HDHP
Back to GlossaryDefinition
A type of health insurance coverage with a high deductible. To contribute to a HSA, a person must have coverage under an HDHP. HDHPs require policyholders to pay more out-of-pocket expenses before the health plan starts to pay for medical services.
Summary
HDHP (High Deductible Health Plan) is a type of health insurance plan that requires individuals to pay higher out-of-pocket costs (deductibles) before insurance coverage begins, but typically offers lower monthly premiums. These plans are often paired with Health Savings Accounts (HSAs) to help manage the higher upfront costs.
Usage Context
Understanding HDHPs is crucial when comparing health insurance options, calculating healthcare costs, designing employee benefits packages, and making decisions about Health Savings Account contributions and usage.
Common Confusions
- Thinking that high deductible means no coverage until deductible is met (preventive care is often covered)
- Confusing deductible with out-of-pocket maximum
- Assuming HDHPs are always the cheapest option overall
- Not understanding the HSA eligibility requirements and benefits
- Thinking all medical expenses count toward the deductible
