HDHP Benefits

A high deductible health plan (HDHP) is an individual insurance policy that carries a high deductible, but carries no co-insurance – meaning that once the deductible is satisfied, all medical costs are covered.

(note, this MAY vary from policy to policy, so it’s recommended you shop around a little)

What is the benefit of this? Well, for one, you can save a ton of money up front. For folks who are self employed, or have to pay their own insurance premiums for another reason, the difference in the monthly cost is significant.

For example, a traditional PPO plan with a $500 deductible would cost me around $300/month, where my HDHP costs me about $50. A dramatic savings, no?

On top of that, you get 100% co-insurance. What does this mean? You know that $300/month PPO plan? That only covers 80% of my medical costs after the deductible (up to a certain amount). This means I might still be on the hook for $500/day if I have to stay in the hospital or have surgery. With the HDHP, the most I will ever have to pay is the deductible – which I can offset by having a tax-deferred HSA!

Now, these plans don’t work for everyone of course – those with medical conditions that require regular care or have a good PPO/HMO plan provided by their employer at a lower cost to them might not need it. But as health care costs continue to rise, you can bet the HDHP will on everyone’s radar for a long time!

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