What Are the High-Deductible Health Plan (HDHP) Limits for 2024?
Key takeaways:
A high-deductible health plan (HDHP) generally has lower monthly premiums and a higher deductible. Before you pay the deductible, an HDHP may cover 100% of your in-network preventive care.
For 2024, the minimum deductible on an HDHP is $1,600 for an individual and $3,200 for a family.
The maximum out-of-pocket expenses allowed are $8,050 for an individual and $16,100 for a family.
Table of contents
High-deductible health plans (HDHP) have grown in popularity. In 2021, more than half of private-sector workers in the U.S. were enrolled in HDHPs.
If you’re thinking about enrolling in an HDHP during open enrollment season, it’s important to understand how these health insurance plans work and become familiar with the costs. Many people opt for an HDHP because of the lower monthly premiums and the fact that it allows you to sign up for a health savings account (HSA). But if you need to have surgery or have a health emergency, you could end up paying thousands of dollars out of pocket before your health insurance kicks in.
Below, we break down how HDHPs work, the deductible limits, and the benefits of HSAs.
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What is a high-deductible health plan (HDHP)?
An HDHP has a higher deductible than a traditional health insurance plan. A deductible is the annual amount you must spend on healthcare before your insurance starts covering a portion of your costs. After you pay your deductible, you’re responsible for a copayment or coinsurance for medical services and your insurance company pays the rest.
The deductible requirements typically do not apply to preventative care. HDHPs typically cover in-network preventive care services before you meet your annual deductible.
Some examples of preventive care services include:
Blood pressure screening
Cholesterol screening
Colorectal cancer screening for adults age 45 to 75
Diet counseling
HIV screening
Obesity screening and counseling
Type 2 diabetes screening for qualified individuals
What are the minimum deductibles and maximum out-of-pocket costs for HDHPs?
The following charts show the minimum deductibles and maximum out-of-pocket expenses for HDHPs in 2023 and 2024.
High-deductible health plan (HDHP) requirements | 2023 | 2024 |
|---|---|---|
Minimum deductible for an individual | $1,500 | $1,600 |
Minimum deductible for a family | $3,000 | $3,200 |
Out-of-pocket expenses maximum for an individual | $7,500 | $8,050 |
Out-of-pocket expenses maximum for a family | $15,000 | $16,100 |
Source: Healthcare.gov
The HDHP maximum out-of-pocket expenses include copayments, coinsurance, and deductibles. These limits only apply to in-network services.
Should I choose an HDHP?
If you are young and expect to have little to no medical problems, an HDHP may be a good option. This is also the case if you do not have children. In general, children often have more healthcare needs because of frequent colds and viruses.
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But there are disadvantages to having an HDHP. If you have an unexpected healthcare problem, you may need to cover thousands of dollars in care on your own. Your plan won’t cover most of your costs until you reach your annual deductible. That means you need to have savings on hand to cover any unexpected medical costs.
An HDHP could also cause you to delay treatment because of the upfront costs. This may lead to worsening health problems or other issues.
When deciding whether or not to get an HDHP, you should seek help from an insurance agent or financial planner. It’s important to consider your family health records, medical needs, and financial situation to determine if a HDHP is right for you.
What are the benefits of contributing to a health savings account (HSA) if I have an HDHP?
Having an HDHP allows you to enroll in a health savings account (HSA). You can also pair an HDHP with the following accounts:
Dependent care flexible spending account (DCFSA): This is an employer-sponsored pretax benefit. You can use the funds in this account to pay for eligible dependent care services like preschool, summer day care, babysitting, and child or adult day care.
Limited-purpose FSA: This is also an employer-sponsored pretax account. It is primarily used for qualified dental and vision expenses.
HSAs are unique accounts because they allow you to use tax-free funds to pay for medical expenses and those funds to not expire. You can contribute tax-free funds directly from your paycheck or deduct your contributions on your tax return if you’re self-employed.
Suppose you contribute $2,000 to an HSA, and your tax rate is 24%. You will save $480 in taxes when you use those funds for qualified medical expenses.
Your HSA funds can be to pay for qualified medical expenses like:
Pain relievers such as Tylenol and Advil
If you do not spend all the money in your HSA, you can carry over the remaining amount to the following year. You can even invest the money in mutual funds, exchange-traded funds, and other investment accounts. The earnings grow tax-free.
If you withdraw money from your HSA to pay for nonqualified expenses, you may be subject to a 20% tax penalty if you are under 65. You will also have to pay taxes on the distribution.
However, when you reach age 65, you won’t be penalized for using your HSA funds to pay for nonqualified expenses. At that point, you would only have to pay taxes on money withdrawn for nonqualified expenses. This makes an HSA a great addition to your retirement plan.
How do I know if my HDHP is an HSA-qualified health plan?
Through the website for the Affordable Care Act (ACA) marketplace, you can identify plans that are HSA-eligible. You can use the filter “Eligible for an HSA” to search for these plans.
If you have an employer-sponsored HDHP, you should ask your insurance carrier or human resources department for details about your plan.
How do I qualify for an HSA in 2024?
To make qualified HSA contributions in 2024, the IRS requires that:
You are enrolled in an HDHP on the first day of the month you contribute to an HSA. So, if you sign up for an HDHP on July 15, you won’t be able to contribute to an HSA until August 1.
Your HDHP is your only health plan. However, you can have additional coverage for accidents, disability, dental, vision, long-term care, and certain other situations.
You are not enrolled in Medicare.
You are not claimed as a dependent on someone’s tax return.
What is the difference between an HDHP and HSA?
An HDHP is a health insurance plan that requires monthly premium payments. After you pay your deductible, your insurance company pays for eligible healthcare costs covered under your plan.
An HSA is a financial account, and you fund it with your own money. An employer may also contribute money to your HSA. There is usually a linked debit card to pay for qualified medical expenses. Using the funds for these expenses allows you to receive the account’s tax benefits.
Do employer contributions to HSAs count toward the limit for 2024?
Yes, if your employer contributes to your HSA in 2024, those funds count toward the annual contribution limit. For example, say your employer contributes $800 to your HSA, and you have individual coverage. You can contribute up to $3,350 on top of that, because the total contributions to an individual HSA cannot exceed $4,150 in 2024.
How much can a married couple contribute to an HSA in 2024?
The HSA contribution limit for family coverage is $8,300 for 2024, an increase of $550 from the previous year. If you are age 55 or older, you’re allowed to contribute an additional $1,000. This is called a catch-up contribution.
Is an HDHP good to have if I’m pregnant?
The advantages of an HDHP include the lower monthly premiums and the tax advantages of having an HSA. If your baby is healthy and you decide to get an HDHP, you may have lower upfront costs than with a traditional plan.
However, the average cost of a vaginal birth is roughly $15,000 for people with large employer-sponsored group health plans. And the average out-of-pocket costs are nearly $3,000. The average cost for a cesarean section is around $26,000.
Because of the high deductibles and out-of-pocket maximums of HDHPs, you may have to pay a large portion of these costs before your insurance kicks in. So it’s important to consider the costs of pregnancy and your financial situation before enrolling in a HDHP.
If you have a lower income, you may qualify for Medicaid or Children’s Health Insurance Program (CHIP) coverage. There may also be state and local pregnancy assistance programs you can access. You can call 1-800-311-BABY (1-800-311-2229) to find free or reduced prenatal care.
The bottom line
A high-deductible health plan (HDHP) generally has lower monthly premiums compared to traditional healthcare plans. You can also pair this type of policy with a health savings account (HSA), which provides a variety of tax advantages. You can even use an HSA to save for your retirement.
But HDHPs are usually better for those who are young and have minimal health problems because of the high deductibles and out-of-pocket maximums. To decide on the type of policy that is best for you, it is a good idea to seek help from a health insurance agent or financial planner who can assess your needs.
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References
DeMarco, J. (2023). Rate of workers enrolled in high-deductible health plans jumps for 8th year in row to record 55.7%. ValuePenguin.
Healthcare.gov. (n.d.). Coinsurance.
Healthcare.gov. (n.d.). High deductible health plan (HDHP).
Healthcare.gov. (n.d.). Preventive care benefits for adults.
Healthcare.gov. (n.d.). Understanding HSA-eligible plans.
U.S. Department of Health and Human Services. (n.d.). Are there any health assistance programs for pregnant women, mothers, and children?
This article is solely for informational purposes. This article is not professional advice concerning insurance, financial, accounting, tax, or legal matters. All content herein is provided “as is” without any representations or warranties, express or implied. Always consult an appropriate professional when you have specific questions about any insurance, financial, or legal matter.
