What Is a "High Deductible Health Plan" (HDHP)?


Craig Stiff, Marketing Director for Lifespring Health


A High Deductible Health Plan (HDHP) provides comprehensive coverage for high-cost medical events and a tax-advantaged way to help you build savings for future medical expenses.

If you want to open an HSA you must have an High Deductible Health Plan (HDHP). It is an inexpensive health insurance plan with a high deductible - that means the plan won't pay out for the approximately the first several thousand dollars of health care expenses. Of course, your HSA is available to help you pay for the expenses that your plan doesn't cover.

For 2006, the deductible amounts are $1,050 for individual insurance and $2,100 for family insurance. The annual out-of-pocket expenses (including deductibles and co-pays) for 2006 cannot exceed $5,250 (self-only coverage) or $10,500 (family coverage).

Even though the deductible is higher than traditional health plans, many people prefer to save the money from their monthly insurance premiums and use the remaining savings for future medical expenses. If you don't use those funds, they grow tax-advantaged!

HSA's offer great flexibility in physician choices, while making it possible to save money for medical expenses in your retirement. Also, Health Savings Accounts are portable and remain yours despite a change in employment/unemployment, medical coverage or residence.

A recent story in the Boston News envisions such a shake-up in health insurance:

If any one of the healthcare overhaul plans under consideration on Beacon Hill passes intact, state officials say, a ripple effect is likely. High-deductible plans would also be attractive to employers who have endured five consecutive years of double-digit premium hikes for standard health insurance; the state's HMOs could aggressively promote them; and employees would be allowed to take their health plans from job to job -- effectively seeding the marketplace.

"This is a paradigm shift. It wouldn't be surprising to me that you will see a lot more people actively taking these things up," said Timothy R. Murphy, Romney's secretary of health and human services. "Large employers that we speak to are exploring a number of different options."

About 60,000 people have such insurance in Massachusetts, fewer than 1 percent. Nationwide, 1 million to 2 million are enrolled in high-deductible plans, according to industry estimates. Those numbers may soon increase.

According to results of a survey of 86 large national employers released last week, 45 percent plan to offer such plans.
The survey, conducted by Fidelity Investments, said the average projected savings on premiums would be 6 percent.


Author, Craig Stiff, Marketing Director for Lifespring Health, writes on the benefits of Health Savings Accounts as an alternative to expensive Health Insurance Policies. More information can be found at www.LifespringHealth.com.




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