{"id":10734,"date":"2025-04-17T17:18:00","date_gmt":"2025-04-17T17:18:00","guid":{"rendered":"https:\/\/www.freeway.com\/knowledge-center\/?p=10734"},"modified":"2025-04-11T19:24:46","modified_gmt":"2025-04-11T19:24:46","slug":"how-to-set-aside-money-if-you-have-a-high-deductible","status":"publish","type":"post","link":"https:\/\/www.freeway.com\/knowledge-center\/health-insurance\/how-to-set-aside-money-if-you-have-a-high-deductible\/","title":{"rendered":"How to Set Aside Money if You Have a High Deductible"},"content":{"rendered":"\n

Your deductible is one of the key factors you need to know when budgeting for your health costs each year. While a high deductible health plan, or HDHP, can help keep your monthly premiums low, it can put a major strain on your pockets when health expenses do pop up. However, there are ways to plan ahead and set money aside to make sure that your high deductible health plan works for you and your family. <\/p>\n\n\n\n

What Constitutes a High Deductible Health Plan?<\/strong> <\/h2>\n\n\n\n

So, what exactly is a high deductible health plan? As you might have guessed, these plans have a higher deductible<\/a> than average, but they also come with certain benefits to offset their costs. <\/p>\n\n\n\n

According to the IRS rules for 2025<\/a>, HDHPs need to have deductibles of at least $1,650 for individual policies and $3,300 for family policies. They also need out-of-pocket maximums of $8,300 for individuals and $16,600 for families. <\/p>\n\n\n\n

Key Advantages of Enrolling in an HDHP<\/strong> <\/h3>\n\n\n\n

Although having a large deductible can sound a bit daunting, it actually has a few key benefits. Namely, larger deductibles usually come with lower premiums. They can help you keep health care costs low<\/a> by reducing your monthly premium. If you only need basic care with standard co-pays, compared to more involved and expensive services, HDHPs can help you save. You\u2019ll still have insurance in place if you end up having a serious health expense, but you won\u2019t have to deal with a high monthly premium. <\/p>\n\n\n\n

HDHPs are also the only types of health insurance<\/a> policies that are HSA-eligible. A health savings account<\/a> (HSA) is a special, pre-tax savings account that you can use for certain medical expenses. Because HSAs use money from your paycheck before it\u2019s taxed, you ultimately pay less for your healthcare. The government designed HSAs as an incentive to make everyday healthcare more affordable for people who use HDHPs. <\/p>\n\n\n\n

HSA vs. FSA: Understanding the Differences<\/strong> <\/h3>\n\n\n\n

HSA plans are personal accounts you can grow and contribute to while enrolled in an HDHP. However, they aren\u2019t the only type of savings account for healthcare expenses. Flexible savings accounts (FSAs) are another popular option you should know about. <\/p>\n\n\n\n

They also have a few key differences. You own your HSA account and the money in it, even if you get your insurance through your employer. Meanwhile, FSAs are employer-sponsored policies, and they don\u2019t usually follow you when you leave your job. With your HSA, your money rolls over every year for you to keep, accumulate, and even invest. FSA funds typically expire at the end of the year, although restrictions may change from employer to employer. <\/p>\n\n\n\n

Keep in mind that you can\u2019t contribute to both an HSA and an FSA at the same time. For example, you may have had an HDHP with an HSA through the marketplace. Then, you get hired by a company that offers a more standard insurance plan, plus an FSA. You\u2019ll still be able to keep your HSA for future use, but you\u2019ll only be able to contribute to your FSA once you switch away from your HDHP.\u00a0<\/p>\n\n\n

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Planning for the Future with Your HSA<\/strong>\u00a0<\/h2>\n\n\n\n

HSAs aren\u2019t just a good way to set aside money for your ongoing health expenses. They can also benefit your budget in the long term. You can actually invest a certain amount of the money in your HSA, allowing it to grow tax-free. That way, you\u2019ll be prepared for any health expenses that pop up in the future. As you get older and your health needs become more complex, you\u2019ll be glad to have a large nest egg in your HSA. Plus, you can also use HSAs for your kids, so even if your personal health costs are low, you\u2019ll be able to keep your whole family healthy. <\/p>\n\n\n\n

Strategies for Smart Saving and Investing<\/strong> <\/h2>\n\n\n\n

Want to use your HDHP to make the most of every dollar? With a bit of planning, you can save for emergency health expenses and beyond. <\/p>\n\n\n\n

Long-Term Benefits of HSAs in Retirement Planning<\/strong> <\/h3>\n\n\n\n

You can withdraw money from your account at any time, but you\u2019ll have to pay a pretty decent tax penalty if you\u2019re younger than 65. After you hit 65, you\u2019ll actually be able to withdraw that money tax-free. At that point, you don\u2019t just have to spend the money on healthcare; you can use it for anything you want. That means HSAs can double as alternative retirement savings accounts. <\/p>\n\n\n\n

How HSAs Can Aid in Tax Savings<\/strong> <\/h3>\n\n\n\n

HSAs are famous for having a triple tax advantage. Here are the three ways it can help you save on your taxes: <\/p>\n\n\n\n