Health insurance can seem like a labyrinth of legal and medical jargon, with endless choices. One option that often sparks confusion is the High Deductible Health Plan (HDHP). When they hear “high deductible,” many people immediately think it is expensive and risky. However, in some cases, it can actually be a good move. The following information can help you decide whether a high-deductible health plan could be the right choice.
What Is an HDHP?
A High Deductible Health Plan’s defining feature is a high deductible. For 2025, the minimum deductible is $1,650 for an individual and $3,300 for a family. With an HDHP, you pay lower monthly premiums but are responsible for covering more of your medical costs upfront before your insurance coverage kicks in.
What Makes an HDHP the Right Option?
Despite the high deductible, an HDHP may be the best choice under any of the following circumstances:
You Do Not Expect A Lot of Medical Expenses
If you are a generally healthy individual or family and do not expect to visit doctors often, an HDHP could save you money. Monthly premiums for this plan tend to be much lower than for traditional plans. If your medical expenses are minimal, paying more out of pocket may be worth the risk if you need care. As HDHPs typically cover preventive care, you can still have annual checkups without breaking the bank.
You Are Comfortable with Managing Risk
With a high deductible, you accept a certain level of financial risk. The possibility of accidents and unexpected surgeries or chronic conditions can weigh heavily on this decision. However, if you are comfortable with the uncertainty, have an emergency fund, and are willing to manage the upfront costs of healthcare, an HDHP can make sense. The potential savings on premiums can outweigh the stress of higher deductibles for some people.
You Have a Health Savings Account (HSA)
One of the perks of high-deductible health plans is that they can be paired with health savings accounts (HSAs), which are savings accounts designed to pay for healthcare costs. You can make pre-tax contributions to an HSA, use the funds for qualified medical expenses, and roll it over from one year to the next. With the added benefit of tax advantages, an HSA can be a powerful financial tool in planning for the future. You can use it for medical expenses today and to build up savings for healthcare in retirement.
You Are Planning for High Medical Expenses in the Future
If you anticipate major medical expenses in the near future, an HDHP could save you money overall. For example, if you are expecting a pregnancy or planning a major surgery, you could hit your deductible quickly, after which your health plan will cover most of the costs. In this scenario, the lower premiums you pay throughout the year could mean significant savings over time.
A High Deductible Health Plan is not for everyone, but it may be the right choice in some circumstances. Our friendly agent can help you determine the best type of health insurance for you.