Which type of health insurance plan typically has lower premiums but higher deductibles?

Which type of health insurance plan typically has lower premiums but higher deductibles?

• A. PPO Plan
• B. High Deductible Health Plan (HDHP)
• C. Exclusive Provider Organization (EPO)
• D. Health Maintenance Organization (HMO)

Answer: (B)

A High Deductible Health Plan (HDHP) is designed to have lower monthly premiums while requiring higher deductibles before the insurance coverage kicks in. This means that insured individuals essentially pay less each month but need to cover more of their initial healthcare costs themselves before their insurance starts contributing. The trade-off for this lower premium is that the insured may face higher out-of-pocket expenses when they do require medical care. HDHPs are particularly appealing for individuals who are generally healthy and do not expect to have frequent medical expenses, as they can save money on premiums while using their plan mainly for catastrophic coverage in case of major illnesses or accidents. This structure often complements Health Savings Accounts (HSAs), allowing users to save money tax-free for medical expenses, further enhancing the financial benefits of HDHPs for eligible individuals.

A High Deductible Health Plan (HDHP) is designed to have lower monthly premiums while requiring higher deductibles before the insurance coverage kicks in. This means that insured individuals essentially pay less each month but need to cover more of their initial healthcare costs themselves before their insurance starts contributing.

The trade-off for this lower premium is that the insured may face higher out-of-pocket expenses when they do require medical care. HDHPs are particularly appealing for individuals who are generally healthy and do not expect to have frequent medical expenses, as they can save money on premiums while using their plan mainly for catastrophic coverage in case of major illnesses or accidents.

This structure often complements Health Savings Accounts (HSAs), allowing users to save money tax-free for medical expenses, further enhancing the financial benefits of HDHPs for eligible individuals.