In an HDHP, the general relationship between deductible and premiums is best described as:

• A. Premiums are higher and deductibles are higher.
• B. Premiums are lower and deductibles are lower.
• C. High deductible, lower monthly premiums.
• D. Premiums and deductibles vary by plan.

Answer: (C)

The main idea is that high-deductible plans set a high deductible in exchange for lower monthly premiums. When the deductible is high, you’re paying more out of pocket before the plan begins to pay, so the insurer can charge a smaller monthly premium. This keeps ongoing costs lower for the enrollees who choose these plans. The trade-off is that if you need care early in the year, you’ll face larger out-of-pocket expenses before benefits kick in. These plans are often paired with a health savings account to help cover the deductible and other eligible costs.