Do High Deductible Plans Have Copays?

High-Deductible Health Plans (HDHPs) are a common type of health insurance, often chosen for their lower monthly premiums. These plans feature a cost-sharing structure that differs from traditional health insurance, leading many to question how medical expenses, including copays, are handled. This article clarifies the role of copays within HDHPs and explains other cost-sharing mechanisms.

Understanding High-Deductible Health Plans

A High-Deductible Health Plan (HDHP) has a higher deductible than a typical health plan, meaning individuals pay more out-of-pocket before insurance coverage begins. For 2025, an HDHP must have a minimum deductible of $1,650 for individual coverage and $3,300 for families. This structure often results in lower monthly premiums.

Key terms define how medical costs are shared within an HDHP. The deductible is the amount an individual must pay for covered services before the insurance company contributes. After the deductible is met, coinsurance applies, which is a percentage of the costs an individual pays for covered services, while the plan pays the rest. The out-of-pocket maximum is the highest amount an individual will pay for covered services in a plan year; once this limit is reached, the plan pays 100% of subsequent covered costs. For 2025, the out-of-pocket maximums for HDHPs are $8,300 for individuals and $16,600 for families.

The Role of Copays in HDHPs

High-Deductible Health Plans typically do not feature copays for most services before the deductible is met. For non-preventive care, individuals are responsible for the full cost of medical services, such as doctor visits or prescriptions, until their deductible is met. This contrasts with traditional plans where a fixed copay might be paid at the time of service, regardless of the deductible.

Exceptions exist where copays might apply. Many HDHPs, by federal law, cover certain preventive services at no cost to the individual, even before the deductible is met. These services, such as annual physicals, immunizations, and various screenings, are often structured as a $0 copay. Some HDHPs might introduce copays for specific services after the deductible has been satisfied, though coinsurance is a more common cost-sharing mechanism at that stage. It is important for individuals to review their specific plan documents to understand these variations.

Beyond Copays: Other Cost-Sharing in HDHPs

Once the deductible in an HDHP is met, cost-sharing primarily transitions to coinsurance. This means the individual pays a percentage of the cost for covered medical services, and the insurance plan pays the remaining percentage. For example, a plan might have an 80/20 coinsurance, where the plan pays 80% and the individual pays 20% of the allowed amount for services. This arrangement continues until the individual reaches their annual out-of-pocket maximum.

The out-of-pocket maximum is a protective limit that ensures individuals are not burdened with unlimited medical expenses. All payments made towards the deductible and coinsurance contribute to this maximum. Once the out-of-pocket maximum is reached, the health plan pays 100% of all covered medical expenses for the remainder of the plan year.

Health Savings Accounts and HDHPs

Enrolling in an HDHP allows eligibility to open and contribute to a Health Savings Account (HSA). An HSA is a tax-advantaged savings account designed to help individuals pay for qualified medical expenses. Only individuals covered by an HDHP that meets specific Internal Revenue Service (IRS) guidelines are eligible to contribute to an HSA.

HSAs offer a triple tax advantage: contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. These accounts can help offset the higher deductible of an HDHP, making healthcare costs more manageable. Funds in an HSA can be used to pay for deductibles, coinsurance, and other eligible medical expenses with pre-tax dollars.