One Big Reason to Love High Deductible Health Plans

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If you dislike your high-deductible health plan, the day may come when you’re grateful for it. Take a look at why. [[{“value”:”

About 10 years ago, my husband worked for an energy startup in Southern California. He loved the job and the excitement of being part of a startup. What neither of us liked was the fact that his health insurance plan carried a high deductible.

For years leading up to being diagnosed with a brain tumor, we’d spend a small fortune on alternative treatments for me. We were smack-dab in the middle of paying off debt and found the idea of facing more medical expenses discouraging. We didn’t realize how effectively a high-deductible health plan (HDHP) can help create a more comfortable financial future.

The green-eyed monster

Of all the emotions I experience, envy is one of my least favorite. But the truth is, my green-eyed monster peeks out a little any time I hear about someone having an HDHP. As ridiculous as that sounds, hear me out.

I get that life happens, but it sometimes feels like life has happened to my family a lot. Like millions of Americans, we’ve faced corporate downsizing, serious illness, losing our shirt on a home sale in the middle of the Great Recession, and dozens of financial shocks that set us back. My mother used to say, “One step forward, two steps back,” and I grew to understand precisely what that meant.

What I wish we’d known back when we were whining about the HDHP was how easily having one can result in a brighter financial outlook. If we’d taken a deeper dive into the plan’s details, we would have known.

HDHPs have lower monthly premiums

Lower monthly premiums mean more money can be used for other goals, like paying off debt or building an emergency fund.

Preventive care is 100% covered

We were so focused on how much we might pay in deductibles if one of us became ill that we overlooked how valuable preventive care is. With an HDHP, qualified preventive care is covered 100%. That means we didn’t pay a cent for routine screenings, bloodwork, and tests.

Lower medical expenses

We’ve spent years paying for “wellness care” for our dogs, knowing that it’s better for them physically and for our checking account if we keep them healthy rather than wait until they get sick. The same is true for us as humans. We can minimize the risk of some illnesses by staying on top of routine preventive care, and an HDHP makes staying healthy a little easier.

Access to an HSA is another perk

An HDHP is the only plan that can be paired with a health savings account (HSA). If you’re not familiar with HSAs, here’s a quick rundown of benefits:

You can contribute pre-tax dollars to an HSA through payroll deductions.Voluntary contributions are tax-deductible.Funds contributed to an HSA grow tax-deferred. All interest and earnings on the HSA account are also tax-free.Any withdrawals you make that are spent on qualified medical expenses are not taxed.HSAs are not subject to the rule of “use it or lose it” like flexible savings accounts (FSAs) are. Unused HSA contributions roll over from year to yearOnce money hits an HSA, it’s yours to keep, even if you change jobs, get a new health plan, or retire.

If I had to narrow it down, it’s the last two points on this list that make me wish I had an HSA. With our FSA, we must use the money we’ve contributed within a specific time frame, or it disappears.

That’s not true of an HSA. The funds in an HSA roll over from year to year, earning interest and growing like any other retirement plan. For people like us who are already contributing every dollar we can to our 401(k)s, an HSA would give us another way to make pre-tax contributions toward our future.

A 2023 Gallup poll revealed that 43% of Americans feel they’ll have enough money to retire comfortably. For the rest of us, it’s a matter of playing catch-up and finding ways to tuck as much money away as possible. The one reason to love an HDHP is that it provides you with one more method of automatically investing for your future using pre-tax dollars.

If we’re lucky enough to grow old, we should be fortunate enough to live comfortably, and an HSA can help with that.

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