HDHP (High-Deductible Health Plan)

An HDHP asks employees to pay more out-of-pocket before insurance coverage kicks in, in exchange for a lower monthly premium. The IRS sets minimum deductible and maximum out-of-pocket thresholds each year that a plan must meet to qualify as HSA-eligible.

Why employers offer one: HDHPs are frequently offered alongside a traditional PPO option, giving employees a choice between lower premiums with more cost exposure (HDHP + HSA) or higher premiums with more predictable costs (a traditional copay-based plan).

What employees should understand: with most HDHPs, preventive care is still covered at no cost even before the deductible is met — but everything else, including prescriptions in many designs, is paid out-of-pocket until the deductible is reached. Employer HSA contributions are one of the most common ways to soften that gap.