What is a High Deductible Health Plan
A high deductible health plan (HDHP) is a health insurance plan with traditionally low premiums but higher deductibles. An HDHP can be combined with a health savings account (HSA) to pay for certain medical expenses with money free from federal taxes. Other types of insurance plans, such as PPO, POS, HMO, and more, can still be classified as an HDHP, depending on the deductible of the plan.
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What is a High Deductible Health Plan?
A high deductible health plan (HDHP) is a health insurance plan with low premiums but high deductibles. This means that you pay a low monthly rate for your plan, but will not receive coverage until you meet a very high deductible. An HDHP is the only type of health plan that can pair with a Health Savings Account (HSA) to help lower the cost of healthcare expenses. You can enroll in an HDHP in the health insurance Marketplace during the Open Enrollment Period or Special Enrollment Period. When you view plans in the Marketplace, you can see if HDHP plans are "HSA-eligible."
Types of insurance plans, such as HMO, PPO, etc. (described in the FAQs), can be considered high deductible health plans. A high deductible plan is classified by the amount of the deductible itself. The threshold for what is considered “high deductible” for the 2021 and 2022 health insurance plan years is described below.
|Min. Deductible||Max. Deductible||Min. Deductible||Max. Deductible|
Services Covered By an HDHP
Your insurance plan will cover preventative care before you meet your deductible. However, with an HDHP, you must cover all treatment that is not considered preventative until you have met your deductible. Coverage of preventative services may depend on age and risk of developing certain conditions. Some examples of preventive care covered by your health insurance plan include:
- Blood pressure screening
- Cholesterol screening
- Depression screening
- Diabetes (Type 2) screening
- Diet counseling for adults at higher risk for chronic disease
- Hepatitis B screening for people at high risk
- Hepatitis C screening for adults age 18 to 79 years
- HIV screening
- Lung cancer screening
- Obesity screening and counseling
- Sexually transmitted infection (STI) prevention counseling for adults at higher risk
- Syphilis screening for adults at higher risk
- Tobacco use screening
- Tuberculosis screening
What is a Health Savings Account (HSA)?
A Health Savings Account (HSA) is a type of savings account often paired with an HDHP that lets you set aside tax-free money for qualified medical expenses, such as copayments and coinsurance, but not premiums. An HSA may lower your overall health care costs and earn interest, which is not taxable. Your HSA funds can also be deducted from taxes when you file your tax return.
You can use the funds in an HSA at any time to pay for qualified medical expenses, but you may only contribute to an HSA only if you have an HDHP. HSA funds also roll over year to year if you don't spend them.
|Max. Contribution||Max. Contribution|
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Who Should Consider an HDHP?
High deductible health plans can be helpful for a variety of people but are typically geared toward those who are relatively healthy and don’t expect to incur significant medical expenses within the year. For those who do not seek regular medical care, having an HDHP can keep monthly premiums low and allow for HSA contributions to help cover the costs of copayments, coinsurance, and high deductibles.
HDHPs can also be beneficial for those who are sick because of the maximum out-of-pocket costs combined with premiums and the tax advantages when paired with an HSA. The maximum out-of-pocket costs on HDHPs are often lower than maximum out-of-pocket costs for non-HDHPs. In 2022, the maximum allowable out-of-pocket expenditure on an HDHP will be $7,050 for an individual and $14,100 for a family. However, for non-HDHPs, the maximum allowable out-of-pocket costs are $8,700 for an individual and $17,400 for a family.
The reason this out-of-pocket maximum is critical is when a person is sick and has extensive medical needs, they’ll likely end up meeting the out-of-pocket limit on their plan regardless of whether the deductible is low or high. Once this maximum is met, the health insurance company pays for the rest of the care costs, so a lower threshold may be more beneficial.
High Deductible Health Plan Frequently Asked Questions (FAQs)
Consider the following questions when evaluating whether an HDHP is best for you and your family.
What are other types of health plans?
An HDHP is tagged to plans with deductibles within a specific range, but there are other ways to share your healthcare costs between you and your insurance company. Health insurance plans are also classified by metal tier and by type. The table below shows the cost breakdown of metal tier plans with the insurance companies’ contributions. For example, with a platinum plan, the company is responsible for 90 percent of your healthcare costs, but these plans are often expensive to maintain. Bronze and Silver plans are often cheaper, but you are accountable for a more significant share of your healthcare costs.
|Plan Category||Insurance Company Contribution||Your Contribution|
Below are a few other types of healthcare plan types, such as HMO, PPO, POS, and EPO plans. A high deductible health plan can still be any of these types of plans.
Health Maintenance Organizations (HMOs)
HMOs typically have lower insurance premiums and out-of-pocket costs because they require a primary care physician (PCP) referral before seeking specialty care. When employees sign up for an HMO plan, they should choose a trusting PCP since they will be the gatekeeper of their other health needs.
Preferred Provider Organizations (PPOs)
PPOs typically have higher premiums than HMOs or POS plans, but enrollees can seek specialists and out-of-network physicians with no referral needed. These plans are an excellent option for those requiring frequent and various care and can afford higher premiums.
Point of Service Plans (POSs)
Like an HMO, a POS plan requires a referral from a primary care physician before seeing a specialist. These plans usually have higher premiums than HMOs because they cover out-of-network doctors but at a higher price than in-network care.
Exclusive Provider Organization (EPO)
EPO’s are lesser-known and only cover in-network services, but the network is generally more extensive than HMOs; therefore, they may not require a referral from a primary care physician. The premiums for EPOs are higher than HMOs but lower than PPOs.
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What are alternatives to health insurance?
Alternatives to health insurance include catastrophic coverage, care membership plans, or concierge medicine. Health insurance can be expensive, but having access to affordable care is essential in maintaining good health and preventing poor health outcomes. Catastrophic coverage is eligible for people under 30 or people of any age with a hardship exemption or affordability exemption (based on Marketplace or job-based insurance is unaffordable). A care membership plan, such as Mira, is available to those ages 11 and up to access virtual care and urgent care services, with discounts on prescriptions and lab tests.
How do you know if you qualify for federal health insurance programs?
When you look for health insurance in the health insurance Marketplace, you will be asked to enter your personal information, including your income. Based on this information, the Marketplace will generate your options, which may include plans such as Medicaid, Medicare, CHIP, or other means to reduce your healthcare costs such as premium tax credits or cost-sharing reductions.
High deductible health plans are classified as plans with deductibles between $1,400 and $7,050 for individual plans for the 2022 plan year. Metal tier plans and other health insurance plans can be considered HDHPs based on the deductible but can be offset when paired with an HSA. HDHPs are suitable for healthy people with infrequent medical needs and those experiencing illness.
If you have an HDHP, you may consider pairing it with a Mira membership. Mira offers an affordable alternative to health insurance, and there is no deductible to be met. Add your family or your business and get access to in-person urgent care services, virtual urgent care, virtual primary care, and telebehavioral health. Plans range from an average of $25 to $60 per month. Members also get access to up to 80 percent discounted rates on thousands of prescriptions and lab screenings. Join today!
Ashley Brooks works in Healthcare Consulting and graduates with her MPH in September of 2022 from George Washington University, but graduated with her B.S. in Health Science from James Madison University in 2019. Ashley has been with Mira since June of 2021 and shares the passion for creating affordable healthcare coverage for all!