High Deductible Health Plan Flashcards, test questions and answers

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What is High Deductible Health Plan?

A High Deductible Health Plan (HDHP) is a health insurance plan designed to help reduce healthcare costs by requiring policyholders to pay more out-of-pocket expenses before their insurance kicks in. HDHPs generally have lower premiums than other types of health plans, but the covered services are often limited and the deductibles can be quite high.HDHPs are becoming increasingly popular due to rising healthcare costs and the Affordable Care Act’s requirement that all Americans have health insurance. Many people choose an HDHP because they believe it will save them money in the long run, since they can apply pre-tax dollars from a Health Savings Account (HSA) to cover their deductible and other out-of-pocket expenses. Additionally, HSAs offer tax advantages, as contributions to them are not subject to federal taxes and any interest or investment gains on these accounts are also tax free. However, there are some drawbacks associated with an HDHP that should be considered before signing up for one of these plans: 1) The high deductibles mean policyholders must pay for most routine healthcare services out of pocket until their deductible has been met; 2) Covered services may be limited; 3) If policyholders need expensive medical care that exceeds their deductible limit, they may still face significant out-of-pocket costs; and 4) Some doctors may not accept patients with this type of plan due to lower reimbursement rates from insurers. For those who want more comprehensive coverage at a lower cost than traditional health plans provide, an HDHP can be a great option. It is important for individuals considering this type of plan to carefully evaluate their medical needs so they understand what level of coverage is right for them before making a decision about which plan best fits their needs and budget.