What characterizes a high-deductible health plan (HDHP)?

A high-deductible health plan (HDHP) is characterized by requiring higher out-of-pocket costs before insurance coverage begins. This is essential to understand because an HDHP typically has lower monthly premiums in exchange for higher deductibles, meaning that the insured must pay more out-of-pocket expenses for healthcare services before the insurance starts covering costs.

This structure encourages individuals to be more mindful of their healthcare spending as they will be responsible for a more significant portion of their medical expenses initially. Many HDHPs are designed to work in conjunction with Health Savings Accounts (HSAs), which allow individuals to save money tax-free for medical expenses, enhancing the affordability and flexibility of these plans. Therefore, answer B accurately captures the primary feature of an HDHP, making it the correct choice in this context.