Consumer Directed Health Plans

By Michelle Fitzwater, Managed Care Contract Specialist

I receive many industry newsletters regarding insurance benefits and HR topics. I read an article recently regarding the expansion of Consumer-Directed Health Plans. This is a trend that I have watched grow over the last few years with our clients as well.

“The momentum behind Consumer-Directed Health Plans (CDHPs) continues to grow, with 39% of large employers offering one in 2013 and 64% expecting to do so by 2016 /1/. Mercer believes that now more than ever offering a CDHP, and encouraging participants to enroll, makes sense. CDHPs can be used to:

• Reinforce individual accountability for health care consumption.
• Reduce costs for employers and often for participants.
• Assist in meeting the ACA-mandated 'affordable coverage' requirement.
• Help employers avoid the 2018 Excise Tax (often called the Cadillac Tax).
• Provide a compliant auto enrollment default selection.”

/1/ Mercer’s National Survey of Employer-Sponsored Health Plans, 2013

So this is what benefit professionals are hearing but what will this mean for you? CDHPs can look different but the underlying intent is to reduce health care spending by allowing consumers to see the financial implications of treatment decisions.

CDHPs usually incorporate a High Deductible Health Plan (HDHP) as well as an HSA (health savings account) or HRA (health reimbursement account). HSAs and HRAs allow an employer to contribute money to a tax-free account for you to use towards medical expenses. The idea is that if you are spending your own money on treatment, you are more likely to research the procedure, prescription, etc., before you spend the money.

In theory, this makes sense. I love finding deals and saving money, so I would do the research to find a provider with the best cost-to-outcome ratio. The problem is that the data isn’t always available to the extent I need to make that decision.  Also, I do not have total flexibility to make that choice due to network constraints.

So what should you do if you are presented with a CDHP at open enrollment?  Read, read, read all of the documents and ask questions.  Benefits professionals want to avoid HR nightmares and they do not want unhappy employees, so ask them your questions before picking the plan. Document the services you or your family uses most. Look at the potential costs of the plans presented and add up your potential out of pocket expenses with each option. Don’t ever rely on what a co-worker picks…the plan you pick needs to work for you.

Don’t be afraid to ask for help either. Our social work team and I are happy to help you and answer your questions!