Why You Shouldn’t Be Scared of the High Deductible Health Plan (HDHP)
Many employers are starting to offer a high deductible health plan (HDHP) as part of their health insurance offering. So just how high does that mean the deductible is? As defined by the IRS, for 2018, the minimum annual deductible for a HDHP is $1,350 for single coverage and $2,700 for family coverage. Make sure to find out your specific HDHP deductible from your employer.
That’s higher than more traditional health plans, and tends to steer people back to what they’ve always had. But it’s important to take a comprehensive look at some of the benefits high deductible plans provide.
It can be paired with a Health Savings Account (HSA).
The HDHP often comes with an HSA. Contributions to HSAs are tax deductible and earnings and withdrawals for eligible medical expenses are tax-free. Unlike a flexible spending account (FSA), HSA funds carry over and are individually owned. That means your account goes with you if you retire or leave your employer. You can also choose to invest your HSA dollars or use an HSA debit card to pay for eligible medical expenses. If you opt to invest your account, you can reimburse yourself any time—in a month, two years or thirty years from now. (Check with your employer to see if they’ll contribute or match your contributions!).
An HDHP has lower premiums.
The premiums for the HDHP are lower than more traditional health plans, which can help outweigh the higher deductible. Putting your premium savings each month into your HSA can be beneficial when you have larger medical expenses, and those dollars continue to grow until that time comes. For example, if the monthly premium for family coverage on your traditional plan is $350 and the monthly premium for family coverage on the HDHP offering is $100, that’s $250/month you can stock away for a later date.
It’s a Consumer Driven Health Plan (CDHP).
The high deductible health plan puts you in the driver’s seat. Instead of paying a standard co-pay for a doctor’s visit, you’ll pay a discounted amount for the service you received. Did you know different treatments, procedures and prescriptions can cost different amounts based on where you get them? Check your insurance company’s website for cost comparisons, so you know exactly what you’ll be paying when you walk in the door.
To determine if you have an HSA-qualified HDHP, contact your health insurance provider. For more information on health savings accounts, visit the HealthSavings Administrators website.