Qualified HDHPs
Enrollment in a qualified HDHP is a requirement for establishing and maintaining a health savings account. The chassis for a qualified HDHP is the same as described in Chapter 1, but it must also conform to certain federal guidelines:
- A qualified HDHP must specify both a minimum annual deductible and a maximum annual out-of-pocket (OOP) expense limit, as set every year by the IRS. The minimum annual deductible is just that—the minimum amount that the insured must pay before the plan pays any benefit. The maximum annual OOP expense limit is the cap on the sum of the annual deductible and all out-of-pocket expenses the insured must pay for covered expenses under the plan. Out-of-pocket expenses include coinsurance and copayments; they do not include the plan’s premium payments. The OOP limits vary for individual coverage and family coverage. Once the insured reaches the out-of-pocket limit, all covered expenses are paid 100 percent by the HDHP for the remainder of the plan year.
- For 2021, the minimum annual deductible and the maximum annual out-of-pocket expense limits for qualified HDHPs are:
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2021 |
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Minimum Annual Deductible |
Maximum Annual Out-of-Pocket Expense Limit* |
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Individual coverage |
$1,400 |
$7,000 |
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Family coverage |
$2,800 |
$14,000** |
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* Private insurance companies usually offer HDHPs as part of a managed care plan such as a PPO. A qualified HDHP can have a separate and higher OOP limit for out-of-network care. Maximum OOP expenses do not include premium payments. ** As of 2016 and beyond, a family plan must embed a per-individual OOP limit that does not exceed the cost-sharing limits imposed by ACA for that year. |
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- A plan with a lower deductible or higher out-of-pocket expense limits would not qualify as an HSA-compatible HDHP. The insurer can design the plan so that the minimum deductible and the maximum OOP amounts apply to services received only from in-network services; costs incurred through services provided by out-of-network providers may not count toward either limit.
- A qualified HDHP can cover preventive care without requiring a deductible or copayment. Indeed, if the HDHP is to meet the minimum coverage requirement for the Affordable Care Act, it mustcover certain preventive services with no copayment, even during the deductible stage. Examples of preventive care include:
- annual physicals
- routine well-child care
- immunizations
- screening services
All services other than preventive care are subject to the deductible.
If an HDHP meets these criteria, it is qualified as HSA-compatible and will be labeled as such by the insurer. Though those who are enrolled in a qualified HDHP are not required to establish an HSA, there are really no compelling reasons not to do so.
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Note Not all plans with a high deductible are HSA-compatible. For example, a plan might have a $1,500 deductible on inpatient hospital care but immediately cover office visits with a $30 copay. Although the insured may be paying a lot of his or her own bills, the insured does not qualify as having a “qualified” high-deductible health plan and would not be able to open a HSA. |
Out-of-Pocket Limits: HDHPs vs. ACA
It’s important to understand that the qualified HDHP out-of-pocket expense limits are not the same as the cost-sharing limits imposed on (nongrandfathered) plans by the ACA. The ACA limits the amount an individual must pay out-of-pocket for essential health benefits covered by his or her insurance plan. ACA cost-sharing limits are set each year by the Department of Health and Human Services; the HDHP limits are tied to the Consumer Price Index and are set by the IRS. In 2021, for example, the ACA cost-sharing limits for single coverage and family coverage are, respectively, $8,550 and $17,100—$1,550 and $3,100 higher than their qualified HDHP counterparts.
Family HDHP coverage must “embed” an individual out-of-pocket maximum for each family member, such that the plan begins to pay benefits for any family member once his or her individual expenses reach the ACA individual cost-sharing limit in place for that year, regardless of whether the family as a whole has met the plan’s deductible.
Questions about HSA’s or qualified HDHP’s can be answered by your Total Benefit Solutions, Inc health insurance specialists at (215)355-2121