Navigating the American healthcare and insurance system is not easy. You have many coverage options, each with advantages and disadvantages. One popular option is a high-deductible health plan (HDHP). But what is an HDHP, and why should you consider one?
What is an HDHP?
An HDHP is like a traditional health insurance policy. But as the name would imply, you have a higher deductible.
With any insurance policy, the deductible is how much you pay out of pocket before your coverage begins. Once you meet the deductible, your health insurance provider will handle the rest. With an HDHP, the deductible is higher, leaving you with a more significant financial burden when faced with medical expenses. If you would like to know - What is an HDHP? visit this website.
The Disadvantages of an HDHP
Of course, the biggest downside of these health plans is the higher deductible. Aside from in-network preventative care, you'll have to pay more before your coverage kicks in compared to other plans.
While that's fine for some people, it can burden others. You should always consider high out-of-pocket expenses before enrolling in an HDHP.
The Advantages of an HDHP
Now, let's talk about why you might consider getting an HDHP.
One of the most attractive perks is lower premiums. Because you have a higher deductible, you get the benefit of paying less on your monthly premiums. It's a tradeoff you must consider.
For many younger and healthier people, it's a no-brainer! The odds of requiring expensive medical care are lower, so why pay a high premium? While the deductible is more, spending less every month can be beneficial.
Another perk is the ability to open a health savings account (HSA). An HSA is a tax-advantaged account you can contribute to yearly. You can also invest the money, gain interest, and grow wealth. An HSA will cover qualified medical expenses tax-free, which you could use for your high deductible.
There are strict qualifications to open an HSA. The most significant is that you must have an HDHP. It's a big draw that can help you plan for unexpected expenses while controlling how you pay for healthcare.
Read a similar article about HRA here at this page.