High Deductible Health Plan
What Does High Deductible Health Plan Mean?
A high-deductible health insurance plan (HDHP) is a type of health insurance that features lower premiums and higher deductibles compared to traditional plans, such as HMOs or PPOs. Some HDHPs also offer additional wellness benefits that are accessible even before the deductible is met.
An HDHP is also referred to as a consumer-directed health plan.
Insuranceopedia Explains High Deductible Health Plan
Some HDHPs include additional wellness benefits that are available before the deductible is met. These plans are a form of catastrophic coverage designed to provide financial protection against severe illnesses or medical emergencies.
HDHPs are often paired with a Health Savings Account (HSA), enabling the insured individual or their employer to make tax-deductible contributions. Funds in the HSA can be used tax-free to pay for qualified medical expenses.
However, contribution limits apply, and the HDHP out-of-pocket maximum sets the highest amount an individual or family must pay annually for covered expenses.
