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For many Americans, open enrollment is currently taking place, offering the opportunity for individuals to make changes to their benefits for the upcoming year, including health insurance.
Choosing a health insurance plan can be challenging. Whether it’s for you as an individual or for your whole family, there can be a number of pros and cons to weigh for each health plan option.
Often individuals are offered a choice between a traditional plan and a high deductible health plan. Not familiar with a HDHP?
Here are details on potential benefits, including the opportunity to use a Health Savings Account (HSA).
What is a High Deductible Health Plan?
A high deductible health plan is commonly referred to as an “HDHP.” As indicated in the name, it is a health insurance plan that has a higher deductible than a traditional insurance plan, meaning individuals will pay more upfront for medical costs until they meet the deductible. Once the deductible is met, coverage will begin.
The deductible that needs to be met before insurance coverage starts is different for individuals and family plans. For 2019, the minimum annual deductible for an individual is $1,350 and $2,700 for family HDHP coverage.
For 2020, the minimum annual deductible for an individual is $1,400 for self-only and $2,800 for family HDHP coverage.
In general, the higher the deductible, the more the individual will pay out-of-pocket to access full coverage until they meet the deductible. While the deductible is higher, these plans typically have a lower monthly premium than traditional plans.
The traditional health plan participant will generally have a low deductible but will pay higher monthly premiums. The high deductible health plan participant will generally have low monthly payments but have higher deductibles.
Because of the higher deductible and potential for higher out-of-pocket expenses, HSAs were established to help you save to cover these costs.