When federal subsidies expired at the end of 2025, many Americans faced rising monthly premiums on health insurance. Consequently, a large number of people switched to high-deductible health plans (HDHPs) to keep costs manageable. However, these plans come with trade-offs that many enrollees do not fully understand — including steep out-of-pocket expenses before coverage begins.
Madison Burgess, a 31-year-old teacher in San Diego, experienced this firsthand. She chose a cheaper plan for her husband on the exchange. She later realized she had no idea what a deductible was. “I didn’t know what a deductible was, so I just went with what was cheap, and now I have regret,” she said.
Her story is far from unique. Understanding how HDHPs and health savings accounts (HSAs) work together can save you thousands of dollars each year.
What Is a High-Deductible Health Plan?
HDHPs offer lower monthly premiums in exchange for higher upfront medical costs.
A deductible is the amount you pay out of pocket before your insurance company begins sharing the bill. For Burgess’s husband, that number stands at $5,800. Only after paying that amount does the insurance plan start covering most services.
These plans are increasingly common. By 2023, 30% of employer-insured workers carried a high-deductible plan — up sharply from just 4% in 2006. Therefore, understanding how to use them wisely is more important than ever.
Two key terms to know:
- Deductible: The amount you pay before insurance shares costs
- Premium: Your fixed monthly payment to the insurance company
You May Qualify for an HSA Without Knowing
A health savings account offers a powerful triple tax advantage.
If you enrolled in a bronze or catastrophic marketplace plan, you likely qualify for an HSA. Think of it as a dedicated medical savings account with significant tax benefits. First, contributions reduce your taxable income. Second, your money grows tax-free inside the account. Third, withdrawals for qualified medical expenses are also tax-free.
Furthermore, HSA funds cover a wide range of expenses — doctor visits, prescriptions, over-the-counter medicines, tampons, and even sunscreen. The account belongs to you permanently. Even if you change jobs or switch health plans, your HSA balance stays with you.
HSA vs. FSA — Know the Difference
An HSA is not the same as a flexible spending account (FSA). FSAs are also tax-advantaged, but employers offer them exclusively. Moreover, FSA balances expire at year-end, and you forfeit unused funds when you leave your job. An HSA, by contrast, rolls over indefinitely and earns interest.
How to Open an HSA
Opening an HSA is straightforward — anyone with an eligible plan can do it.
You open an HSA through a bank or financial institution, which then issues a debit card for medical purchases. You can open an account at any point during the year, as long as your health plan qualifies.
Before choosing a provider, compare fee structures. Some institutions charge monthly maintenance fees, while others offer fee-free accounts. Additionally, if your employer provides insurance, they may require you to use a specific IRS-approved HSA administrator.
Contributions do not need to be large to be useful. Even depositing a few dollars each month builds a financial cushion over time. For 2026, the IRS caps HSA contributions at $4,400 for individuals and $8,750 for families.
Preventive Services Cost You Nothing
All marketplace plans must cover certain preventive services at zero cost to patients.
Routine immunizations and cancer screenings are among the services covered at no charge — provided you visit an in-network provider. Beyond preventive care, costs vary by service type. For instance, many plans charge less for telehealth visits than for in-person primary care appointments.
Review your Summary of Benefits and Coverage document to understand what each service costs under your specific plan. This comparison helps you choose the most cost-effective type of care for each situation.
Schedule Care Early in the Year
Timing your medical appointments strategically can reduce your annual healthcare costs.
Most deductibles reset on January 1. Therefore, if you anticipate needing ongoing care — such as follow-up treatment for a chronic condition — scheduling appointments early in the year makes financial sense. Meeting your deductible sooner means your insurance kicks in earlier, making the remaining months of the year significantly cheaper.
Caitlin Donovan, a senior director at the Patient Advocate Foundation, recommends this approach for anyone who knows they will need multiple services throughout the year.
Should You Pay Cash Instead?
Cash payments sometimes cost less than billing your insurance — but they do not count toward your deductible.
Certain hospitals and clinics offer discounted rates for cash-paying patients. You have the legal right to request a Good Faith Estimate before receiving care, showing you the out-of-pocket cost without insurance. Compare that figure against what your insurer would charge when you use your coverage.
If the cash price is lower and you are unlikely to meet your deductible anyway, paying directly saves money. “If you don’t think you’re ever going to hit your deductible — you’re that young invincible, and your deductible is $10,000 — negotiate the cash price,” Donovan advised.
However, note that cash payments generally do not count toward your deductible or out-of-pocket maximum. Plan accordingly.
ACA Plan? Update Your Income Now
Failing to report income changes on your ACA marketplace application can result in a large, unexpected tax bill.
If your earnings increase during the year, update your marketplace profile immediately. Subsidies adjust based on income, and delays in reporting can cause you to receive overpayments that must be repaid at tax time. Donovan frequently sees this situation: “Someone is newly unemployed, signs up for coverage, says they’re not making any money, then eventually gets a job and doesn’t report it — and then they have this huge tax bill at the end.”
Fortunately, stashing money in an HSA can help offset this problem. HSA contributions lower your taxable income, which in turn may reduce the subsidy repayment you owe. Additionally, reporting a change in income promptly might qualify you for Medicaid or a plan with better cost-sharing benefits.
