High Deductible Health Plans (HDHPs) & Health Savings Accounts (HSAs)

What are HDHPs & HSAs?

One way to manage your health care expenses is by enrolling in a High Deductible Health Plan (HDHP) in combination with opening a Health Savings Account (HSA).

How High Deductible Health Plans and Health Savings Accounts can reduce your costs

  • If you enroll in an HDHP, you may pay a lower monthly premium but have a higher deductible (meaning you pay for more of your health care items and services before the insurance plan pays).
  • If you combine your HDHP with an HSA, you can pay that deductible, plus other qualified medical expenses, using money you set aside in your tax-free HSA.
  • So if you have an HDHP and don’t need many health care items and services, you may benefit from a lower monthly premium. If you need more care, you’ll save by using the tax-free money in your HSA to pay for it.
  • Your HSA balance rolls over year to year, so you can build up reserves to pay for health care items and services you need later.

What’s considered a High Deductible Health Plan?

Under the tax law, HDHPs must set a minimum deductible and a limit, or maximum, on out-of-pocket costs.

For calendar year 2020, these amounts for HDHPs are:

Minimum deductible (The amount you pay for health care items and services before your plan starts to pay) Maximum out-of-pocket costs (The most you’d have to pay if you need more health care items and services)

Individual HDHP

$1,400

$6,900

Family HDHP

$2,800

$13,800

HDHP deductibles are often significantly higher than the minimums shown above and can be as high as the maximum out-of-pocket costs shown above.