A High-Deductible Health Plan (HDHP) has a much higher deductible (usually four figures) than a traditional health insurance plan. A deductible is the portion of your insurance claim that you must pay out of pocket before the insurance provider is liable to cover the remaining portion. 

The monthly premium of an HDHP is usually lower, meaning you pay less every month for your plan. However, you pay a higher deductible from your own pocket before the policy coverage is activated.

In 2025, the Internal Revenue Service (IRS) defines an HDHP as one with a deductible of at least $1,650 for individuals and $3,300 for families. However, your insurance policy will outline your deductible, as this can vary.

What Do HDHPs Cover?

HDHPs cover a range of medical needs, as long as you pay your deductible amount (typically above $1,650 for individuals), and then they will cover the remainder of the claim amount.

In addition, HDHPs cover many routine preventive services and screenings without you having to meet your deductible amount. Meaning you can access a range of services at no extra cost, including:

  • Blood pressure screenings.
  • Depression screenings.
  • Diet and nutritional counseling.
  • HIV screenings. 
  • Vaccines for diseases, such as chickenpox, flu, and measles.

Can I Pair My HDHP With An HSA?

Yes. In fact, an HDHP is the only plan that you can legally pair with a Health Savings Account (HSA). You do not qualify for an HSA if you have any other type of health insurance plan.

An HSA is a type of savings account that allows you to set aside pre-tax income to later pay for medical expenses that aren’t covered by an HDHP, such as acupuncture, dental care, and vision care. 

However, using HSA funds to pay for non-qualified medical expenses will incur income taxes and possibly a 20% penalty depending on your age.

Employers may choose to contribute to your HSA as part of a workplace benefit, and any other person may also make HSA contributions on behalf of an eligible individual or family.

Who Is An HDHP Suitable For?

HDHPs are suitable for those who are generally healthy and only require preventive services, such as flu vaccines and health screenings, rather than more complex medical procedures. 

For example, a young to middle-aged individual with no underlying health conditions should consider an HDHP, as they only require preventive procedures, which are covered by the plan. However, if this person has an unexpected health issue, they will be required to pay a high deductible towards their care.

In addition, HDHPs are suitable for high-earners who can afford to self-insure, as these plans allow you to lower your taxable income by contributing to your HSA.

HDHP vs First Dollar Coverage Plans

First Dollar Coverage Plans are the opposite of HDHPs. These plans have no deductible, meaning the provider will cover your medical expenses, and you won’t be out of pocket. However, First Dollar Coverage plans may impose strict limits on the total value of coverage, and you’ll likely pay a much higher premium each month. 

Traditional medical insurance plans typically fall between HDHPs and First Dollar Coverage Plans.