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- CDHP plans combine a health savings account with a high-deductible insurance plan
- They may help you save money if you don’t have chronic health problems
- Recent legislation has restricted CDHP plans
CDHPs allow the use of health savings accounts, health reimbursement accounts, or other similar accounts to pay routine medical bills. These accounts are used in combination with a high-deductible health plan for medical emergencies.
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High-deductible Health Plans
The main benefit of high-deductible health plans is that they cost less. When medical expenses incurred by a person with a CDHP plan don’t meet this deductible, they pay the expenses out of their health savings accounts.
The policyholder also pays a premium for the plan, but it is less than for many similar plans.
Health Savings Accounts
Health savings accounts are designed to be very easy for the policyholder to access. All they have to do is use a debit that is usually provided by a bank associated with their insurer. Sometimes the card is issued by the insurer themselves.
How are health savings accounts funded?
The account is funded by the policyholder. Many people who have CDHP plans fund their health savings accounts through automatic contributions from their salaries. The amount taken from one’s salary depends on the preference of the policyholder.
What happens if the health savings account runs out?
If the account runs out, then the insurance kicks in and covers the additional expenses. When exactly the insurance kicks in depends on the plan.
Be sure to take a look at this when comparing quotes for different plans. If the account hasn’t run out by the end of the year, the leftover balance is applied to next year’s medical expenses.
How does the Affordable Care Act (Obamacare) affect CDHP plans?
There are several important ways that ACA affects CDHP plans. ACA, also known as Obamacare, requires that all routine or health maintenance claims be covered at no cost to the policyholder. This means that regular visits to the doctor, such as annual checkups, cost nothing. Therefore, no money is taken out of the health savings account.
This means there is more money left over for serious medical expenses. All things considered, ACA has made medical care less costly and more accessible for policyholders of CDHP plans.
Why CDHP plans are often called “consumer-driven healthcare”?
Experts on the healthcare industry often refer to CDHP plans as consumer-driven healthcare for several reasons. For one, claims are settled by the policyholder using an account they control. This is fundamentally different than a normal health insurance plan. In a normal plan, the insurance company pays whatever they decide is their obligation to pay. The policyholder has to make up the rest.
This important difference in the functions of a health insurance plan puts policyholders in charge of their own care.
Many people who previously had more traditional health insurance plans report a higher level of satisfaction with CDHP plans.
Studies show that patients with CDHP plans are much more likely to ask about the cost of medical treatments. The same studies showed that patients with chronic conditions were significantly more likely to follow treatment regimes more closely.
Federal legislation and CDHP plans
The Affordable Care Act (ACA), also known as Obamacare, introduced some restrictions on CDHP plans. All routine medical expenses must be fully covered by the insurer. In the past, routine medical expenses of those with CDHP plans were paid by the policyholders themselves out of their health savings accounts.
Obamacare may have been the biggest change in federal legislation as far as CDHP plans are concerned, but it certainly wasn’t the first.
Federal legislation was passed in 2003 that significantly affected the CDHP healthcare insurance market. Customers that were comparing different types of plans may have been tempted to choose CDHP plans because of the legislation, which provided tax incentives to people who have CDHP plans.
Supporters and Critics of CDHP plans
CDHP plans are one of the most divisive issues in healthcare. The supporters of CDHP plans are very passionate, and the critics of such plans are equally passionate. Both parties make points backed up with scientific data.
The jury is still out on whether CDHP plans actually make things better for the American public.
Given the current tumultuous climate of health care in the United States, it may stay that way for some time.
The Positions of Supporters
The main benefit that supporters claim to see from CDHP plans is lower cost to policyholders. While it is true that the higher deductibles lead to lower premiums, there is some debate as to whether the health savings account aspect of CDHP plans benefits policyholders financially.
Supporters of CDHP plans also claim that the greater choice of healthcare services will create competition amongst providers that’ll lower prices. This line of thinking also claims that this competition will improve the quality of services in addition to lowering their cost.
The Positions of Critics
Critics of CDHP plans think that Americans should choose a different type of plan. It can be tempting to choose CDHP plans when shopping for quotes, as these plans are often the cheapest options available.
The critics of such plans claim that less wealthy and educated policyholders will not get healthcare they need because they are worried about costs.
Critics also say that the average person is not equipped to make healthcare choices like the ones necessary in CDHP plans and that these choices should be left to the pros.
Is a CDHP plan right for me?
As you no doubt have realized through reading this article, CDHP plans aren’t for everybody. They are a good option for people that do not have chronic health problems and want to save money. CDHP plans might not be the best option for people with many long-term health problems.
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