What is a High-Deductible Health Plan?

Fri, Sep 17, 2021 8:51 PM Medicare Medicare Supplement

Are you looking for low-cost healthcare options? You've probably heard of High-Deductible Health Plans (HDHPs) (HDHPs). A deductible on a High-Deductible Health Plan is higher than on a typical insurance plan. These plans, however, can be paired with Health Savings Accounts (HSAs) to maximize the amount of non-taxable health care you can afford.

 

What is a High-Deductible Health Plan, and how does it work?

 

A person must first fulfill their annual deductible before their health insurance plan begins to pay for their care. A High-Deductible Health Plan (HDHP) is similar, except the annual deductible is substantially greater. HDHPs feature cheaper rates and greater deductibles than typical health plans.

A high-deductible plan is one with a deductible of at least $1,400 for an individual or $2,800 for a family. The total annual out-of-pocket expenses for an HDHP cannot exceed $6,900 for an individual or $13,800 for a family. All deductibles, copayments, and coinsurance are included in these figures. An HDHP covers 100 percent of all in-network healthcare expenses until you reach this level. However, keep in mind that this restriction does not apply to out-of-network services. Even if your deductible has been met, you'll have to pay for those.

 

What is the relationship between HDHPs and Health Savings Accounts?

 

Because HDHPs can result in high out-of-pocket healthcare costs, many consumers form a health savings account (HSA). An HSA is a type of savings account that is only available to HDHP enrollees. You can contribute pre-tax cash to an HSA, albeit there are yearly contribution limits. This helps to offset the additional healthcare costs that come with having an HDHP. In addition, any funds remaining in your HSA at the conclusion of a calendar year may be carried over to the following year.

Keep in mind that health savings accounts and flexible spending accounts are not the same things (FSAs). A flexible spending account (FSA) is a system in which businesses allow employees to contribute pre-tax cash to special savings accounts for out-of-pocket medical bills. Each employee has the option of contributing as much as they like to an FSA, up to a pre-determined amount imposed by their employer. Only a portion of the money left over from an FSA can be carried over to the following calendar year.

 

Are HDHPs cost-effective?

 

An HDHP may be cheap if you do not have any major medical conditions. Because of the low monthly premium amounts, this is the case. An HDHP may be affordable if you do not visit the doctor frequently, are generally healthy and do not have a large family covered by your plan. However, if you or someone in your family has a catastrophic medical event that necessitates high-level treatment, an HDHP becomes substantially less inexpensive. This is due to the fact that, despite the modest insurance rates, you will have high out-of-pocket expenses. Furthermore, any out-of-network care will be excluded from your annual restrictions.

It's important to know that, with an HDHP, you'll cover 100% of the cost of any care until you reach your yearly deductible, with the exception of preventative care. That means you'll be responsible for the whole cost of any surgeries, in-patient or out-patient procedures, or therapies you require. Even if you have health insurance through an HDHP, you could end up with enormous medical debt in the worst-case situation.

However, if an HDHP is all that their company gives, some people may not have any other options for coverage.

 

Also Read: How to Choose a Health Insurance Plan

 

Is the coverage provided by HDHPs comprehensive?

 

You'll still have coverage for preventative care with no co-pays thanks to the Affordable Care Act.

These essential health benefits must be covered by all ACA-compliant plans, including those provided on the Marketplace. If you have an HDHP, however, you won't be covered for these expenses (excluding preventative care) until you've satisfied your yearly deductible:

 

• Prescription medications

• Services and devices for rehabilitative and habilitative purposes (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)

• Services in the laboratory

• Wellness and prevention programs, as well as chronic illness management

• Pediatric services, such as dental and vision care (adult dental and vision coverage aren't considered essential health benefits).

• Patient ambulatory services (outpatient care you get without being admitted to a hospital)

• Assistance in an emergency

• Inpatient care (like surgery and overnight stays)

• Maternity, infant, and pregnancy care (both before and after birth)

• Services for mental health and substance abuse, including behavioral health treatment (this includes counseling and psychotherapy)

 

What other health insurance alternatives do I have?

 

There are various different coverage alternatives available to you.

 

• The Medicaid program. Depending on your income, you may potentially be eligible for Medicaid. You can check if you qualify and apply here.

• COBRA. If you've recently been laid off, you may be eligible for COBRA, which requires you to pay the entire price for the same insurance that your employer purchased for you. COBRA insurance is often significantly more expensive than Marketplace insurance, but it allows you to keep your current coverage.

• An Obamacare/Marketplace Plan. A Marketplace health insurance plan, commonly known as Obamacare or Affordable Care Act insurance, can be purchased.

• The Medicare program. When you reach the age of 65, you become eligible for Medicare. To enroll, call (844) 731-6614

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