Choosing Between HDHPs and Non-HDHPs on the ACA Marketplace

When shopping for health insurance on the Affordable Care Act (ACA) Marketplace, you might be faced with a choice between a high-deductible health plan (HDHP) and a non-HDHP. Both types of plans have their own advantages and disadvantages, so it’s important to understand the differences before making a decision.

What is an HDHP?

An HDHP is a health insurance plan with a higher deductible than a traditional plan. This means that you will pay more for out-of-pocket costs before your insurance starts to cover expenses. However, HDHPs typically have lower monthly premiums than non-HDHPs.

Benefits of an HDHP

Lower monthly premiums: HDHPs typically have lower monthly premiums than non-HDHPs. This can be a significant savings, especially if you are on a tight budget.
HSA eligibility: HDHPs are eligible for Health Savings Accounts (HSAs). HSAs are tax-advantaged accounts that you can use to pay for qualified medical expenses. This can help you save even more money on your healthcare costs.

Disadvantages of an HDHP

Higher out-of-pocket costs: HDHPs have higher deductibles than non-HDHPs. This means that you will have to pay more for out-of-pocket costs before your insurance starts to cover expenses.
Limited coverage: HDHPs may not cover as many services as non-HDHPs. For example, some HDHPs do not cover prescription drugs or mental health services.

Non-HDHPs

Non-HDHPs are health insurance plans with lower deductibles than HDHPs. This means that you will pay less for out-of-pocket costs before your insurance starts to cover expenses. However, non-HDHPs typically have higher monthly premiums than HDHPs.

Benefits of a Non-HDHP

Lower out-of-pocket costs: Non-HDHPs have lower deductibles than HDHPs. This means that you will have to pay less for out-of-pocket costs before your insurance starts to cover expenses.
More comprehensive coverage: Non-HDHPs typically cover more services than HDHPs. For example, most non-HDHPs cover prescription drugs and mental health services.

Disadvantages of a Non-HDHP

Higher monthly premiums: Non-HDHPs typically have higher monthly premiums than HDHPs. This can be a significant expense, especially if you are on a tight budget.
No HSA eligibility: Non-HDHPs are not eligible for HSAs. This means that you will not be able to take advantage of the tax benefits of HSAs.

Which Type of Plan is Right for You?

The best type of health insurance plan for you will depend on your individual needs and circumstances. If you are healthy and do not expect to have many medical expenses, an HDHP may be a good option for you. However, if you have a chronic condition or are expecting to have significant medical expenses, a non-HDHP may be a better choice.

If you are not sure which type of plan is right for you, talk to a licensed insurance agent. They can help you compare plans and find the best option for your needs.