What characteristic defines a High-Deductible Health Plan (HDHP)?

A High-Deductible Health Plan (HDHP) is defined by having low premiums in comparison to traditional health plans, paired with high deductibles that must be met before the insurance begins to pay. This structure is designed to encourage enrollees to take a more proactive role in managing their health care expenses, as they will be responsible for a larger share of costs upfront.

The low premium aspect makes HDHPs attractive to individuals and families who may not anticipate needing extensive medical care, thus allowing them to save money in monthly premiums. However, the high deductible means that in the event of significant medical needs, policyholders must be prepared to incur substantial out-of-pocket expenses before the insurance coverage kicks in.

This kind of plan fits well with Health Savings Accounts (HSAs), which allow individuals to save money tax-free to cover those high deductibles. While options that present high premiums or unlimited coverage are part of different insurance models, they would not accurately reflect the essential characteristics of HDHPs.