An elementary school teacher chose a low-price health insurance plan but soon realized she wasn’t clear about what it would mean for her family’s finances.
“Once I got the insurance card, I compared our old plan to our new plan, and that’s when I really got worried, because I didn’t really understand what a deductible was. It got me thinking, how do I use this insurance?”
— Madison Burgess, 31, of San Diego
When enhanced federal subsidies expired at the end of 2025, many people buying insurance on the state and federal exchanges saw monthly rates rise and switched to high-deductible health plans to keep premiums down. These plans have lower monthly payments but higher out-of-pocket costs when you need care. In 2023, 30% of people with employer coverage had a high-deductible plan, up from 4% in 2006.
Madison, who gets insurance through her job, shopped on the exchange for a cheaper option for her husband and picked a bronze plan without fully understanding the deductible. In their case, most coverage didn’t kick in until they’d paid $5,800 in medical bills.
Key terms:
– Deductible: the amount you must pay before insurance begins to pay.
– Premium: the monthly bill you pay to the insurer.
How do you prepare for large up-front costs? One helpful tool is a health savings account (HSA). HSAs let you save pretax money for qualified medical expenses and are available to people enrolled in eligible high-deductible plans, including many bronze and catastrophic exchange plans. These plans usually have the lowest premiums and the highest out-of-pocket costs.
If you chose cheaper coverage and then discovered a high deductible, these tips can help.
1. You might qualify for an HSA and not know it
If you’re enrolled in an HSA-eligible bronze or catastrophic plan, you can open an HSA. Think of it as a medical savings account with a triple tax advantage: contributions are pretax (or tax-deductible), the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. Qualified expenses include doctor visits, prescriptions, and some over-the-counter items (e.g., medicines, tampons, sunscreen).
HSA funds generally cannot be used for monthly premiums, but the account is yours to keep even if you change jobs or plans. HSAs differ from flexible spending accounts (FSAs): FSAs are employer-run, often lose unused money at year-end, and don’t follow you when you leave the job.
2. HSA-curious? How to open one
Open an HSA through a bank or financial institution; they typically issue a debit card for HSA spending. You can open an HSA anytime during the year while covered by an eligible plan. If you have employer coverage, your employer may require a specific IRS-approved HSA custodian. Shop around for fees and services.
You don’t have to contribute large amounts—small, regular deposits help build a cushion. The IRS sets annual contribution limits; in 2026 those limits are $4,400 for individuals and $8,750 for families. Within those caps, how much you contribute is up to you.
3. Preventive services should be covered at no cost
Marketplace plans must cover certain preventive services at no cost if provided in-network. These include routine immunizations and screenings. Beyond that, compare costs for different types of visits—telehealth may cost less than an in-person primary care visit under some plans. Review your plan’s summary of benefits to see covered services and cost-sharing.
4. Seek care early in the year
Most deductibles reset on Jan. 1. If you discover a condition that will require ongoing care, scheduling needed appointments or procedures early in the year can be strategic: once you meet the deductible, covered care for the rest of the year can be much cheaper. If you can afford to pay toward the deductible sooner, it may save money overall.
5. Consider paying cash instead of spending down your deductible
Some providers offer lower cash prices than the billed insured price. You have the right to an itemized good-faith estimate of out-of-pocket costs before care. Ask for that estimate and compare it with your insurer’s projected cost if you use insurance. If a cash price is cheaper and you prefer to pay it up front, pay before charges are submitted to insurance. Be aware that cash payments usually won’t count toward your deductible or out-of-pocket maximum. If you’re unlikely to hit your deductible, negotiating a cash price can make sense.
6. On an ACA plan? Update your income and use an HSA to avoid a tax surprise
If you get marketplace subsidies and your income changes, report it right away. If you don’t update your marketplace application after a raise, new job, or side gig, you could owe money at tax time. Reporting increases can also change your subsidy eligibility and might qualify you for different plans or Medicaid.
Contributing to an HSA reduces your taxable income, which can help offset subsidy changes. It’s generally better to report income changes and adjust premiums or contributions during the year than to face a large reconciliation bill at tax time.
Bottom line
High-deductible plans lower monthly premiums but increase up-front costs. An HSA can help you save pretax for those costs, with tax-free growth and withdrawals for qualified medical expenses. Open an HSA if your plan is eligible, contribute what you can within IRS limits, review preventive benefits and cost differences for types of care, consider timing care early in the year, compare cash versus insured prices, and keep your marketplace income information up to date to avoid tax surprises.
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