A High Deductible Health Plan (HDHP) is a health insurance plan with a higher deductible than traditional health plans, but contrary to what the name might suggest, the deductible is not always significantly higher than those found in many copay plans. One of the key features of an HDHP is its eligibility requirement for setting up and contributing to a Health Savings Account (HSA), which allows for tax-advantaged savings to pay for qualified medical expenses.
Unlike many traditional copay plans, HDHPs generally do not offer copays for most services before meeting the deductible. However, they are required by law to cover preventive care services without copayments or having to meet the deductible first. This feature makes them a good option for individuals who primarily need coverage for routine preventive care.
Another important aspect of HDHPs is that they have an annual out-of-pocket (OOP) limit, which can often be lower than the OOP limits found in many copay plans. This means that in a catastrophic health situation, an individual might end up paying less out-of-pocket with an HDHP than they would with a traditional copay plan. The lower monthly premiums of HDHPs, combined with the potential for lower catastrophic costs, make them an appealing choice for people looking for affordable catastrophic coverage and those who want to take advantage of the benefits offered by HSAs.