A high deductible health plan (HDHP) is usually with a higher deductible than a traditional insurance plan. And the monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
For a health plan to be considered a qualifying, high-deductible health plan, or HSA-eligible, it must meet the IRS's announcement of annual minimum deductible and out-of-pocket maximum set annually.
HDHP minimum deductible for individuals: $1,400 for 2022 and $1,500 for 2023
HDHP minimum deductible for families: $2,800 for 2022 and $3,000 for 2023
HDHP maximum out-of-pocket for individuals: $7,050 for 2022 and $7,500 for 2023
HDHP maximum out-of-pocket for families: $14,100 for 2022 and $15,000 for 2023
High deductible health plans and health savings accounts can help to reduce your costs. When 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). But if you combine your HDHP with an HSA, you can pay that deductible, plus other qualified medical expenses, using the 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. And 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.
Please note that an HDHP is a must for your eligibility to make a pre-tax contribution to the HSA account. If you lose HDHP, you are not qualified to make contributions to the HSA account. Instead, your HSA account will be transferred to Individual retail HSA accounts, in which you can still access the money but you are not able to make contributions.
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