Federal law defines the characteristics that a plan must have to be classified as a qualified HDHP.
In addition to a high deductible — it must be at least $1,100 for an individual and $2,200 for a family in 2008 — the plan must have a
cap, or maximum out-of-pocket limit, on how much you can be required to spend on qualifying healthcare costs each year. That cap is $5,600 if you’re single or $11,200 if you have family coverage, in 2008. This limit includes both your deductible and any co-payments you may be responsible for, such as fees for doctor visits and prescriptions, after your insurer begins to pay its share. So even though you run the risk of paying high medical expenses under an HDHP, your exposure to that risk isn’t infinite.
You can check with the IRS, your health plan provider, or a professional tax adviser to confirm that an HDHP plan you’re considering meets the required standards.
When first-dollar is OK
Neither insurers nor the IRS wants you to skip important preventive medical procedures as a way to save money. That helps neither you nor the insurer, since skipping preventive care may result in more serious medical problems later on. Therefore, a plan can still be an HSA-qualified HDHP while offering first-dollar coverage on some kinds of preventive care, as specified by the IRS, including:
