How does a high deductible health plan actually work?

A high deductible health plan requires you to pay all of your medical costs out of pocket until you hit a set dollar threshold, called the deductible, which is typically $1,500 or more for an individual. Once you reach that deductible, insurance kicks in and covers most remaining costs, often with a copay or coinsurance until you hit an out-of-pocket maximum. The tradeoff is that your monthly premiums are much lower than traditional plans. HDHPs also make you eligible to open a Health Savings Account, where you can deposit pre-tax money to pay for medical expenses. This setup works best for people who are generally healthy and rarely need care, since you absorb more risk in exchange for lower monthly costs.