High-Deductible Health Plan - HDHP

AAA

DEFINITION of 'High-Deductible Health Plan - HDHP'

A health insurance plan that has a high minimum deductible, which does not cover the initial costs or all of the costs of medical expenses. The deductible forces the insurance holder to pay the first portion of a medical expense before the insurance coverage kicks in. The minimum deductible for a plan to fall into the category of an HDHP varies each year. In 2006, it was more than $1,000 for individuals and $2,000 for families.

INVESTOPEDIA EXPLAINS 'High-Deductible Health Plan - HDHP'

These health plans became more common when the new health savings account (HSA) legislation was signed into law in 2003. In order to open an HSA account, an individual must first have an HDHP. These high-deductible health plans are thought to lower overall healthcare costs by forcing individuals to be more conscious of medical expenses. The higher deductible also lowers insurance premiums, making health coverage more affordable.

RELATED TERMS
  1. Unallocated Benefit

    A provision available in health insurance policies, where the ...
  2. Preferred Provider Organization ...

    A type of health insurance arrangement that allows plan participants ...
  3. Aggregate Product Liability Limit

    The maximum sum of money that an insurance company will pay during ...
  4. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  5. Insurance

    A contract (policy) in which an individual or entity receives ...
  6. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
RELATED FAQS
  1. Why are insurance companies and pension funds considered financial instruments?

    Insurance policies are widely considered to be financial instruments. Pension funds may contain many different types of financial ... Read Full Answer >>
  2. How are earmarks and pork barrel spending related?

    Both earmarks and pork barrel spending involve spending money on certain projects or specific events. Projects paid for by ... Read Full Answer >>
  3. What is the difference between moral hazard and adverse selection?

    Adverse selection occurs when there's a lack of symmetric information prior to a deal between a buyer and a seller, whereas ... Read Full Answer >>
  4. In what types of economies are regressive taxes common?

    Regressive taxation systems are more likely to be found in developing countries or emerging market economies than in the ... Read Full Answer >>
  5. What causes politicians or governments to begin "pork barrel" spending?

    Pork barrel spending occurs when the government taxes the general population to hand out concentrated benefits to special ... Read Full Answer >>
  6. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Fighting The High Costs Of Healthcare

    If your employer is cutting medical benefits, a health savings account may be right for you.
  2. Home & Auto

    How To Avoid Medical Debt

    Find out what you can do to avoid a financial meltdown when there's a medical emergency.
  3. Insurance

    What Does Medicare Cover?

    Don't assume you're insured. Find out what you can expect from this healthcare program.
  4. Insurance

    What You Need To Know About Student Health Insurance

    Before heading off to college, read up on health insurance plans.
  5. Options & Futures

    20 Ways To Save On Medical Bills

    Handy tips to cut the cost of hospital bills, co-pays, prescription drugs and more.
  6. Options & Futures

    How To Choose A Healthcare Plan

    HMOs? PPOs? CDHPs? We'll clear up the confusion so you can find the right coverage.
  7. Economics

    Current Countries Under A Western Embargo

    We look at which countries the United States and European Union have imposed an imposed embargoes on and why.
  8. Professionals

    How to Fund Retirement with Insurance

    So you've contributed the max to all available retirement vehicles...now what? Consider a permanent life insurance policy (and its fee structure).
  9. Economics

    How Changing Demographics Affects U.S Elections

    With the 2016 election upcoming, the change in two of the country's largest demographics will go a long way in determining who controls the White House.
  10. Economics

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center