What is a high-deductible health plan and how does it work?

As its name implies, it's a health insurance plan that has a high deductible. A deductible is the amount of medical expenses you must pay each year before coverage kicks in.

High-deductible plans don't start paying until after you've spent at least $1,400 (for an individual) or $2,800 (for a family) of your own money on health care expenses, although deductibles vary by plan. The maximum deductible is $7,000 for an individual or $14,000 for a family.

While the deductible is high with this type of plan, the premium (the regular fee you pay to obtain coverage) is typically lower than it is for traditional plans. Also, many preventive services, such as mammograms, are covered before a deductible is met.

You can use your HSA to pay deductible expenses, as well as copays and some other health care expenses that are determined by the individual HSA.

High-deductible health plans are becoming increasingly common. Businesses are more likely to offer them as their only plans or as one of the limited options they provide. It's critical to carefully review the plan's coverage details, including the out-of-pocket maximum — the limit on how much you would have to pay for medical expenses in a year.