HDHPs Provide Affordable Health Insurance for Many

Find out how HDHPs, or High Deductible Health Plans, can make health insurance affordable

Many people prefer to get a high-deductible health plan (HDHP) because of the lower monthly premiums. Deductibles may range from $1,000 to $10,000 which can provide a safety net for plan subscribers. You can get an HDHP plan through your employer or you can get one on your own.

The overall structure and healthcare provider network of an HDHP plan are comparable to a health maintenance organization (HMO) or a preferred provider organization (PPO). Plan holders may choose from different deductible levels. Rules concerning the meeting of deductibles may differ depending on the plan. Copays for basic and preventive care may be available for some plans before the deductible is offered. Coinsurance, or the percentage of costs the insurer pays, varies according to the plan type.

Low monthly premiums are the main selling point of HDHP plans. They are typically twenty percent cheaper compared to traditional plans. These plans are comparable to catastrophic health insurance plans which can protect individuals and families against the high costs of illness and injury. These plans are highly recommended for those who are relatively healthy and do not require routine medical care or those who cannot afford traditional plan premiums.

HDHP plan holders have the option of getting a health savings account or HSA. With this account, pre-tax dollars can be used to cover health care costs. Employers can set up a similar account for their workers known as a health reimbursement account or HRA. HRA funds may or may not roll over the following year and are typically forfeited when an employee leaves the company.

Unfortunately, preventive care or prescriptions may not be covered by HDHP. Subscribers of these plans tend to avoid medical care because of the expensive out-of-pocket costs while others feel that the savings on the premium costs are not enough to cover the high cost of medical care before deductibles are met. People with low income feel that the tax breaks are not beneficial. Choosing the right health insurance plan is essential to balance affordability with adequate coverage, especially when facing potentially high medical expenses.

For more information on the types of health plans offered, visit our Health Insurance Learning Center.