cons
- Higher deductible: If your deductible is higher, it means you are required to pay for your medical care out of pocket up to that amount before your health plan begins to help pay for covered costs. The exception is for preventive care, which is covered at 100% under most health plans when you stay in-network.1
- Costly out-of-pocket medical expenses: If you choose a high-deductible health plan and need non-preventive medical care, or costly medical care, you will have to pay all of your deductible before your plan begins to help you pay for covered costs. Depending on your medical needs, these costs could be significant out-of-pocket expenses that you may not have planned for.
When choosing between a high-deductible health plan and a more traditional one, consider your anticipated health needs. Are you likely to require medical care above and beyond preventive? If so, an HDHP plan with a lower monthly premium may not necessarily be an advantage. A more traditional plan with a higher premium and lower deductible might offer you improved cost savings.
How much does a high-deductible health plan cost?
On average, if you are a covered employee with a high-deductible health plan in the United States, you may pay $8,217 annually and $22,404 for a family.3 HDHPs have lower monthly premiums and are a good fit for those who anticipate needing preventive care only.
How do I choose a health insurance plan that’s right for me?
Consider the following when choosing a health plan:
- If you’re healthy and usually go to the doctor once a year, a lower monthly premium (like one that comes with HDHPs) may be a good choice for you.
- If a chronic health condition means that you go often to your primary care provider (PCP) or specialists during the plan year, you must decide if savings from low premiums are greater than the cost of regular care or medication.
Carefully weighing the pros and cons of high-deductible health insurance may help you find the coverage that’s right for you. In addition to saving you money, finding the right plan for you can help ensure that you’ll receive coverage for the health care you need, when you need it.
FAQs
An HDHP has a higher deductible than a typical health plan. That simply means you pay out of pocket for your medical expenses until you reach a certain amount. Then, your plan begins to pay.
What is a HDHP health plan? ›
A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (also called your deductible).
What is a high deductible health plan HDHP Quizlet? ›
High Deductible Health Plan (HDHP) health plan that combines high deductible insurance and a funding option to pay for patients out of pocket expenses up to the deductible. lower premiums and higher deductibles than a traditional health plan.
Are HDHP plans worth it? ›
If you're generally healthy and don't have medical expenses beyond annual physicals and preventive screenings, an HDHP could save you several hundred dollars or more a year.
Which is better, PPO or HDHP? ›
When choosing between an HDHP and a PPO, consider your health status, expected medical needs, and financial situation. An HDHP may be a good option if you're generally healthy, while a PPO might be better for those needing frequent medical care.
What is a downside of a HDHP? ›
The downsides of a high deductible health plan are: Expensive. The upfront costs can be costly. High Payments. With a high-deductible health plan, your out-of-pocket costs may be higher.
How do I know if my health insurance plan is a HDHP? ›
Per IRS guidelines in 2025, an HDHP is a health insurance plan with a deductible of at least $1,650 if you have an individual plan or a deductible of at least $3,300 if you have a family plan. The deductible is the amount you'll pay out of pocket for medical expenses before your insurance pays anything.
What is the HDHP limit? ›
HDHP Out-of-Pocket Maximums. The 2025 limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $8,300 for self-only HDHP coverage (up from $8,050 in 2024), and $16,600 for family HDHP coverage (up from $16,100 in 2024). EBHRA Contribution Limit.
Is a high deductible health plan the same as a HSA? ›
A High Deductible Health Plan (HDHP) is a health plan product that combines a Health Savings Account (HSA) or a Health Reimbursem*nt Arrangement (HRA) with traditional medical coverage.
Why is my deductible so high? ›
The first factor is the high cost of health care services. The cost of medical treatments, procedures, and prescription drugs has continued to skyrocket year over year with seemingly no end in sight. As those costs have grown, both the individual deductible and family deductible have increased in tandem.
It Is More Expensive to Manage a Chronic Illness With an HDHP. A chronic illness, such as heart disease or diabetes, can be much more expensive to manage under an HDHP than a traditional health care plan. With these conditions, regular medications and health screenings may be required.
Why would you not choose a high-deductible health plan? ›
Cons. Higher deductible: If your deductible is higher, it means you are required to pay for your medical care out of pocket up to that amount before your health plan begins to help pay for covered costs. The exception is for preventive care, which is covered at 100% under most health plans when you stay in-network.
Is Copay or HDHP better? ›
Perks: Lower monthly premiums than co-pay plans. If you have a HDHP, you're often eligible for a health savings account (HSA). This is essentially a savings account where you can put money aside to spend on qualified medical expenses, including deductibles.
Do copays count towards deductible? ›
As a general rule, copays do not count toward a health plan's deductible.
How does HDHP insurance work? ›
HDHPs have higher annual deductibles and out-of-pocket maximum limits than other types of Federal Employees Health Benefits (FEHB) Program plans. With an HDHP, the annual deductible must be met before plan benefits are paid for services other than in-network preventive care services, which are fully covered..
What is better HMO or HDHP? ›
Plus, an HDHP will give you the ability to contribute to an HSA, which can be a great tool for paying for planned medical expenses. An HMO could be a good option if you know that the doctors and specialists you see are part of an HMO network, or if you are comfortable seeking a lot of care from an HMO network.
Is HSA better than HDHP? ›
If you would benefit from reducing your taxable income by contributing to your HSA, you should consider an HDHP. If you would like to save for medical expenses in the future or qualified medical expenses not covered by the health plan (Lasix, orthodontia), you should consider an HDHP.
Do HDHP have copays? ›
So HDHPs cannot have copays for office visits or prescriptions before the deductible is met (as opposed to a plan that's got a high deductible but also offers copays for office visits from the get-go; people might generally consider the latter to be a high deductible plan, but it's not an HDHP).
What is the minimum deductible for HDHP? ›
HDHP Minimum Deductibles. The 2025 minimum annual deductible is $1,650 for self-only HDHP coverage (up from $1,600 in 2024) and $3,300 for family HDHP coverage (up from $3,200 in 2024).
