Consumer-directed health plans (CDHPs) have become a standard option for medical plans. The underlying idea of CDHPs is that they allow individuals to have more control over their health care costs.
This is typically through a two-front approach. First, the consumer will get a CDHP instead of another variety of plan. Since CDHPs come with a higher deductible, they can pair with a health spending account (HSA). Thus, allowing individuals to build a more efficient form of insurance coverage.
Essentially, the combination of CDHPs and HSAs allows people to get a plan that can do all the same things as a standard employer-provided plan. Whether its a preferred provider organization (PPO) or health maintenance organization (HMO) plan. All while paying lower premiums. It’s important to note, however, that this approach isn’t optimal for all individuals and organizations. Let’s look at a few key elements for understanding consumer-directed health plans.
Consumer-directed health plans have become increasingly popular over the years. According to the Health Cost Institute, the number of people utilizing CDHPs increased four times over between 2008 and 2017. This is a staggering level of growth, signifying that there are certainly benefits to the consumer.
Many employers are now determining whether it makes sense to switch. Many are providing a CDHP alternative versus more traditional plans like PPOs and HMOs. These are some of the main benefits of consumer-driven health plans:
There are a few kinds of people who can find a lot of benefit from utilizing a CDHP versus other types of health plans. Individuals who are more active and comfortable in the process of choosing the specifics of their health plan, and their doctors, will find CDHPs to provide substantial value. It can also be great for those who don’t expect to utilize their insurance plan too much. Or, those who take preventative health seriously. Additionally, those who are okay handling a higher deductible can save money. They do this by having a tax-advantaged HSA to go along with their low-premium plan.
Furthermore, there are pros to CDHPs on the enterprise level. Organizations that adopt CDHP programs for their benefit plans can save money on employer-provided health insurance costs. All while also giving employees a valuable choice for lowering their expenses.
It should be obvious by now that there are concrete benefits to consumer-directed health plans. At the same time, switching something like insurance benefits can be a tricky—and contentious—undertaking for enterprises. There will likely be pushback from certain groups. Plus, it’s going to take a major concerted effort to effectively make this change.
While offering CDHPs is a good idea for organizations today, they should also consider doing so with the help of a healthcare consulting firm. These are a few reasons to leverage healthcare consulting expertise:
No matter how your organization plans to do it, offering employees consumer-directed health plans can be a highly appealing benefit. Once you understand how these plans can benefits employees and organizations alike, it makes perfect sense to start offering them.