High-Deductible Health Plan (HDHP)
Candlefocus EditorThe most attractive feature of HDHPs is the potential for an accompanying health savings account (HSA). An HSA combines features of a traditional savings account with a tax-advantaged account. With an HDHP and HSA, individuals and families can save money for future medical expenses on a tax-advantaged basis and use funds for current medical expenses on a tax-free basis.
HDHPs are designed for younger, healthier people who don’t anticipate needing a lot of medical care, as well as wealth individuals or families that can afford to pay their own deductible out of pocket. Additionally, since HDHPs encourage individuals and families to become more shophardware in their healthcare costs, these plans help to reduce overall health care costs.
But HDHPs are not an ideal option for everyone. Older people and those who require regular doctor visits and medication are more likely to benefit from an alternative health plan than an HDHP. Additionally, HDHPs may not be a great fit for those that cannot afford their own out-of-pocket costs up to the deductible.
To determine if an HDHP is the right fit for you or your family, seek the advice of a financial professional and review the plan details carefully. While they offer some solid advantages, they also require a great deal of responsibility and financial discipline. Be sure to assess your current financial needs and future capabilities before selecting an HDHP.