What is a high-deductible health plan (HDHP)?

A high-deductible health plan (HDHP) is characterized by having low monthly premiums coupled with higher deductibles. This means that while the monthly payments to maintain the insurance are relatively lower, the insured individual must pay a larger amount out of pocket before the insurance begins to cover costs. This type of plan often appeals to individuals and families who do not anticipate needing extensive medical care and want to save on monthly expenses.

In contrast, plans that cover all costs without any deductible would not fit the definition of an HDHP, as they typically involve regular premium payments that can be higher. Likewise, a plan designed exclusively for preventative care would not encompass the greater range of services that an HDHP covers once the deductible is met. Lastly, a plan requiring no out-of-pocket costs contradicts the very nature of an HDHP, which is defined by the higher out-of-pocket expenses that must be paid before benefits kick in.