The term high-deductible health plan (HDHP) refers to a health insurance plan with a larger annual minimum deductible than a typical health plan. The minimum deductible is the amount your employee will pay for health care items and services before the plan starts to cover costs.
Each year the IRS defines the limits for HDHPs. For 2022, the minimum deductibles are at least $1,400 for individuals and $2,800 for families. The deductibles can actually be as high as the maximum out-pocket costs. The maximum out-of-pocket costs set by the IRS for 2022 are $$7,050 for individuals and $14,100 for families.
How it works with HSAs
According to federal guidelines, you can offer your employees the opportunity to contribute to a Health Spending Accounts (HSAs) if they are covered under a qualifying high-deductible health plan which meets the minimum deductible and the maximum out of pocket threshold for the year and they are not covered by any other medical plan.
HDHP Pros
The primary appeal of HDHP is the low monthly premium. Some employees also prefer to know what their out-of-pocket maximum will be during the coverage year. Therefore, selecting HDHPs can be an intelligent financial decision. If the employee is relatively healthy, they may be more likely to save money by choosing an HDHP.
In addition, HDHPs do cover qualifying preventive services such as annual checkups and screenings. A complete list of qualifying preventive services and screenings for HDHPs is available at Healthcare.gov.
HDHP Cons
As many people learned from Covid, no one knows when a medical disaster may strike, making electing an HDHP a bit of a gamble. Employees do have the risk of paying their maximum out-of-pocket costs. Again, for a family, that is $14,100. The median balance of American households is $5,300. An illness can cause severe financial hardship for your employee and their family member. In addition, not all services and doctors fall within HDHP coverage. Employees must use services within the insurance network.
Another possible downside is that employees with HDHPs may jeopardize their future health. They may not go to the doctor to treat an infection or injury or experience dangerous symptoms because of high out-of-pocket costs. Avoiding healthcare visits and prescriptions could lead to an even larger medical bill for hospitalization than an in-office visit.
PT Pros
PT Business Solutions offers superior customer service. We know that your business is unique. That’s why we take the time to get to know you and your employees. We can help you optimize the right health care coverage solutions for your business. Reach out to us today.
