What defines high-deductible health plans (HDHPs)?

High-deductible health plans (HDHPs) are characterized primarily by their higher annual deductibles and out-of-pocket limits compared to traditional health insurance plans. This means that the insured individual must pay a greater amount out-of-pocket for healthcare expenses before insurance coverage kicks in, which can promote cost-consciousness among consumers.

This structure often results in lower monthly premiums, making these plans appealing for those who are generally healthy and do not anticipate needing extensive medical care. However, the higher deductible is a key defining feature, distinguishing HDHPs from other types of health insurance plans, which typically have lower deductibles and higher premiums.

While many HDHPs comply with regulations requiring them to cover preventive services at no cost to the insured, this is not unique to HDHPs and does not define the category itself. Furthermore, HDHPs are not limited to only healthy individuals; they can be purchased by anyone, regardless of health status. Therefore, the defining characteristic of HDHPs is the combination of higher deductibles and out-of-pocket limits.