How does a high-deductible health plan (HDHP) primarily operate?

The primary operation of a high-deductible health plan (HDHP) is characterized by higher deductibles paired with lower premiums. This setup means that insured individuals typically pay less each month for their insurance, but they must be prepared to cover more of their healthcare costs out-of-pocket before the insurance begins to pay.

Additionally, HDHPs often come with the option to establish Health Savings Accounts (HSAs), which allow individuals to save money tax-free for medical expenses. This can be particularly advantageous for those who are generally healthy and do not anticipate high medical costs. The combination of a high deductible and low premiums can make these plans more affordable upfront while promoting the use of HSAs for unforeseen medical expenses.

In contrast, plans with lower deductibles and higher premiums would not qualify as high-deductible health plans. Comprehensive coverage with no deductibles would refer to traditional health plans that provide thorough benefits without requiring the insured to meet a deductible first, which also does not align with the definition of an HDHP.