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Consumer Driven Health Plan

What is a Consumer Driven Health Plan (CDHP)?

A Consumer Driven Health Plan (CDHP) is intended with a motto to engage people in selecting their healthcare provider and managing healthcare expenditures. Such plan also helps the employers to keep increasing healthcare expenses at the bay.

Consumer Driven Health Plan (CDHP) Payment Structure

A Consumer Driven Health Plan (CDHP) usually uses a 3-tier arrangement for payment which includes the followings:

  • Tier 1 - A tax-free health account that you can utilize to pay expenditures up to a particular amount;
  • Tier 2 - A high deductible medical insurance policy. Once you have reached the deductible, your insurance policy will bear the expenses on behalf of you;
  • Tier 3 - The gap between a high deductible policy and a health account. You may be needed to bear any healthcare expenses from you pocket in this gap.

When does an individual use a Consumer Driven Health Plan (CDHP)?

A Consumer Driven Health Plan (CDHP) is basically utilized in combination with Health Reimbursement Arrangements or HRAs and Health Savings Accounts or HSAs. Employees and employers can add up to an annual maximum to such accounts that you can then take decision on how to allot amongst various medical expenditures. Such plans are combined with the high deductible health plans or HDHPs. With a HDHP, the premiums are usually small, however the deducible you are required to pay from your pocket for a treatment or service would be higher than what you would pay with a POS or a PPO plan.

What are the advantages of a Consumer Driven Health Plan (CDHP)?

Introducers of the CDHPs feel so many Americans use too much healthcare or too small relevant healthcare. They strongly believe that with individual weighing and a higher deductible the costs of what they may or may not pay for, people will choose their healthcare more intelligently and use only what is required to let insurers and employers save money.

However, the opponents believe that a CDHP may take the focus off of the preventive care and that people would not look for treatment till they have a severe pain or in requirement of a costly procedure. Critics believe that the people would not seek required healthcare because of the out-of-pocket expenses.

Surveys have revealed mixed opinions to the CDHPs; but many individuals are likely to compare such plans with conventional healthcare plans of the past instead of treating them independently.

If you are healthy and young, a Consumer Driven Health Plan (CDHP) is a good choice for you. Nevertheless, the older people or the people who need lots of specialized treatment or procedure may not find CDHPs useful, due to the out-of-pocket expenditures and higher deductibles.

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