High-Deductible Health Plan Pros and Cons

What is a high-deductible health plan?

An HDHP is a type of health insurance plan that typically has a lower monthly premium and a higher deductible than traditional plans. It's often paired with a health savings account (HSA).

Many plan types can be HDHPs as long as they have a high enough deductible. This includes PPO (Preferred Provider Organization), HMO (Health Maintenance Organization), EPO (Exclusive Provider Organization), and more.

How does a high-deductible health plan work?

An HDHP works in stages over the plan year. You pay more upfront when you get care, but less each month for coverage. Here’s how it usually works:

1. You pay the full cost until you reach your deductible.

At the start of the year, you pay 100% of most medical costs. This does not include preventive care. This continues until you reach your plan’s deductible, which resets each year.

For 2026, the deductible limits for an HDHP with HSA is $1,700 for self-only coverage and $3,400 for family coverage.¹

2. You and the plan share costs after the deductible.

When you meet your deductible, your health plan starts to share medical costs through coinsurance and/or copays.

3. The plan pays 100% after you reach the out‑of‑pocket maximum.

HDHPs include a yearly out‑of‑pocket maximum. This is the most you’ll pay for covered, in‑network care in a year. Once you reach that limit, the plan pays 100% of covered costs for the rest of the year.

How much does a high-deductible health plan cost?

On average, if you are a covered employee with a high-deductible health plan in the United States, you'll pay an average of $8,620 annually in premiums for single coverage and $25,379 for a family.² Actual health plan costs vary by employer, location, and type of health plan.

HDHPs have lower monthly premiums and are a good fit for those who anticipate needing preventive care only.

What are the pros and cons of high-deductible health plans?

Pros of HDHP

• Lower monthly premiums
• In-network preventive care at no additional cost³
• May include an HSA for tax-free savings⁴

Cons of HDHP

• Higher deductible
• Higher out-of-pocket costs if you need non-preventive care
• Harder to budget for medical expenses

How do I decide if an HDHP is right for me?

When choosing between a high-deductible health plan and a traditional health plan, think about your health needs. 

• Are you healthy and expect to only need preventive care? 
• Can you afford the full deductible if needed? 
• Does your employer contribute to an HSA?

If you answered "yes" to one or more of the questions above, then an HDHP may be a good fit.

Carefully weighing the pros and cons of high-deductible health insurance may help you find the coverage that’s right for you. In addition to saving you money, finding the right plan for you can help ensure that you’ll receive coverage for the health care you need, when you need it.

HDHP Frequently Asked Questions (FAQs)

Is an HDHP a good choice if I’m healthy?

It can be a good choice if you don’t use much health care. If you are healthy, you may only need preventive care, like a yearly check‑up. HDHPs often have lower monthly premiums, so you pay less each month. That can help you save money.

An HDHP may work best if you:

• Rarely visit the doctor.
• Can pay the full deductible if you have unexpected health costs.
• Want to save money in an HSA.

If you expect to need regular medical appointments, another plan may be a better fit.

Do HDHPs cover annual check‑ups?

Yes, most HDHPs cover annual check‑ups. Preventive care is usually covered before you meet your deductible when you use in‑network providers. This often includes:

• Annual physicals.
• Certain vaccines.
• Screenings for health conditions, like diabetes or colon cancer.

This means you typically pay nothing out of pocket for these services. Coverage details can vary by health plan, so it’s always a good idea to check your benefits and plan documents for more details.

What happens if I don’t meet my deductible?

If you don’t meet your deductible, your plan still helps protect you. You will keep paying the full cost for most medical care until you reach the deductible. If you don’t reach it by the end of the year, you do not get money back. Your deductible resets when the new plan year starts.

Even if you don’t meet the deductible, your plan still covers preventive care and limits how much you could pay if you have a major medical event.

¹ 26 CFR 601.602: Tax forms and instructions, IRS, https://www.irs.gov/pub/irs-drop/rp-25-19.pdf, May 1, 2025

² 2025 Employer Health Benefit Survey, KFF, https://www.kff.org/health-costs/2025-employer-health-benefits-survey/, October 22, 2025

³ Not all preventive care services may be covered. For example, immunizations for travel are generally not covered. See your plan documents for a complete list of covered preventive care services.

⁴ HSA contributions and earnings are not subject to federal taxes and not subject to state taxes in most states. A few states do not allow pretax treatment of contributions or earnings. Contact a tax professional for details.