Consumer-directed healthcare was created to provide consumers with better access to reliable health information, improved resources for making healthcare decisions and more control over their healthcare dollars. There are two components to a CDH plan:
Your healthcare account is either one or a combination of the following:
CDHPs typically have a healthcare account that is intended to provide you with greater control over your healthcare expenses and your healthcare spending. This account lets you choose what to spend your healthcare dollars on and saved or unspent dollars in the account can accumulate over time. CDH plans often require a high deductible health plan for participation.
CDH plans are designed more like your auto insurance policies. The higher the deductible you choose, the lower your monthly premium. With a CDH plan, as a consumer, you are willing to take more risk and pay out of pocket for minor expenses, if they should occur, and depend on the insurance for major expenses. This reduces your monthly premium to the insurance company. Most high-deductible plans do cover preventive care coverage before reaching the deductible. This is to encourage consumers to get their routine care, tire and oil changes in our auto insurance example, to prevent major repairs in the future.
A deductible is the amount of dollars that you must pay for covered healthcare expenses before your health plan will provide coverage. A high deductible health plan (HDHP) is an insurance plan that has a higher than average deductible. These types of plans also have annual limits on how much you have to pay out-of-pocket in the form of deductible, copayments and coinsurance fees.
For 2014, in order for an HDHP to be HSA qualified, it must have at least a $1,250 individual deductible and a $2,500 family deductible. For 2015, the limits are at least a $1,300 individual deductible and a $2,600 family deductible. The annual out-of-pocket maximum for 2014 cannot exceed $6,350 for individual coverage and $12,700 for family coverage. The annual out-of-pocket maximum for 2015 cannot exceed $6,450 for individual coverage and $12,900 for family coverage.
The right HDHP can save you money, give you a larger role in your healthcare options and, more importantly, allow you to participate in an HSA. In addition, because these plans typically have higher deductibles and coinsurance responsibilities for major medical services, the monthly premiums are lower. Therefore, you can pay for healthcare when you need it, but save your money when you don’t.