Consumer-directed health plans* are health plans that are designed to help consumers become smarter and more financially responsible about their health care choices, and they’re quickly becoming more popular among employers. A consumer-driven health plan is often a high deductible health plan, or HDHP, that is combined with a pre-tax spending account. The account may be funded by the employer or the employee, depending on the type of account. Examples of these spending accounts include the health reimbursement account** (HRA), health savings account (HSA) or an Archer medical savings account (MSA).
Consumer-driven health plans are often broken down into three parts.
- The first part is the pre-tax spending account that helps employees pay for eligible medical expenses. The money in the account can be used to pay a portion of the plan deductible.
- The second part is the employee’s responsibility to pay out-of-pocket for care until they reach their deductible.
- If the medical expenses are higher than the deductible amount, then the third part, the health plan, starts paying. At this point, the plan works like a traditional health plan. The plan will usually pay a big percentage of the costs. This is called coinsurance. For example, if the plan pays 80% of the cost, you will pay the remaining 20%. And if a serious medical event happens, you can rest easy. Once the deductible and coinsurance payments add up to the plan’s out-of-pocket maximum, the plan will usually pay 100 percent of all eligible expenses for the rest of the year.
Also known as consumer-driven health plans.
Also known as a health reimbursement arrangement.