Facts About Your HDHP

High Deductible Health Plans, or HDHPs, are becoming part of the health insurance landscape. If your employer is offering one, or if you are considering enrolling in one of these plans, realize it’s nothing like a typical health insurance plan. HDHP health coverage can be complicated.

Here are some helpful facts about HDHP and some associated factors:

• An HDHP is a form of an HMO.
• An HDHP is part of the PPO (Point of Service) National Network.
• Compared to the typical health insurance plan, an HDHP has lower premiums.
• If one has no coverage at all and a tight budget, the premium for an HDHP plan is definitely affordable.
• Compared to the typical health insurance plan, an HDHP has extremely high deductibles.
• The term “catastrophic coverage” is often used to describe the HDHP plan, as, because of the high deductible, it’s said to only be practical for emergency medical care.
• An HDHP insured consumer might have to come up with a few thousand dollars to cover medical expenses before any insurance would kick in.
• An HDHP has higher annual out-of-pocket expenses with maximum limits.
• Coverage under any other health plan is not allowed. There are limited exceptions, such as accident, dental, disability, long-term care, vision or specified disease insurance (cancer, etc.).
• On average, the plan must have at least a $1,200 single and $2,400 family deductible.
• The plan cannot have an out of pocket expense limit above $5,950 single or $11,900 for family coverage.
• An HDHP can consist of a network of health care professionals.
• Going outside the network could be met with a higher co-insurance, or no coverage at all.
• As the deductible is too steep, an HDHP is considered not for typical medical care, such as check-ups.
• It’s said HDHP coverage is better than none at all.
• Some employers only offer HDHP.
• When joining an HDHP, you also are required to have a health savings account.
• There are different types of health savings accounts: Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Flexible Savings Account (FSA).
• These savings accounts are essentially utilities that you put money into to offset portions of the deductible, or co-payments, co-insurance, and other out-of-pocket medical expenses.
• You are eligible for HSA if there are no other health plans covering the family, you are not receiving VA benefits, you are not enrolled in Medicare, and you have not been claimed as a dependent on anyone else’s tax return.
• Unused funds in an HSA can roll over, and the interest earned is tax free.
• In 2003, the HSA was part of a bill signed into law as part of the Medicare Modernization Act.
• An HSA is not available for anyone over 65.
• The HSA is typically funded with direct deposits taken from your pay.
• The HSA is portable from employer to employer.
• Accumulated HSA funds can be saved for health care expenses in retirement.
• The HRA is for those individuals not eligible for a HSA.
• If you switch to another plan, an HRA cannot go with you.
• The HRA does not earn interest.
• The funds in a FSA have to be spent that year or there’s the risk of losing them.
• The idea behind these savings accounts is that lower premiums offer the opportunity to put aside for savings.
• HDHPs are compliant with federal and state requirements.
• Under a traditional health insurance plan, the deductible can be met by two or more covered individuals, as long as one of them is the primary policyholder. With a HDHP, no payable benefits are available until both the primary has reached the deductible limit and the dependents have reached their deductible limit.
• Technically, a family will put out, at the very least, the deductible before being eligible for any payment from its HDHP.
• As most medical expenses will be coming out of pocket, HDHP encourages frugal attention to health care.
• HDHPs cover some preventive care services at 100%, which are not subject to the deductible.
• Preventive care is usually an annual wellness exam. This includes physical exams, well baby and child care, blood pressure and cholesterol checks, diabetes screenings, flu shots, breast exams, pap tests, Tetanus-Diphtheria boosters and mammograms.
• These plans are not income sensitive.
• The IRS sets the minimum deductible limits on these plans, adjusted for inflation, annually.
• Eligible children are covered until the age of 20.
• You can look into HDHPs using online insurance tools.