A high-deductible health plan (HDHP) is a special type of plan that typically offers a lower premium than a traditional health plan. The trade-off is that what you pay out of pocket for medical expenses is typically more. If you’re healthy and use mostly preventive services, and therefore don’t have many medical bills, this type of plan can save you money.
How HDHPs work
A traditional health plan has a deductible that may range from $500 to a few thousand dollars. Once you meet your deductible, the plan picks up the rest of your expenses. A high-deductible health plan, on the other hand, may have a deductible anywhere from $1,200 to as much as $5,500 or more.
The idea behind this type of plan is that you can take the money you’re saving on the premium and invest it in a health savings account (HSA) on a tax-deductible basis to pay for your medical costs. It gives you more control over your money and allows you to keep better tabs on how your health care dollars are spent.
One benefit of HDHPs is that some (not all) are qualified to work with an HSA. These special accounts allow participants to pay for medical expenses with pre-tax (for a group plan) or tax-deductible (for a non-group plan) dollars. HSAs are designed to complement HSA-qualified HDHPs. With an HSA-qualified HDHP, members can take the money they save on premiums and invest it in the HSA to pay for future qualified medical expenses.
When you need care, you can pay for it with the pre-tax money from the HSA account, which saves you money. You can use the money in your account to pay for qualified medical expenses, such as office visits, eyewear, prescription medication, deductibles, copays, and coinsurance, plus expenses your plan may not cover, such as laser vision correction.
Another benefit of an HSA is that you own the account. If you switch jobs or switch insurance companies, it goes with you. Plus, money you contribute to it accumulates from year to year. It’s not a use-it-or-lose-it arrangement like a flexible spending account.
Find out more
WPS Health Insurance offers a variety of HSA-qualified HDHPs, along with traditional health insurance plans. If you’re interested in taking more control of your health care spending, or in the financial benefits an HDHP may offer you, check them out. Your local WPS agent can answer any questions you may have. If you don’t have a local agent, contact the sales office nearest you.