February 1, 2021

What is a High Deductible Health Plan (HDHP)?

What is a High Deductible Health Plan

A high deductible health plan, or HDHP, is a type of health insurance plan with (you guessed it) a higher deductible than most insurance plans. The monthly payments are typically lower but you cover the full costs of healthcare until you reach your yearly deductible. This is also the plan that can be combined with a health savings account (HSA), which allows you to pay for certain medical expenses tax free.

What qualifies as a high deductible health plan?

Only specific plans qualify as HDHP and can be combined with an HSA. There are three rules set by the IRS for a health insurance plan to be considered a HDHP:

What are the benefits of a high deductible health plan?

There are a few reasons that a HDHP combined with an HSA is a good option:

What are the disadvantages of a High Deductible Health Plan?

A high deductible health plan can be a good option, but there are some thing to keep in mind:

Should I offer a High Deductible Health Plan as an employer?

The HDHP combined with an HSA can be an attractive benefit for attracting and retaining employees because of the dramatic tax benefits—especially if you’re planning to contribute to your employee’s HSA accounts.

HDHPs can also be a good way to keep your monthly insurance contributions lower, and still offer a great benefit to your employees. Even if you’re contributing to your employee’s HSAs, your monthly contributions will typically be lower than a traditional health insurance plan.

If you’re thinking about offering a high deductible health plan as an employer, it’s always best to discuss your unique company needs with your health benefits provider. Depending on your employee demographics, they’ll be able to suggest options for your business.

Disclaimer: Any articles written on this website, including this article, are not to be taken as legal or HR advice. Employment laws are constantly changing and vary by location and industry. You should consult a lawyer or HR expert for guidance. Need HR advice? We can help!

📸 Photo by Andrew Neel on Unsplash

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