Stay in the know about CDHPs

Why Consumer-Driven Health Plans are more than just high deductible plans

In a CDHP plan, consumers bear the cost for claims until the deductible for the plan is met.

Explore everything you need to know about CDHP.

Why Consumer-Drive Health Plans are more than just a high deductible health plan

In a CDHP plan, consumers bear the cost for claims until the high deductible for the plan is met.

The 5 Main Components in a CDHP

Low premium

Savings account

High-deductible medical coverage

(includes 100% coverage for preventive care)

Access to educational tools and information

Medical expense cost transparency

26.1

million

individuals were covered by a CDHP in 2013

individuals were covered by a CDHP in 20131

Take the Quiz!

Can you guess what employees with a CDHP are more likely to do?

Develop a budget to manage health care expenses

Check service prices before getting care

Use an online cost-tracking tool

All consumerism behaviors mentioned in choices A-C

Correct Answer:

All of the above

Individuals in consumer-directed health plans were more likely to say that they2:

developed a budget to manage health care expenses
checked service prices before getting care
used an online cost-tracking tool

Individuals in consumer-directed health plans were more likely to say that they2:

developed a budget to manage health care expenses
checked service prices before getting care
used an online cost-tracking tool

Plan Types

Choose from the following accounts to help your employees pay for medical expenses before their deductibles become effective:

Plan Types

Choose from the following plans to help your employees pay for medical expenses before their deductibles become effective:

HSA

Health Savings
Account

Health
Savings
Account

What is an HSA?

A health savings account is a bank account in the employee’s name where interest is accumulated tax-free and funds can be withdrawn for medical expenses.

The employee, employer or both may contribute to the account
Employees typically fund the account by setting aside money from each paycheck on a pre-tax basis
Funds in an HSA roll over and accumulate year after year if not spent
The account stays with the employee even if he or she leaves the company

HRA

Health Reimbursement Arrangement

What is an HRA?

Under a health reimbursement arrangement, the employer sets aside a specified amount of money to pay for an employee’s medical expenses.

The fund is owned by the employer
Money given to the employee for medical expenses is tax deductible for their employer
The employer decides which expenses are covered
Employer decides whether leftover money in the account can roll over to the next year
The employee does not pay taxes on money from an HRA used for qualified medical expenses

Did You Know?

Who's more likely to offer CDHPs – large employers or small businesses?3

Click the stats below to find out:

of companies with

3 - 199

employees

offer CDHPs

of companies with

200 - 999

employees

offer CDHPs

of companies with

1,000+

employees

offer CDHPs

Advantages of Choosing a CDHP4

Savings for Businesses

Taking part in a CDHP reduces costs to the employer without taking more out of employees’ paychecks for premiums.

With lower premiums, it may also be possible to keep your health plan beneath the 40 percent "Cadillac" tax threshold. As a component of the Affordable Care Act, the excise tax, labeled "Cadillac" tax by the general media, is imposed beginning 2018.

The New York Times blog predicts: A company can save as much as 20% on insurance costs by offering consumer-driven health plans compared with traditional insurance.5

Medical Cost Savings

Annual health care spending in the U.S. could be reduced by as much as $57 billion, if enrollment in consumer-directed health plans were to reach 50% of the insured.6

Medical Cost Savings

Research shows that when employees are more directly affected by health costs, they are more likely to adopt consumerism behaviors, such as:

Looking for lower-cost quality health services
Requesting a generic drug or lower-cost prescription9
Utilizing preventive services

Better Health Outcomes

The majority of CDHPs provide 100% coverage for preventive care like physicals, mammograms and colonoscopies. If employees are educated about these benefits, you can help them avoid possible illnesses. Employees may then become more responsible for related health care costs once they are more aware of their own health and decisions.

Improved Quality of Care

Health care performance metrics7 such as evidence-based quality measures and patient-satisfaction survey data may help you find success when providing CDHPs for your employees. Employees are likely to make better choices about the quality of care that they receive with this type of tangible information.

What do consumer-driven health plans need to be successful?

Successful consumer-driven health plans must satisfy two overarching objectives:

Be effective for the healthiest AND the most ill.
Appeal to those who want to make all health decisions AND those who want to make none.8

Outlook for CDHPs

With health care costs on the rise, CDHPs are likely to give employers a cost-effective solution while promoting recommended preventive services and the use of cost and quality tools.9

Research shows that CDHPs can be money-saving for employers, but it is important to provide accurate and sufficient tools to help employees make better health care decisions and to ensure that health care dollars are well spent.4

Take a seat at the Health Benefits Roundtable on LinkedIn to converse with peers and experts.

Get answers about the ACA, managing health costs, and more.

References

¹Fronstin P. Findings from the 2013 EBRI/Greenwald & Associates consumer engagement in health care survey. Employee Benefit Research Institute. December 2013; (393).

http://www.ebri.org/pdf/EBRI_IB_012-13.No393.CEHCS.pdf

²Fronstin P. Findings from the 2011 EBRI/MGA consumer engagement in health care survey. Employee Benefit Research Institute. December 2011; (365).

http://www.ebri.org/pdf/briefspdf/EBRI_IB_12-2011_No365_CEHCS.pdf

³Kaiser Family Foundation/Health Research and Education Trust. 2013 Kaiser/HRET employer health benefits survey (EHBS).

http://kff.org/private-insurance/report/2013-employer-health-benefits

⁴Health Insurance Plans for Your Business: Four Reasons to Choose a CDHP. Making Healthcare Reform Work Blog. September 2014.

http://blog.makinghealthcarereformwork.com/health-insurance-plans-for-your-business-four-reasons-to-choose-a-cdhp/

⁵High-Deductible Health Plans: Better for You or Your Employer? The New York Times Blog. October 2009.

http://well.blogs.nytimes.com/2009/10/16/high-deductible-health-plans-better-for-you-or-your-employer

⁶Consumer-directed health plans shown to be money-savers. American Medical News website. May 2012.

http://www.amednews.com/article/20120521/business/305219964/6/

⁷Building a Better Consumer. Human Resource Executive Online. May 2008.

http://www.hreonline.com/HRE/view/story.jhtml?id=90778078

⁸Consumer-directed health plans: Do they deliver? Robert Wood Johnson Foundation website. October 2012.

http://www.rwjf.org/en/research-publications/find-rwjf-research/2012/10/consumer-directed-health-plans.html

⁹Consumer-Directed Health Care: The Employer Perspective. Critical Issue Update. A National Business Group on Health Publication. August 2014.

http://www.businessgrouphealth.org/pub/cccf5d3f-782b-cb6e-2763-c5b829541408

Why Consumer-Driven Health Plans are more than just high deductible plans

In a CDHP plan, consumers bear the cost for claims until the deductible for the plan is met.

Why Consumer-Drive Health Plans are more than just a high deductible health plan

In a CDHP plan, consumers bear the cost for claims until the high deductible for the plan is met.

The 5 Main Components in a CDHP

Low premium

Savings account

High-deductible medical coverage

Access to educational tools and information

Medical expense cost transparency

Take the Quiz!

Can you guess what employees with a CDHP are more likely to do?

Develop a budget to manage health care expenses

Check service prices before getting care

Use an online cost-tracking tool

All consumerism behaviors mentioned in choices A-C

Correct Answer:

All of the above

Individuals in consumer-directed health plans were more likely to say that they2:

developed a budget to manage health care expenses

checked service prices before getting care

used an online cost-tracking tool

Individuals in consumer-directed health plans were more likely to say that they2:

developed a budget to manage health care expenses

checked service prices before getting care

used an online cost-tracking tool

Plan Types

Plan Types

Health SavingsAccount

HealthSavingsAccount

What is an HSA?

Health Reimbursement Arrangement

What is an HRA?

Did You Know?

Who's more likely to offer CDHPs – large employers or small businesses?3

of companies with

employees

offer CDHPs

of companies with

employees

offer CDHPs

of companies with

employees

offer CDHPs

Advantages of Choosing a CDHP4

Savings for Businesses

Savings for Businesses

The New York Times blog predicts: A company can save as much as 20% on insurance costs by offering consumer-driven health plans compared with traditional insurance.5

Medical Cost Savings

Annual health care spending in the U.S. could be reduced by as much as $57 billion, if enrollment in consumer-directed health plans were to reach 50% of the insured.6

Medical Cost Savings

Better Health Outcomes

Better Health Outcomes

Improved Quality of Care

Improved Quality of Care

What do consumer-driven health plans need to be successful?

Outlook for CDHPs

References

Health Savings
Account

Health
Savings
Account