How is a high-deductible health plan (HDHP) characterized?

A high-deductible health plan (HDHP) is characterized by its structure of lower premiums paired with higher deductibles. This means that policyholders pay less each month for their insurance but must pay more out-of-pocket before their insurance begins to cover medical expenses.

This arrangement is designed to encourage individuals to take more responsibility for their healthcare expenses, as they will typically need to pay for a larger portion of their medical costs upfront. HDHPs are often used in conjunction with Health Savings Accounts (HSAs), which allow individuals to save money tax-free for qualified medical expenses, providing an additional incentive to manage healthcare spending.

In contrast, other options mention elements that do not accurately reflect the characteristics of HDHPs, such as high premiums or comprehensive coverage at no extra cost, which are not typical of these types of plans.