Certified Application Counselor Practice Test

Which of the following statements about High Deductible Health Plans (HDHPs) is true?

1. They are ideal for everyone

2. They typically require low out-of-pocket costs

3. They have higher deductibles and lower premiums

4. They provide full coverage for all services

The correct answer is: They have higher deductibles and lower premiums

High Deductible Health Plans (HDHPs) are characterized by their higher deductibles, which means that the insured individual must pay a larger amount out-of-pocket before their health insurance begins to cover costs. This structure allows HDHPs to offer lower monthly premiums compared to plans with lower deductibles. Thus, individuals who opt for an HDHP typically enjoy the benefit of reduced premium costs. This arrangement can be particularly appealing to healthy individuals or those who do not anticipate needing frequent medical care, as they might save money on their monthly payments. However, it's important to note that while the premiums are lower, the risk is higher for out-of-pocket expenses in the event of unexpected health issues or emergencies. Other options suggest characteristics that don't align with the fundamental nature of HDHPs. For example, the idea that HDHPs are ideal for everyone overlooks the fact that individuals with chronic health conditions or those who require frequent medical services might not find them financially beneficial. Additionally, the claim of low out-of-pocket costs contradicts the premise of HDHPs, where high deductibles typically result in higher out-of-pocket costs until the deductible is met. Finally, the assertion that HDHPs provide full coverage for all services is inaccurate, as