A high-deductible health plan or HDHP is a plan with a deductible for medical expenses that is higher than a traditional health insurance plan. HDHPs are available for purchase on the health insurance Marketplace. Depending on your health and financial situation, an HDHP may be an ideal plan for you.
High-Deductible Health Plan: How does it work, and what does it cover?
In 2024, the IRS defined a qualifying HDHP as a plan that had a deductible of at least $1,600 for self-only coverage (individual coverage) and $3,200 for family coverage. In 2025, the minimum deductible changed to $1,650 and $3,300, respectively.
With an HDHP, the monthly premium is lower than traditional insurance plans, but you’ll pay more out-of-pocket for medical expenses yourself before the deductible (or the insurance company) starts paying. Once you reach your minimum limit, the insurance company will pay for 100% of covered, in-network medical expenses. Also, HDHPs include an annual catastrophic limit on out-of-pocket expenses for covered, in-network medical expenses.
An HDHP plan covers many of the same medical expenses as other plans, like doctor visits, hospital stays, emergency care, mental health services, etc. Likewise, they normally cover routine preventive care without requiring copays or coinsurance before the deductible takes over. Examples of preventive care include vaccines, blood pressure screening, diet, nutritional counseling, etc.
High-Deductible Health Plans and Health Savings Accounts
A unique feature of an HDHP plan is that you can often combine it with a health savings account (HSA). In fact, HDHPs are the only plans that permit you (the enrollee) to contribute to an HSA, which is why HDHPs are sometimes called HSA-eligible plans. The benefit of having an HSA is that you can save money tax-free to use for certain medical expenses such as deductibles, copayments, coinsurance, and other qualified expenses, which can lower out-of-pocket health care costs.
Are High-Deductible Health Plans Right for You?
A common rationale for choosing an HDHP is that because HDHPs make individuals more conscious of medical expenses, they help lower overall healthcare costs. Similarly, HDHPs create more affordable monthly costs because of the lower insurance premiums. Moreover, these lower premiums help you save money if you only use the plan for preventive care, like annual physicals and preventive screenings.
As such, people say that HDHPs are ideal for young, healthy individuals who only require coverage for serious health emergencies. People also see wealthy individuals and families who can afford to pay the high deductible as conventional HDHP enrollees. Another draw of an HDHP plan is the ability to use a tax-advantaged HSA.
Alternatively, someone might choose another plan over an HDHP if they are okay with higher premiums and don’t see themselves contributing to an HSA. Likewise, someone may avoid an HDHP plan if they don’t want to deal with higher out-of-pocket costs.
