Who should consider a high-deductible health plan?

When you don’t expect to use healthcare products and services

If you expect to be in good health and don’t expect to need prescription drugs or to incur significant medical expenses in the coming year, you may consider an HDHP. Although they often have lower premiums, many HDHPs require you to pay out of pocket (until you meet your deductible) for any treatment other than preventive care. That’s in line with the conventional wisdom that says “HDHPs and HSAs are for healthy people.”

Bronze and Catastrophic plans in the individual market are now considered HDHPs. These plans generally have deductibles that are quite high, but it’s also common for them to cover various non-preventive care, such as office visits to address an illness or injury, with a copay before the deductible is met.¹

When you expect to use a lot of medical care

But HDHPs and HSAs are also sometimes among the best options for people who have health conditions and expect they’re going to need extensive medical care in the coming year. There are a couple of reasons for that: Maximum out-of-pocket costs combined with premiums, as well as the tax advantages that go along with contributing to an HSA.

Let’s take a look at how each of those work when a person has very significant medical needs:

Premiums + maximum out-of-pocket might be lower with an HDHP

For employer-sponsored coverage, the maximum out-of-pocket (MOOP) costs for HDHPs can sometimes be lower than the MOOPs for non-HDHPs. The non-HDHP will provide more pre-deductible benefits, but the total MOOP might be similar or higher. To be clear, the IRS caps the maximum allowable MOOP for HDHPs (other than Bronze and Catastrophic individual market plans) at a lower level than CMS caps the maximum allowable MOOPs for all other plans.

But even when you’re looking at health plans with out-of-pocket caps well below the legal limits, you may see HDHPs with lower out-of-pocket limits compared with other available plans. If your employer offers multiple options and one is an HDHP, take a careful look at the maximum out-of-pocket limits for the various plans. You might be surprised to see that even though the deductible is higher on the HDHP, the total out-of-pocket exposure might be lower.

That’s not always the case, but you certainly don’t want to write off the HDHP without giving it careful consideration.²

For people who buy their own coverage in the Marketplace, the fact that all Bronze and Catastrophic plans are now HDHPs means that the policies with the lowest premiums are all considered HDHPs, making their enrollees eligible to make HSA contributions.

If a person has significant medical needs and knows they’re going to meet the MOOP on any policy they buy, their total costs, including premiums and out-of-pocket expenses, could be lower with an HDHP. For example, consider a 50-year-old in Houston who earns too much to qualify for a subsidy and is purchasing Marketplace coverage. For 2026, here are the total costs (premiums plus maximum out-of-pocket) for this person, for the lowest-cost plan in each category:³

• Catastrophic HDHP: $18,131 ($10,600 in MOOP plus $7,531 in premiums; Catastrophic plans don’t always have the lowest premiums)
• Bronze HDHP: $16,880 ($10,600 in MOOP plus $6,280 in premiums)
• Silver non-HDHP: $18,831 ($9,000 in MOOP plus $$9,831 in premiums; Silver premiums are often higher than Gold premiums)
• Gold non-HDHP: $17,612 ($9,200 in MOOP plus $8,412 in premiums)

When a person has very extensive medical needs, there’s a good chance that they’ll end up meeting the out-of-pocket limit on their plan regardless of whether the deductible is low or high. On an HDHP, the deductible might make up a significant chunk of the out-of-pocket exposure, whereas a person enrolling in a plan with a lower deductible might find that the bulk of their costs end up being coinsurance and copays. But at some point in the plan year, the enrollee is likely going to end up meeting the out-of-pocket cap and the insurer will start to pay all covered in-network medical costs at that point.

So the question is how much will that total out-of-pocket be, and how much is it when you also add on the cost of the premiums that you pay all year? Here are some simplified examples to help you walk through the math on this. It may be that a plan with a lower deductible still ends up being the better option, even after accounting for the potentially higher premiums. But there’s no one-size-fits-all here – you have to look at each plan and see what your total costs would end up being.

HSAs let you use pre-tax dollars to fund medical care

A person with high medical costs can also benefit from enrolling in an HDHP because this makes them eligible to contribute to a health savings account (HSA). An HDHP will allow you to put money into an HSA (up to the maximum contribution limits set by the IRS) and then take it right back out again to pay those medical bills. For example, if you have planned medical treatment and know that you will have significant out-of-pocket costs, perhaps meeting your OOP maximum, you can estimate the bills that are coming, set aside funds accordingly, and withdraw those pre-tax funds to apply to bills.

That way, you get to use pre-tax dollars to pay for your medical care, instead of after-tax dollars. If you’re paying out-of-pocket, without depositing the money into your HSA first, you’re going to be paying with after-tax dollars. So if you know you’re going to have substantial medical bills in the upcoming year, it makes sense to set yourself up so that you can use pre-tax money to pay them instead of after-tax money.

If you don’t use an HSA, you can deduct medical expenses that exceed 7.5% of your income, but that deduction is only helpful insofar as your expenses exceed that threshold, since you can’t deduct the expenses that fall below that threshold. You also have to itemize to get that deduction, and most tax filers don’t do that – especially since the Tax Cuts and Jobs Act increased the standard deduction so much (made permanent by H.R. 1, enacted in 2025).⁴ For the 2023 tax year, only about 9% of all returns used itemized deductions.⁵

But if you have an HSA-eligible HDHP (which includes all Bronze and Catastrophic individual market plans), you can contribute up to $4,400 to an HSA in 2026 if your HDHP covers just yourself, or up to $8,750 if it covers at least one other family member.⁶ The contributions are pre-tax, and you have until April 15, 2027 to contribute some or all of that money.⁷ And there’s no need to itemize – you can deduct your HSA contributions even if you’re taking the standard deduction. There’s also no income limit for this deduction.⁸

You can then withdraw the money, still pre-tax, to pay your medical bills. And since there’s no "use it or lose it” rule for HSAs, the money remains in the account (plus any interest, dividends, or investment growth) from one year to the next. So over time, you may find that you have more than enough to cover your full out-of-pocket exposure, if you’re able to just let the money grow in the account.

What if you need medical care but not a lot of it?

In general, people who know they will need moderately expensive medical treatment in the coming year might be better served by a traditional plan with a lower deductible and copays – even though the premiums will likely be higher than they’d be for an HDHP.

This is because people with modest health care needs might not end up meeting their out-of-pocket maximum. A lower deductible means that their insurance plan will start to pay sooner, and the plan might cover a variety of services – like office visits, urgent care visits, and prescriptions – with copays instead of having the patient pay for them with the costs counting towards the deductible.

Again, there’s no one-size-fits-all here, and “modest health care needs” means different things to different people. But if the care you’re going to need isn’t likely to put you near the out-of-pocket maximum on the plans you’re considering, you might find that you come out ahead with a traditional plan, despite the higher premiums and loss of the tax advantages that go along with the HDHP/HSA combination.

But as is always the case when comparing health plans, keep in mind that none of us can foresee exactly what medical costs we might have in the coming year.

Enrolling in an HDHP? Don’t miss out on the tax advantages of an HSA

If you do decide to enroll in an HDHP, one of the benefits is that you can establish and make contributions to an HSA. You can deduct your HSA contributions when you file your tax return, without having to itemize your deductions. (The deduction is taken on Schedule 1 of Form 1040.)⁹

The money in your HSA rolls over from one year to the next and remains in the account until you withdraw it – there’s no “use it or lose it” provision with an HSA.¹⁰

You can use the money in your HSA to pay your deductible and other out-of-pocket expenses, as well as any qualified medical expenses that aren’t paid by your health plan. As long as you make contributions to your HSA, it can be a way to ensure that you have money available to cover your deductible if necessary.

Since HDHPs are typically among the lower-priced major medical health plans available, some people opt to purchase an HDHP, establish an HSA, and then contribute the amount they’re saving in premiums to the HSA each month. So if you’re paying $500/month for an HDHP and you’d otherwise be paying $650/month for a traditional health plan with copays and a lower deductible, you can put the $150 savings into the HSA each month instead of paying it to your insurance company.

If and when you need to meet your deductible, the money is there for you to use. But if you don’t end up needing to meet your deductible, the money in your HSA is still yours to keep – it’s always tax-free to withdraw it for medical expenses, even if you don’t keep your HDHP long-term.

Read more about HSAs in our article explaining the top ten reasons to use an HSA.

* Catastrophic plans are only available to people under 30 and people who qualify for hardship exemptions from the ACA’s individual mandate. But access to Catastrophic plans was expanded starting with the 2026 plan year. People can qualify for a hardship exemption (and thus access Catastrophic plans if any are available in their area) if their income makes them ineligible for Marketplace premium subsidies or cost-sharing reductions.¹¹

healthinsurance.org does not offer tax advice. This article is intended only to provide background information about how HDHPs and HSAs work. Readers should consult a tax professional if they have questions about their specific circumstances and whether an HDHP/HSA might be a good fit for their needs.