A high-deductible health plan (HDHP) is a health care plan that charges a lower premium and has a higher deductible that traditional health care plans. It is usually paired with a Health Savings Account (HSA) to provide maximum benefits at the lowest cost to individuals. Often, small business owners find that Health Savings Accounts and HDHP’s are a cost-efficient way to provide health insurance to their employees.
Benefits of the HDHP
A benefit of a HDHP is that the sum of the high deductible and the maximum out-of-pocket expenses that you pay for covered medical expenses have a ceiling. Out-of-pocket expenses include co-payments but not premiums.
Another benefit of a HDHP is that it may provide preventive care with no deductible or with a much lower deductible. Preventive care includes but is not limited to the following:
1. Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.
2. Routine prenatal and well-child care.
3. Child and adult immunizations.
4. Tobacco cessation programs.
5. Obesity weight-loss programs.
6. Screening services. This includes screening services by the individual’s employer.
a. Cancer
b. Heart and vascular diseases
c. Infectious diseases
d. Mental health conditions
e. Substance abuse
f. Metabolic, nutritional, and endocrine conditions
g. Musculoskeletal disorders
h. Obstetric and gynecological conditions
i. Pediatric conditions
j. Vision and hearing disorders
Deductibles and Out-of-Pocket Maximums
For 2009, the minimum deductibles and maximum out-of-pocket maximums are the following for HDHP’s:
- Minimum deductible – single = $1,150; Maximum out-of-pocket – single = $5,800
- Minimum deductible – family - $2,300; Maximum out-of-pocket – family = $11,600
For 2010, the minimum deductibles and maximum out-of-pocket maximums will be the following for HDHP’s:
- Minimum deductible – single = $1,200; Maximum out-of-pocket – single = $5,950
- Minimum deductible – family = $2,400; Maximum out-of-pocket – family = $11,900
Although prescription drug expenses are not covered until the deductible is reached, employees using the HSA/HDHP option can have separate prescription drug plan coverage.
HSA/HDHP Medical Plan Summary
The HDHP/HSA plan is meant to force consumers to save money through their HSA for medical expenses such as co-payments, prescriptions, and lower out-of-pocket medical costs. The HDHP kicks in when there are larger, catastrophic medical costs. Not only does this plan save the consumer or employee money, it is a cost-efficient way for small businesses to offer their employees health insurance as the premiums are lower than for traditional health insurance plans.
IRS Publication 969 gives more extensive information on the HDHP/HSA health care accounts.
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