394 / What is a high deductible health plan for purposes of a Health Savings Account (HSA)?

For 2026, an HDHP is a plan with an annual deductible of not less than $1,700 for self-only coverage ($1,650 in 2025). The family coverage deductible limit is $3,400 in 2026 ($3,300 in 2025). Annual out-of-pocket expenses for an HDHP cannot exceed $8,500 in 2026 ($8,300 in 2025) for self-only coverage. For family coverage, the annual out-of-pocket expense limitation is increased to $17,000 in 2026 ($16,600 in 2025).² These annual deductible amounts and out-of-pocket expense amounts are adjusted for cost of living. Increases are made in multiples of $50.³

For this purpose, family coverage is any coverage other than self-only coverage.⁴

The chart below includes the HDHP limits for 2018-2026.

TYPE	2018	2019	2020	2021	2022	2023	2024	2025	2026
HDHP-Min Single	$1,350	$1,350	$1,400	$1,400	$1,400	$1,500	$1,600	$1,650	$1,700
HDHP-Min Family	$2,700	$2,700	$2,800	$2,800	$2,800	$3,000	$3,200	$3,300	$3,400
HDHP-Max Single	$6,650	$6,750	$6,900	$7,000	$7,050	$7,500	$8,050	$8,300	$8,500
HDHP-Max Family	$13,300	$13,500	$13,800	$14,000	$14,100	$15,000	$16,100	$16,600	$17,000

An HDHP may provide coverage for preventive care without application of the annual deductible.⁵  The IRS has provided guidance and safe harbor guidelines on what constitutes preventive care. Under the safe harbor, preventive care includes, but is not limited to, periodic check-ups, routine prenatal and well-child care, immunizations, tobacco cessation programs, obesity weight-loss programs, and various health screening services. Preventive care may include drugs or medications taken to prevent the occurrence or reoccurrence of a disease that is not currently present.⁶

In response to the COVID-19 pandemic, the CARES Act allowed HDHPs to cover the cost of telehealth services without cost to participants before the HDHP deductible was satisfied. HDHPs providing telehealth coverage did not jeopardize their status as HDHPs. Plan members similarly retain the right to fund HSAs after taking advantage of cost-free telehealth services.  The remote services did not have to be related to COVID-19 or preventative in nature to qualify.  The relief was extended several times and made permanent under the OBBBA as of January 1, 2025.

Under the 2025 “One Big Beautiful Bill Act,” or OBBB, the COVID-era telehealth relief offered to HDHP/HSA participants was retroactively extended and made permanent.  This means that health plans no longer fail to qualify as HDHPs solely for providing coverage for telehealth and other remote care services before the minimum HDHP deductible is satisfied.⁷  Under the OBBB, HSA participants do not lose their eligibility to contribute if they are covered by (1) HDHPs providing benefits for non-preventive telehealth or other remote care for less than fair market value before satisfying the HDHP deductible or (2) stand-alone telehealth plans providing these remote services for less than the fair market value of the services.  As discussed above, while the COVID-era relief expired after 2024, the OBBB provision is retroactive to January 1, 2025.  The ability to provide pre-deductible remote health services is optional for employers.

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Planning Point: Plans and participants should note that if the HDHP is a calendar year plan, the usual rules regarding the plan deductible applied between January 2022 and March 2022. The 2023 year-end omnibus spending bill extended the telehealth relief, although instead of beginning on January 1, 2023, the relief was effective for plan years beginning after December 31, 2022 and before January 1, 2025 (that means a gap existed for non-calendar year plans from January 1, 2023 until the date that the plan year began).

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The 2025 OBBB expanded HDHP eligibility to include Direct Primary Care Arrangements if certain requirements are satisfied.  Typically, participating in a direct primary care arrangement, or DPCA, would render a participant HSA-ineligible.  DPCAs are arrangements where an individual pays a medical provider a fee to receive primary care services from that provider.  Because DPCAs often cover non-preventive services prior to the individual satisfying the HDHP deductible, they can render the individual ineligible to contribute to an HSA.  The OBBB modified the rules so that DPCA coverage will not be considered disqualifying coverage as long as the individual's DPCA payment is not more than $150 per month for individual coverage ($300 for family coverage).  The amounts will be indexed for inflation.  Further, the OBBB classifies these qualifying DPCA fees as qualified medical expenses, so they could be paid with HSA funds on a tax-free basis.⁸ The definition of “primary care services” specifically excludes (1) procedures that require the use of general anesthesia, (2) prescription drugs other than vaccines, and (3) laboratory services not typically administered in an ambulatory primary care setting.  This provision applies for plan years beginning on or after January 1, 2026.⁹

Under the Inflation Reduction Act, HDHPs are permitted to cover insulin prior to the participant satisfying the plan deductible effective for tax years beginning after December 31, 2022. This insulin coverage will not adversely affect a participant’s eligibility to contribute to an HSA. HDHPs are permitted to cover selected insulin products before the deductible is satisfied regardless of whether the participant has been diagnosed with diabetes. “Selected insulin products” is defined to include any dosage form, including vials, pumps, or inhalers of any type of insulin.

Other Issues

Deductible limits for HDHPs are based on a 12 month period. If a plan deductible may be satisfied over a period longer than 12 months, the minimum annual deductible under IRC Section 223(c)(2)(A) must be increased on a pro-rata basis to take into account the longer period.¹⁰

An HDHP may impose a reasonable lifetime limit on benefits provided under the plan as long as the lifetime limit on benefits is not designed to circumvent the maximum annual out-of-pocket limitation.¹¹ A plan with no limitation on out-of-pocket expenses, either by design or by its express terms, does not qualify as a high deductible health plan.¹²

For months before January 1, 2006, a health plan would not fail to qualify as a high deductible health plan solely because it complied with state health insurance laws that mandate coverage without regard to a deductible or before the high deductible is satisfied.13 This transition relief only applied to disqualifying benefits mandated by state laws that were in effect on January 1, 2004. This relief extended to non-calendar year health plans with benefit periods of 12 months or less that began before January 1, 2006.¹⁴

Out-of-pocket expenses include deductibles, co-payments, and other amounts that a participant must pay for covered benefits. Premiums are not considered out-of-pocket expenses.¹⁵

Annual deductible amounts and out-of-pocket expense amounts stated above are adjusted for cost of living. Increases are made in multiples of $50.¹⁶