High Deductible Health Plan (HDHP)
What Is a High Deductible Health Plan?
A high-deductible health insurance plan (HDHP) is a type of healthcare coverage that requires participants to spend more on up-front costs before the insurance company begins to contribute to covering expenses. In many cases, people with HDHPs spend less per month on premiums.
Different types of healthcare coverages can be considered HDHPs. Additionally, HDHPs can be paired with HSAs to help users pay for qualified medical expenses using tax-advantaged dollars.
HDHP Contribution Limits
As determined by the Internal Revenue Service (IRS), there’s a limit to the amount a person or family can contribute to their HDHP each year.
When identifying these maximums—which are adjusted or affirmed each year—the agency considers changes in the cost of living, among many additional factors.
How Can Employers Effectively Communicate These Limits?
The IRS updates these limits each year, which means that HR teams should prepare pre-written communications using templates to alert employees about these changes.
Likewise, HR professionals should work with trusted brokers and third-party administrators (TPA) to ensure that all benefits systems will accurately reflect the new limits. (Some HR tech—like all-in-one HRIS BerniePortal—automatically updates this information for organizations.)
Related Terms: Health Spending Account (HSA)