High-Deductible Health Plans: Pros, Cons, and FAQs
Key takeaways:
A high-deductible health plan (HDHP) is a health insurance policy that has a lower monthly premium and a higher deductible.
HDHPs typically cover all preventive, in-network care in full, even before the deductible is met. If a person needs any medical services beyond that, they must pay the full deductible before they receive insurance coverage.
The federal government defines the deductible amounts for plans to qualify as HDHPs.
Table of contents
A high-deductible health plan (HDHP) keeps your monthly premium payments low while typically providing 100% coverage for preventive services in your plan’s network before you meet your deductible. Sounds good, right? But it’s not quite that simple. So, understanding how these health insurance plans work is important.
What is a high-deductible health plan (HDHP)?
An HDHP is a health insurance plan with a high deductible. A health plan deductible is the amount you pay out of pocket for medical care before your insurance covers any costs. A premium is what you pay every month for your plan.
An HDHP is a plan with a deductible that meets or exceeds a minimum amount set by the federal government.
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What is considered a high-deductible health plan?
To qualify as an HDHP in 2026, an individual plan must have a deductible of at least $1,700 for individual coverage and $3,400 for family coverage. Your annual out-of-pocket expenses (which include coinsurance, copays, and deductibles) for an HDHP can’t be more than $8,500 for an individual or $17,000 for a family in 2026. If you reach either of those limits, your plan will pick up 100% of further costs for the calendar year. But the limit doesn’t apply for services outside your network.
The table below shows HDHP minimum deductibles and maximum out-of-pocket expenses for 2025 and 2026.
High-deductible health plan (HDHP) requirements | 2026 | 2025 |
|---|---|---|
Minimum deductible for an individual | $1,700 | $1,650 |
Minimum deductible for a family | $3,400 | $3,300 |
Out-of-pocket expenses maximum for an individual | $8,500 | $8,300 |
Out-of-pocket expenses maximum for a family | $17,000 | $16,600 |
What does a high-deductible health plan (HDHP) cover?
If you’re enrolled in an HDHP, your in-network preventive care is covered without you having to pay the deductible first. Because of this, high-deductible policies can be a smart financial decision.
A full list of preventive services and screenings covered by HDHPs is available at Healthcare.gov. Here are some examples of the medical care that may be covered in full before you meet your deductible.
Adults
Screening for abdominal aortic aneurysm (bulging of a large artery that supplies oxygen to the rest of the body) in men of specified ages who have ever smoked
Aspirin to prevent heart disease for men and women of certain ages
Cholesterol screening for adults who are of certain ages or are at higher risk
Colorectal cancer screening for adults over 50
Type 2 diabetes screening for adults with high blood pressure
Certain immunizations, such as the flu shot
Women
Anemia screening on a regular basis for pregnant women or those who may become pregnant
Comprehensive breastfeeding support and counseling from trained providers, along with access to breastfeeding supplies, for pregnant and nursing women
Breast cancer mammography screenings every 1 to 2 years for women over 40
Cervical cancer screening for sexually active women
Osteoporosis screening for women over 60, depending on risk factors
Well-woman visits to get recommended services for women under 65
Children
Autism screening for children at 18 months and 24 months
Behavioral assessments
Depression screening for adolescents
Developmental screening for children under age 3
Hearing screening for all newborns
Vaccines for illnesses, such as whooping cough, influenza, and chickenpox
Save on healthcare: If you have a qualified high-deductible health plan, you can contribute money to a health savings account (HSA).
Open an HSA: If you are self-employed, you can open an HSA on your own.
HSA-eligible expenses: From dental care to prescription medications, here are some HSA-eligible expenses.
The pros of high-deductible health plans
Here are some of the benefits of an HDHP:
Lower premiums: HDHPs typically have lower monthly premiums compared with other health insurance plans with low deductibles and low out-of-pocket maximums. An out-of-pocket maximum is the most you might have to pay during your coverage year.
HSA access: When you are enrolled in a qualified HDHP, you are eligible to open an HSA. Contributions to an HSA are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses — such as hearing aids and prescription eyeglasses — are not taxed. If you have an HSA at work, your employer may also contribute to your account.
Healthcare flexibility: If you’re relatively healthy and generally don’t have medical expenses beyond annual physicals and screenings, you’re likely to save money by opting for an HDHP over a low-deductible plan. That’s because yearly checkups and screenings count as preventive services, which HDHPs typically cover.
Employer benefits: Some employers make HSA contributions for employees with HDHPs, which is another potential perk.
The cons of high-deductible health plans
Yes, HDHPs keep your monthly payments low. But there are some downsides you should consider, including:
Large medical expenses: Since HDHPs generally only cover preventive care, an accident or emergency could result in very high out-of-pocket costs.
Future health risks: Because of the costs, you may refrain from visiting a physician, getting treatments, or purchasing prescriptions when they’re not covered by your HDHP. However, not getting care can lead to problems with your health. This could ultimately lead to needing more serious medical care, such as hospitalization.
High deductibles: Many Americans have a relatively low amount of money in savings. A survey from KFF found that affording healthcare costs is difficult for 47% of insured adults under age 65. It can be challenging to pay a high deductible if you don’t have savings.
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Unfortunately, you can’t tell if or when a medical disaster may strike, so picking a health plan is a bit of a gamble. If you need emergency care, you’ll have to pay your deductible upfront, and you may have costs beyond that, up to the out-of-pocket maximum. So, looking at the out-of-pocket maximum — and determining if you have access to that amount of money — can also be a good idea when trying to choose a health insurance plan.
Is a high deductible or low deductible better?
It depends. HDHPs typically have lower monthly premiums. These plans are ideal for those who are generally healthy and do not expect to visit a healthcare professional often. An HDHP can also be paired with an HSA. By contributing to an HSA, you can take advantage of triple tax benefits and save money on healthcare now and during retirement.
Plans with lower deductibles may have a higher monthly premium. Like HDHPs, these plans usually cover preventive services, but you likely won’t have to pay as much out of pocket before your coverage kicks in for further care.
In short, if an HDHP gives you full coverage for annual preventive care and you think that’s all you’ll need in a given year, it may make sense to choose it.
But if you’re worried about needing other care, it may make financial sense to pay more each month. That way, you can quickly reach the deductible for any added or unexpected services you may need.
High-deductible health plan vs. PPO
Shopping for health insurance? You may have the option to choose between an HDHP and a preferred provider organization (PPO). Here’s a chart to help guide your decision:
| HDHP | PPO |
|---|---|---|
Deductible | Higher | Lower |
Premiums | Lower | Higher |
Out-of-pocket maximums | Higher | Lower |
HSA | Can contribute | Cannot contribute |
Since HDHPs have a higher deductible and lower monthly premiums, you’ll have to pay more for out-of-pocket medical expenses before your coverage kicks in. PPOs, on the other hand, have a lower deductible and higher monthly premiums, and they have lower out-of-pocket costs for medical services.
PPOs tend to be more flexible, but you pay for that flexibility. You may have access to a larger pool of providers and hospitals. PPOs can give you some out-of-network coverage, as well.
Another PPO perk is that, in most cases, you won’t need your primary care provider’s approval to see a specialist or have a test done.
The bottom line
In some cases, HDHPs can help you save money by allowing you to pay lower premiums and giving you a tax break through an HSA. Your employer may contribute to your HSA, too. Plus, you may save money if the plan covers all of your routine care.
But HDHPs aren’t always the most affordable option. If you need ongoing healthcare, or if something unexpected happens, you may wind up spending more out of pocket with an HDHP. Your best bet is to crunch the numbers based on your individual financial and health status to see which option may be best for you.
References
HealthCare.gov. (n.d.). High deductible health plan (HDHP).
HealthCare.gov. (n.d.). Out-of-pocket maximum/limit.
HealthCare.gov. (n.d.). Health benefits & coverage: Preventive health services.
Internal Revenue Service. (2025). 26 CFR 601.602: Tax forms and instructions.
Lopes, L., et al. (2024). Americans’ challenges with health care costs. KFF.
U.S. Department of Health and Human Services. (2025). Preventive care.
