What is a High-Deductible Health Plan (HDHP) & How Does it Work? | Aetna (2024)

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What is a High-Deductible Health Plan (HDHP) & How Does it Work? | Aetna (2024)

FAQs

What is a High-Deductible Health Plan (HDHP) & How Does it Work? | Aetna? ›

What is an HDHP, and how does it work? An HDHP has a higher deductible than a typical health plan. That simply means you pay out of pocket for your medical expenses until you reach a certain amount. Then, your plan begins to pay.

How does a high deductible health plan HDHP work? ›

A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (also called your deductible).

What are the disadvantages of a high deductible health plan? ›

Cons of High Deductible Healthcare Plans
  • Some Individuals May Avoid Healthcare Treatment Due to High Costs. ...
  • It Is More Expensive to Manage a Chronic Illness With an HDHP. ...
  • Few Exceptions to the Deductible Rules. ...
  • Premium Costs and Deductible Levels Seem to Rise Every Year. ...
  • Contributions to Your HSA Are Capped.
Dec 21, 2023

Is high deductible plan a good idea? ›

Advantages of an HDHP

HDHPs are popular because they have low monthly premiums. Because the premiums are lower than other health insurance plans, the deductible is higher. However, many HDHPs provide 100% in-network coverage for preventive services before you meet your deductible.

How do I know if I'm covered by a HDHP? ›

In most cases, your health insurer or your employer can confirm if you are enrolled in a qualifying high-deductible health plan. Oftentimes, this information is included in the declaration page of your policy or in another official correspondence.

Who benefits from a high deductible plan? ›

Pros. Lower monthly premiums: Most high-deductible health plans come with lower monthly premiums. If you anticipate only needing preventive care, which is covered at 100% under most plans when you stay in-network, then the lower premiums that often come with an HDHP may help you save money in the long run.

What does the IRS consider a high-deductible health plan? ›

An HDHP is health coverage with a: Higher annual deductible than typical health plans and. Maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that the taxpayer must pay for covered expenses. Out-of-pocket expenses include copayments and cost sharing but do not include premiums.

Why do employers push HDHP? ›

While offering an HDHP to employees will likely result in savings for your business, it essentially pushes the costs onto the employee, especially if they're faced with a serious medical situation. However, many proponents of HDHPs argue that they're generally beneficial to both businesses and their team members.

Which is better, PPO or HDHP? ›

When choosing between an HDHP and a PPO, consider your health status, expected medical needs, and financial situation. An HDHP may be a good option if you're generally healthy, while a PPO might be better for those needing frequent medical care.

Which is better low premium or High Deductible Health Plan? ›

If you are generally healthy and don't have pre-existing conditions, a plan with a higher deductible might be a better choice for you. Your monthly premium is lower since you're only visiting the doctor for annual checkups, and you're not in need of frequent health care services.

Can you be on Medicare and a high deductible health plan? ›

Some people opt to wait to enroll in Medicare and keep their HDHP and their HSA. This is allowed, providing a person has healthcare coverage.

How do I maximize my high deductible health plan? ›

Here are six ways you can re-balance the scale between premium savings and member costs when moving to a higher deductible.
  1. Supplemental Plans. ...
  2. Health Savings Account (HSA) Contributions. ...
  3. Health Reimbursem*nt Arrangement (HRA) ...
  4. Gap Plans. ...
  5. Flexible Spending Account (FSA) ...
  6. Payroll Deduction Loans.
Mar 6, 2024

What is the minimum deductible for a high deductible health plan in 2024? ›

For calendar year 2024, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not ...

What is the 12 month rule for HSA? ›

The Last Month Rule

The catch? There is a testing period of twelve months. This means you must stay eligible through the end of the next year, or else you will face taxes and penalties. For example, let's look at the individual above who became HSA-eligible on December 1.

Can I cash out my HSA when I leave my job? ›

Yes, you can cash out your HSA at any time. However, any funds withdrawn for costs other than qualified medical expenses will result in the IRS imposing a 20% tax penalty. If you leave your job, you don't have to cash out your HSA.

How does a HDHP health plan work? ›

HDHPs have higher annual deductibles and out-of-pocket maximum limits than other types of Federal Employees Health Benefits (FEHB) Program plans. With an HDHP, the annual deductible must be met before plan benefits are paid for services other than in-network preventive care services, which are fully covered..

What does HDHP save you money on? ›

If you would benefit from reducing your taxable income by contributing to your HSA, you should consider an HDHP. If you would like to save for medical expenses in the future or qualified medical expenses not covered by the health plan (Lasix, orthodontia), you should consider an HDHP.

Do HDHP have copays? ›

So HDHPs cannot have copays for office visits or prescriptions before the deductible is met (as opposed to a plan that's got a high deductible but also offers copays for office visits from the get-go; people might generally consider the latter to be a high deductible plan, but it's not an HDHP).

Is high deductible health plan better than PPO? ›

When choosing between an HDHP and a PPO, consider your health status, expected medical needs, and financial situation. An HDHP may be a good option if you're generally healthy, while a PPO might be better for those needing frequent medical care.

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