High Deductible Health Plans (HDHP) and HSA: Tax Advantages Explained
High Deductible Health Plans (HDHPs) are increasingly popular among American consumers seeking lower monthly premiums.
What Is an HDHP?
An HDHP requires a higher deductible before insurance begins covering costs. In exchange, monthly premiums are typically lower.
What Is an HSA?
A Health Savings Account allows individuals to contribute pre-tax dollars for qualified medical expenses.
Tax Benefits
- Tax-deductible contributions
- Tax-free growth
- Tax-free withdrawals for medical expenses
Contribution Limits
Contribution limits are adjusted annually by the IRS. Individuals and families have different caps.
Who Should Consider an HDHP?
Healthy individuals who rarely visit doctors may benefit most from lower premiums and tax savings.
Conclusion
HDHPs paired with HSAs provide a strategic way to manage healthcare costs while benefiting from significant tax advantages.