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HDHPs

A high-deductible health plan (HDHP) has a higher deductible than most health plans, but it also has a lower monthly premium. The deductible is the amount you must pay yourself before your health plan pays its part for health care services. A premium is the amount you pay every month for your health plan. That means with an HDHP, you generally pay less each month, but when you need health care, you pay more out of pocket before you get help covering your medical costs from the insurance company.

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If you have employer-based health insurance, you can combine an HDHP with a health reimbursement arrangement (HRA) or with a health savings account (HSA). With these savings plans, you contribute money from your paycheck before taxes. You use that money to pay for health costs not covered by insurance, such as copays, coinsurance, or dental care. Your employer may also add to your savings. Not all high-deductible plans can be used with a HSA.

A high-deductible health plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. Being covered by an HDHP is also a requirement for having a health savings account. Some HDHP plans also offer additional “wellness” benefits, provided before a deductible is paid. High-deductible health plans are a form of catastrophic coverage, intended to cover for catastrophic illnesses. A plan with a higher deductible than a traditional insurance plan. Usually the monthly premium is lower, but you have to pay more health care costs yourself (your deductible) before the insurance company starts to pay its share.

A high deductible plan can be combined with a health savings account or a health reimbursement arrangement. This allows you to pay for certain medical expenses with untaxed dollars. Plans with higher deductibles typically have lower premiums, so you’ll keep more of your paycheck. And if you rarely get sick, you won’t come close to hitting your deductible anyway. So the conventional wisdom is that young and healthy people can actually save money with a high deductible plan.