Which statement describes the cost structure of an HDHP?

• A. HDHP has lower premiums but higher out-of-pocket costs until deductible is met.
• B. HDHP has higher premiums and lower deductibles.
• C. HDHP eliminates the deductible.
• D. HDHP does not pair with an HSA.

Answer: (C)

High-deductible health plans use a larger upfront deductible and typically come with lower monthly premiums. The trade-off is that you pay more out of pocket before the plan starts covering most services, which means higher costs until you meet the deductible. After meeting the deductible, you continue to pay costs (often as coinsurance) until you reach the plan’s out-of-pocket maximum. An important feature is that HDHPs can be paired with a Health Savings Account, allowing you to save pre-tax dollars to cover qualified medical expenses and letting those funds roll over year to year. So HDHPs do not eliminate the deductible; they set a higher deductible while offering the tax-advantaged HSA option and lower premiums overall.