How does a high-deductible health plan (HDHP) differ from a traditional plan?

A high-deductible health plan (HDHP) is characterized by its higher deductibles and lower premium costs compared to traditional health insurance plans. This structure means that individuals enrolled in an HDHP typically pay more out-of-pocket expenses upfront before their insurance kicks in, but they benefit from lower monthly premium payments. This arrangement can make healthcare plans more affordable for some consumers, especially those who are generally healthy and do not expect to incur high medical costs.

The key advantage of an HDHP is that it often allows for health savings accounts (HSAs), which enable individuals to save money tax-free for qualified medical expenses. This can provide significant long-term financial benefits for patients who manage their healthcare costs wisely.

In contrast, traditional plans usually feature lower deductibles and higher premiums, making them more accessible during immediate medical needs but potentially more expensive overall for consumers who rarely seek care. Understanding these fundamental differences is essential for consumers to make informed decisions based on their healthcare needs and financial situations.