High-Deductible Health Plan (HDHP)

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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is a High-Deductible Health Plan (HDHP)?

The dollar limits on HDHPs change often (the government thresholds are indexed for inflation). HDHPs are growing in popularity because they help employers limit insurance costs (they have lower premiums) and because they allow people to open Health Savings Accounts (HSAs). HSAs are tax-deferred accounts that allow people to save money to pay the deductibles on their HDHPs.

How Does a High-Deductible Health Plan (HDHP) Work?

Let's say John Doe has a high-deductible health plan. His policy has a $2,000 deductible, which means that if he has a $10,000 surgery, he must pay the first $2,000 before the insurer will cover the rest.

Why Does a High-Deductible Health Plan (HDHP) Matter?

A high-deductible health plan (HDHP) is a health insurance plan that has a high minimum deductible and usually does not cover all of the insured's medical costs.

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