High Deductible Health Plan Features

High-deductible health plans are growing in popularity as health-care costs rise. The plans come with lower costs, and they can be combined with savings accounts to help participants pay out-of-pocket medical expenses. Nonetheless, the plans have drawn criticism for potentially leaving people with medical problems strapped with more health-care costs than they can afford to pay.

Contributions

• High-deductible health plans are cheaper for employers to offer workers than full coverage for hospitalization and other medical care. Employees are ultimately responsible for paying a larger share of their health-care costs due to the high deductible, but they pay lower premiums for their health plans in return. Workers also can deposit pretax dollars into a health savings account (HSA) to help pay their medical expenses. For 2010, the maximum HSA contribution for single people is $3,050, and the maximum for families is $6,150. Employers can make contributions to the accounts on behalf of employees. However, workers own their HSAs, and they can keep them if they leave their jobs.

Deductibles

• A single person who wants to open an HSA has to be enrolled in a qualified health plan that has at least a $1,200 deductible. The minimum deductible increases to $2,400 for families. Unused money in an HSA can remain in an account indefinitely and even fund a person's medical expenses in retirement. Yet a "New York Times" article titled "High-Deductible Plans Grow, but Not Everyone Should Get on Board" says critics assert that HSAs and high-deductible plans only benefit healthy people who don't have many medical expenses. People who require more medical care may have more expenses than they can afford to pay and forgo care as a result.

Affordability

• Earnings gained from HSA accounts are tax-free, and account holders don't pay taxes on money they withdraw as long as it's used for a qualified medical expense. Still, a Washington Post report indicates some Democrats view the accounts as tax shelters for wealthier people. The Post article titled "High-Deductible Health Insurance Plans Grow More Attractive to Employers" also notes that a 2008 Government Accountability Office report said people with HSAs have an average household income of $139,000. The MedPage Today website notes that a 2006 Kaiser Family Foundation study determined HSAs are no more affordable for families with low incomes than other plans.

Investment Options

• Banks and other financial institutions that provide HSAs offer several types of investment options intended to help people get higher returns on their savings. Those options include stocks and mutual funds. However, people who have medical problems or who have low balances in their accounts may want to avoid the risk of losing their money by investing in stocks. Interest-bearing savings or money market accounts deliver lower rates of return, but they also preserve HSA deposits.