A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) cannot be more than $7,050 for an individual or $14,100 for a family. (This limit doesn’t apply to out-of-network services.)
High Deductible Health Plans and Health Savings Accounts can reduce your costs.
- If you enroll in an HDHP, you may pay a lower monthly premium but have a higher deductible (meaning you pay for more of your health care items and services before the insurance plan pays).
- If you combine your HDHP with an HSA, you can pay that deductible, plus other qualified medical expenses, using money you set aside in your tax-free HSA.
- So, if you have an HDHP and don’t need many health care items and services, you may benefit from a lower monthly premium. If you need more care, you’ll save by using the tax-free money in your HSA to pay for it.
- Your HSA balance rolls over year to year, so you can build up reserves to pay for health care items and services you need later.