The High Deductible Health Plan

In order to use a Health Savings Account (HSA), one of the requirements is that you have a High Deductible Health Plan (HDHP) in force.  A HDHP is simply a special sort of medical insurance policy with some very particular components.  Specifically, those components are: a) a higher annual deductible than most typical health plans; and b) a maximum limit on the sum of the annual deductible and out-of-pocket (OOP) medical expenses that you pay for covered medical expenses.The High Deductible Health Plan

HDHP Limits

First of all, the limits for a HDHP are as shown in the following table (2009 figures):
Coverage Type Minimum Annual Deductible Maximum Annual Deductible Plus OOP
Individual $1,150 $5,800
Family $2,300 $11,600

**It should be noted that the Maximum Annual Deductible plus OOP only includes amounts paid within the defined “network” of providers authorized by the plan.  Any expenses outside that network will not be considered within this Maximum Annual amount.

In addition, some family plans have a separate Individual deductible and Family deductible.  When you meet the amount for the Individual deductible for one family member, you no longer have to meet the higher Family deductible for that year. If either the Family deductible or the Individual deductible are less than the minimums for that tax year, the plan does not qualify as a HDHP.

Photo by Andrew Aliferis
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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  • Do not assume that just because your health plan was a high deductible that you are able to use an HSA.

    If your plan had a $2000 deductible but paid for office visits and the deductible did not apply, you cannot have an HSA.

    If you have a drug deductible that is not connected to the policy deductible it will not qualify either.

    Most plans that do qualify state it in the name of the policy or boldly in the paperwork.

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