Which statement describes a High Deductible Health Plan (HDHP)?

Which statement describes a High Deductible Health Plan (HDHP)?

• A. A plan with no deductible and no out-of-pocket maximum
• B. A plan where the deductible must meet a minimum amount and out-of-pocket expense may not exceed a maximum
• C. A plan that covers only cosmetic procedures
• D. A plan with unlimited copayments

Answer: (B)

HDHPs are defined by two features: a relatively high deductible and a cap on annual out-of-pocket costs. This means you pay a minimum deductible before most benefits kick in, and there’s a maximum limit on what you’ll have to pay out of pocket in a year to protect you from very high medical expenses. The statement describing a plan where the deductible must meet a minimum amount and out-of-pocket expenses may not exceed a maximum captures both of these elements, which is what characterizes an HDHP. The other options don’t fit because HDHPs aren’t defined by having no deductible or no out-of-pocket maximum, nor by covering only cosmetic procedures or by allowing unlimited copayments; those features contradict the standard structure of an HDHP, which centers on a high deductible paired with a cap on out-of-pocket costs.

HDHPs are defined by two features: a relatively high deductible and a cap on annual out-of-pocket costs. This means you pay a minimum deductible before most benefits kick in, and there’s a maximum limit on what you’ll have to pay out of pocket in a year to protect you from very high medical expenses. The statement describing a plan where the deductible must meet a minimum amount and out-of-pocket expenses may not exceed a maximum captures both of these elements, which is what characterizes an HDHP.

The other options don’t fit because HDHPs aren’t defined by having no deductible or no out-of-pocket maximum, nor by covering only cosmetic procedures or by allowing unlimited copayments; those features contradict the standard structure of an HDHP, which centers on a high deductible paired with a cap on out-of-pocket costs.