A high deductible health plan (HDHP) has a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs up front before insurance kicks in. An HDHP can be combined with a health savings account (HSA) allowing you to pay for medical expenses using tax-free payroll contributions.
For a health plan to be considered a qualifying, high-deductible health plan, or HSA-eligible, it must meet the IRS's minimum deductible and out-of-pocket maximum. These values are set annually.
If you have an HDHP and require minimal health care, you will likely benefit from having this type of plan. If at some point you need more medical care, you can use your tax-free money from your HSA to pay for those medical expenses.
Your HSA balance never expires and the funds you’ve contributed are yours to keep. You can use HSA funds to pay for health care products and services when you need them.
You must have an HDHP to contribute to an HSA. If you are no longer enrolled in an HDHP you can no longer make contributions to your HSA. At that time, your HSA account will be transferred to an individual retail account, in which you can still access the money but you are not able to make contributions.