What Is a “High Deductible Health Plan” (HDHP)?

You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn't pay for the first several thousand dollars of health care expenses  (i.e., your “deductible”) but will generally cover you after that .  Of course, your HSA is available to help you pay for the expenses your plan does not cover.

For 2007, in order to qualify to open an HSA, your HDHP minimum deductible must be at least $1,100 (self-only coverage) or $2,200 (family coverage). Those amounts will increase each year.  The annual out-of-pocket (including deductibles and co-pays) for 2007 cannot exceed $5,500 (self-only coverage) or $11,000 (family coverage).  These amounts will also increase with time to keep up with inflation.  HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and co pays & coinsurance) for non-network services.

Once you cover your deductible each year, many HDHP's will cover your medical and prescription drug expenses at 100%. And HSA's and HDHP's can be utilized by individuals, as well as employer groups.

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