Orlando Harmon
If you're wondering whether your insurance plan has a high deductible, the simplest way to find out is to check with your insurance provider. In addition, the IRS defines a high-deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. HDHPs have higher deductibles than traditional plans but also have lower monthly premiums, making them attractive to both employers and individuals. They can also be combined with an HSA (Health Savings Account) to save pre-tax money for health expenses.
| Characteristics | Values |
|---|---|
| Definition of a high deductible health plan | A health plan with a deductible of at least $1,350 for an individual or $2,700 for a family, as per the IRS |
| Yearly out-of-pocket expenses | Cannot be more than $6,650 for an individual or $13,300 for a family (excluding out-of-network services) |
| HSA-qualified HDHP criteria | Must have a higher annual deductible than regular individual health insurance plans, a maximum limit on annual deductible and medical costs, and no insurance coverage until the deductible is met |
| HSA-qualified HDHP requirements | No other health coverage except for specific types of ancillary coverage; no coverage through Medicare, TRICARE, or TRICARE for Life; the plan participant cannot be claimed as a dependent on someone else's tax return |
| HDHP and HSA | HDHPs can be combined with an HSA (Health Savings Account) to save pre-tax money for health expenses; however, not all HDHPs qualify for HSA |
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What You'll Learn
Check with your insurance provider
To know if your insurance plan has a high deductible, the best thing to do is to check with your insurance provider. They will be able to tell you the details of your plan, including the amount of your deductible.
You can also ask your insurance provider if your plan is an HDHP (High Deductible Health Plan). An HDHP has a higher deductible than a traditional health plan. The IRS defines an HDHP as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. These limits may change over time, so it is always good to check with the IRS or your insurance provider for the most up-to-date information.
If you are unsure about your insurance provider's response, you can also ask them to clarify the details of your plan, including any deductibles, copayments, and coinsurance. You can also ask if your plan is HSA-qualified, as this will give you an indication of the deductible amount. HSA-qualified HDHPs must have a higher annual deductible than regular individual health insurance plans and must have a maximum limit on annual deductible and medical costs. Additionally, an HSA-qualified HDHP will not provide insurance coverage until the deductible is met.
Checking with your insurance provider is the best way to get accurate and up-to-date information about your specific insurance plan and its deductibles. They can provide you with the details of your plan and help you understand the deductibles and other associated costs.
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Compare deductibles with traditional plans
When choosing a health insurance plan, you may have to choose between a high-deductible plan or a low-deductible plan. A deductible is the amount a policyholder must pay before their health insurance company starts to pay for any medical expenses. A low-deductible plan is a traditional health insurance plan.
Low-deductible health insurance plans carry smaller deductibles compared to high-deductible health plans. This means that when you get sick, you pay less money upfront before your plan kicks in. The trade-off with a low-deductible plan is that you pay a higher monthly premium. A low-deductible plan is a good option if you require extensive medical care. It also makes managing and predicting healthcare expenses easier if you develop a serious illness, are injured, or need surgery.
High-deductible plans offer more manageable premiums and access to Health Savings Accounts (HSAs). HSAs offer a trio of tax benefits and can be a source of retirement income. They are tax-advantaged, meaning you can direct funds from your paycheck pretax into an HSA, or you can add the money post-tax and deduct taxes later. In 2025, the annual HSA contribution limit for an individual is $4,300. Someone with family coverage can contribute up to $8,550. An employer may also contribute to your HSA.
The IRS defines a high-deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. A plan is considered a low-deductible plan if its deductible is less than $1,650 for self-only coverage or $3,300 for family insurance coverage.
Ultimately, the choice between a high-deductible and a low-deductible plan depends on your medical and financial situation.
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Understand HSA-qualified HDHPs
Understanding HSA-qualified HDHPs is essential if you want to take advantage of the benefits they offer. HSA stands for Health Savings Account, and it is a type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. These expenses include some dental, drug, and vision expenses, as well as diagnostic services covered by your plan, Medicare Part B and long-term care insurance premiums, and other health insurance premiums if you are receiving Federal unemployment compensation. By using an HSA, you can benefit from triple tax advantages, as your contributions are either tax-deductible or pre-tax, interest earned is tax-free, and HSA distributions are tax-free if used for qualified medical expenses.
HDHP stands for High Deductible Health Plan. These plans have a higher annual deductible than traditional health insurance plans, which means you pay less in monthly premiums but a higher amount for covered health care services before your insurance plan starts to pay. For example, with a $2,000 deductible, you would pay the first $2,000 of covered services yourself. HSA-qualified HDHPs must meet specific criteria set by the Internal Revenue Service (IRS). According to the IRS, in 2024, a high-deductible health plan has a minimum deductible of $1,600 for individuals and $3,200 for families. These amounts will increase in 2025 to $1,650 for individuals and $3,300 for families. HSA-qualified HDHPs must also have a maximum limit on annual deductible and medical expense costs and offer no insurance coverage until the deductible is met.
It is important to note that not all HDHPs are HSA-qualified. To contribute to an HSA, you must have an HSA-eligible plan and meet the IRS's strict guidelines. These guidelines include having no other health coverage except for certain types of ancillary coverage and not being claimed as a dependent on someone else's tax return. If you are unsure whether your HDHP is HSA-qualified, you can check your policy's coverage details or consult a local insurance broker for guidance.
By combining an HSA-qualified HDHP with an HSA, you can enjoy the benefits of lower monthly premiums, greater flexibility in how you allocate your healthcare dollars, and tax advantages. This combination can be particularly attractive to both employers and individuals looking to add value to their health plans while keeping healthcare costs low.
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Know the IRS definition of a high deductible plan
The IRS defines a high-deductible health plan (HDHP) as a health insurance plan with a sizable deductible for medical expenses. An HDHP usually has a larger annual deductible than a typical health plan but charges lower monthly premiums. The minimum deductible varies from year to year. In 2024, the IRS defined an HDHP as one with a deductible of at least $1,600 for individuals and $3,200 for families, or $1,650 and $3,300, respectively, in 2025.
In layman's terms, a high-deductible health plan could simply be considered a policy with a high deductible. However, the term "high-deductible health plan" is specific to plans that not only have high deductibles but also conform to other established federal guidelines set by the IRS. HDHPs are the only plans that allow an enrollee to contribute to a health savings account (HSA). These savings accounts are exclusively available to people covered by an HDHP and are not subject to federal income taxes at the time of deposit or withdrawal. The money in an enrollee's HSA can be withdrawn at any time to pay for medical expenses that aren't paid by their high-deductible policy.
HDHPs are thought to lower overall healthcare costs by making individuals more conscious of medical expenses. The higher deductible also means lower insurance premiums, resulting in more affordable monthly costs. This arrangement benefits healthy people who mainly need coverage for serious health emergencies and wealthy families who can afford to meet the deductible.
HDHPs pay for certain preventive care before the deductible, as required by the ACA. However, no other services can be paid for by the health plan until the insured has met the deductible. This is in contrast to a plan that has a high deductible but also offers copays for office visits from the outset.
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Review your monthly premium payments
When it comes to health insurance, it's important to understand the difference between a premium and a deductible, and how they are interconnected. A premium is the amount you pay for your health plan each month, whether you use any care or not. Your premium does not go towards your deductible, and it doesn't count for your out-of-pocket maximum (the most you'll pay for care each year). The premium is like a membership fee that "unlocks" your access to a particular plan.
The deductible is the amount of money you need to pay each year before your health insurance plan will pay for most types of care. It is the gap in your coverage—until your claimed expenses for the year exceed the deductible, your insurance company doesn't have to pay. The deductible is like accumulating points toward premium benefits. Deductibles reset every year and when you change plans (e.g. if you switch jobs). If you don't use any part of your plan that requires you to pay a deductible, you don't have to pay anything toward it.
The pricing of one impacts the other—they have an inverse relationship. When one is more affordable, the other tends to be more expensive. A high-deductible health plan (HDHP) is an insurance plan with a low premium and a high deductible. A plan with both a high deductible and a high premium would be too expensive for an individual or employer, while a plan with a low deductible and a low premium would be too expensive for an insurance company. This way, making them opposites helps balance costs for both the member or employer and the health plan.
In 2025, health insurance plans with deductibles over $1,650 for an individual and $3,3000 for a family are considered high-deductible plans. The IRS defines a high-deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP's total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can't be more than $6,650 for an individual or $13,300 for a family.
Therefore, when reviewing your monthly premium payments, consider the following:
- The premium is the amount you pay each month for your health plan, regardless of whether you use any care services that month.
- The deductible is the amount you need to pay each year before your health plan will cover most of the costs.
- The premium and deductible are interconnected, with an inverse relationship—when one is more affordable, the other tends to be more expensive.
- A high-deductible plan typically has a lower premium and a high deductible.
- The IRS defines a high-deductible health plan as having a deductible of at least $1,350 for an individual or $2,700 for a family.
By reviewing your monthly premium payments and understanding how they relate to your deductible, you can make an informed decision about choosing the health insurance plan that best suits your needs and budget.
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Frequently asked questions
HDHPs have higher deductibles than traditional health plans. According to the IRS, in 2024, HDHPs have a minimum deductible of $1,600 for individuals and $3,200 for families. In 2025, these figures will be $1,650 and $3,300, respectively.
A deductible is the amount you pay for a health service before your insurance provider covers the remaining cost.
A copayment, or copay, is a fixed amount for a covered service, usually paid at the time of service.
Coinsurance is your share of the costs of a covered service, calculated as a percentage of the total charge.
HSA-qualified HDHPs must have a higher annual deductible than regular individual health insurance plans, a maximum limit on annual deductible and medical costs, and offer no insurance coverage until the deductible is reached.
