CDHPs are a game-changing healthcare model that is sweeping the nation. A CDHP gives individuals more control over their health care choices. So, it gives them a way to manage their health and finances.
In this way individuals can take more control of their healthcare choices. So, they can make better decisions about:
- Which services they need now
- Versus what can wait until later
This clarity shifts the focus from doctors as gatekeepers of medical care. Instead, puts it in the hands of consumers themselves.
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Introduction to CDHP – Consumer-Directed Health Plans
CDHPs use Health Savings Accounts to help people manage their healthcare needs.
These accounts are used for medical and non-medical expenses, such as:
- Wellness programs
- Dental care
- Or Eyeglasses
CDHPs also provide more coverage for services like mammograms and well visits. CDHPs offer this extra coverage because these costs can’t always wait until the next open enrollment period. And with high deductible plans along with HSA contributions from the employer and employees, workers have an opportunity to save more money while shifting some of the financial responsibility onto themselves. It’s where the responsibility belongs to the non-tax payers.
Americans are facing increasing costs of healthcare facilities daily. This increased cost makes the trend in employer-provided benefits plans towards Consumer-Directed Health Plans (CDHPs) among employees. It is an important development for employers and their workers.
CDHPs – Historical Background
The concept of consumer-directed health plans (CDHPs) has been around for decades. But Oscar Insurance Company in California introduced the first CDHP not until 1986. The company created a product that allowed customers to use a tax-free savings account, or FSA, to pay out-of-pocket medical expenses and save on taxes simultaneously. This innovation led other insurance companies like Blue Cross/Blue Shield and Humana to develop their versions with more lenient features than traditional employer-sponsored HMOs.
CDHPs Options for Organizations Who are Offering Group Health Insurance
CDHPs can be paired with a high-deductible health plan and an account for out-of-pocket costs, like those found in HSAs or IRAS. This combination encourages employees to make informed decisions about their healthcare spending habits. So, they spend wisely — which could lead to lower costs for the company.
Example with an XYZ Company
For example, an XYZ Company switched from a lower-deductible plan to a higher to save on premiums. To make the changes worthwhile for employees and maintain coverage levels, they offer an HRA covering any extra expenses above their HDHP’s. This way, both parties are satisfied with the change: employers get more savings while still maintaining employee exposure at similar rates before switching plans; meanwhile, workers can use up all their pre-tax benefits without having them go unused due to balance caps or deductibles.
Trending of CDHPs
CDHPs are not new, but they’re gaining in popularity. According to data compiled by the U.S, Health and Human Services Department (USDHHS), the industry is projected to grow from $12 billion in 2018 to over $23 billion by 2022. Why? A few reasons:
CDHP participants report more satisfaction with their care than those enrolled on traditional plans.
Plus, if you pay for your plan upfront or make monthly payments that exceed what a public insurer would cover, then there’s no need for complex paperwork when seeking treatment at an out-of-network provider
CDHPs can benefit both employers and individuals by shifting costs away from premiums.
CDHPs are a great way to make sure that you’re getting the care and treatments you need. Your employer pays for everything related to healthcare with these plans. So, it’s important to make sure you understand all the details before committing. This is one of those decisions that will affect your life in the long term. So take some time and do your research. We’ll be here when you get back!
Other Healthcare Programs in USA
- Federal Employees Health Benefits Program (FEHBP)
- Military Health System (MHS) / Tricare
- Children’s Health Insurance Program (CHIP)
- Program of All-Inclusive Care for the Elderly (PACE)
- Veterans Health Administration (VHA)