Welcome to HDHPexpert.com

What is an HDHP?

HDHP = An acronym for High Deductible Health Plan.  In it’s simplest form, an HDHP is a medical insurance product that has a high deductible. Similar to car insurance, a deductible must be reached before the insurance “kicks in” and begins paying claims as stipulated by the plan’s parameters.   More…

What are the advantages of choosing a high deductible health plan?

First and foremost for most individuals: cost.  A high deductible health plan may cost thousands lower annually than a more traditional copay-based plan.  HDHPs encourage consumers to take a more active role in managing their health care, on the premise that if they manage their health and health-related expeditures appropriately, they may come out ahead financially.

Referred to in the industry as “promoting consumerism,” an HDHP may lead enrollees to choose more efficient methods of obtaining health care, such as avoiding costly emergency room visits in favor of urgent care centers, choosing generic drugs over brand-name drugs, etc.

HDHPs also have tremendous tax savings potential, in the form of a Health Savings Account that can be paired with the HDHP insurance itself.  These HSA accounts allow pre-tax contributions to be set aside for eligible medical expenses.

What are Safe Harbor Benefits?

Safe Harbor Benefits are day-one benefits; preventative treatments that the insurance companies provide as a fully-paid benefit because they want to encourage proper health management.  To be clear, these benefits do not apply to a deductible and are 100% paid by the insurance company.  A listing of the major Safe Harbor Benefits can be found here.

From a “big picture” perspective, the insurance companies encouraging their customers to get preventative treatments should lower the overall costs of the entire health insurance system.

Why should I be interested in an HDHP?

HDHPs cost 20-50% less than traditional copay-based insurance.  They allows subscribers the possibilit of tremendous annual savings and put them more in control of their medical expenditures.  When an individual enrolled in a high-deductible plan has a healthy year, they see the financial benefits (savings!), not the insurance company.

How does an HDHP tie in with a Health Savings Account?

One cannot have a HSA without being enrolled in an IRS qualified HDHP.  Once enrolled in an HDHP, an enrollee can establish a tax-favored HSA and use the account as a pre-tax shelter for money earmarked for qualified medical expenses.  Because the money contribruted to an HSA is typically pre-tax, tremondous savings are possible in the range of 20-40% depending on an individuals tax bracket.

HSAs are an add-on component to high deductible health plans.  HDHPs operate perfectly without a Health Savings Account (HSA) and there is no timeframe for HSA account setup: they can be established two weeks or two years after an individual becomes enrolled in a qualified HDHP.

What is the maximum I can contribute pre-tax to an HSA?

Every year the IRS sets the maximum total dollar amount that can be contributed to a Health Savings Accounts.  For 2010, these numbers stand at $3050 for those enrolled as a single, and $6150 for those enrolled with any number of dependents (subscriber+spouse, subscriber+child/children, full family etc.).

Can an HSA be established at any time during the year?

Yes.  A Health Savings Account can be set up at any time during the year and regardless of when the account is established the maximum annual amount can be contributed.

What if I lose my job?  Is my HSA gone?  Do I need to move it?

HSAs are owned entirely at the employee-level, meaning they are not tied to any emploeyer and are totally controlled by the accountholder.  HSA funds are not in jeopardy if you are planning on leaving a job or are in-between jobs.

My company recently enrolled all of the employees in an HDHP, do I need to set up an HSA?

No.  HSAs can be set up at any time and do not need to be set up to accompany an HDHP.  High deductible health plans operate just fine by themselves; a Health Savings Account is a compliment to an HDHP but is not required.  An example of a scenario where someone would not need to set up an HSA is if they weren’t contributing to it due to extremely low medical needs.  There would be no sense in establishing an account just to have it have an ongoing balance of $0.00.