Which of the following best describes a high-deductible health plan (HDHP)?

A high-deductible health plan (HDHP) is characterized by higher deductibles and lower premiums compared to traditional health insurance plans. This means that while policyholders pay less in monthly premiums, they face a greater amount of out-of-pocket expenses before their insurance coverage kicks in. HDHPs are often paired with Health Savings Accounts (HSAs), which allow individuals to save money tax-free for medical expenses. This structure encourages consumers to be more cost-conscious and can provide financial benefits for those who do not frequently require medical care.

The other options do not accurately represent the key features of HDHPs. While the concept of lower premiums and higher out-of-pocket costs is partially correct, they do not define a short-term insurance plan as described in one option, nor do they align with the typical characteristics of health insurance. An understanding of HDHPs is essential for consumers considering their health insurance options, particularly in balancing premium costs with deductible amounts.