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A detailed report on Consumer Driven Health Plans

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A detailed report on Consumer Driven Health Plans

A detailed report on Consumer Driven Health Plans

Consumer Driven Health Plan (CDHP) is a wide extension that has been applied to illustrate health insurance policies that comes with HSA (Health Savings Account) or HRA (Health Reimbursement Account) modules. CDHP came into existence long back in 1990, but from that time only it became much popular in the health insurance industry. The former president of the U.S. George Bush, who was a strong supporter of this health insurance plan, believed that CDHP will be revolutionizing the health insurance industry and thus suggested the citizens of the nation to subscribe to CDHP as it provides lots of special benefits.

A deeper approach to Consumer Driven Health Plans (CDHP)

CDHP is a combination of HSA/HRA and the exclusive health insurance policies. This unique combination allows consumers to reap the highest limit of advantage which would not have been available if two the components would have operated individually. A simple illustration will make the matter clearer. The exclusive health insurance polices mentioned above to which the customer needs to subscribe are called highly deductible. Now these types of health insurance policies require that customers should pay the lower premiums every month. It is quite probable that the customer will be able to save a lot of money as he/she pays the lowest premiums, and obviously the customer is going to deposit the savings into his/her HSA.

As the money that is deposited into the HSA doesn’t falls under the purview of income tax, so the customer reaps the maximum benefits. These two processes described above when amalgamated together make the customer completely responsible for the amount of money spent on his/her healthcare. This means the entire operation is consumer driven and so it is called Consumer Driven Health Plan (CDHP).

CDHP’s are now obtainable from popular health insurance organizations like Kaiser Permanente, State Farm Insurance, Lumenos, Humana-One and many others. Many companies are purchasing CDHPs’ from these organizations and are introducing them as one of the add-on packages for their workers and staffs.

A limitation of CDHP

In spite of the huge benefits of CDHPs’, a customer needs to think twice before subscribing to CDHP as because it has a certain limitation. It however takes a considerable amount of time for the CDHP to pile up and start reaping its benefits. This is because just after getting into the CDHP, the customer will need to take few years time to raise the amount of money into his/her HSA. If in case the customer falls sick or gets a dreadful disease within few years of buying the CDHP, he/she will really have to face a lot of trouble to pay for the medical treatment. So those people who are really willing to buy a CDHP very soon must make sure that they are healthy and fit. Also they must keep aside a good amount of cash that is meant to be spent for medical treatment or healthcare, if required.

Target customers for CDHP

CDHP provides real benefit for those who are financially free and independent enough to meet any turbulent situation, which requires immediate funding. Such a customer will be able to save cash in their HSA by paying small premiums monthly for the CDHP insurance policies. So those customers who don’t have such a sound financial status and thinking of earning benefit from CDHP, may not be able expect the same in the mere future.

However the main benefit that CDHP provides to its customers is the power to choose their own hospitals and healthcare centers for getting the best medical treatment. Even the customers will be allowed to select their own physicians for getting medical care. No fines will be implied on the customer for this.

Questioning the Suitability of CDHP

If a customer is willing to purchase any ordinary health insurance then he/she can quickly get through the offer booklet and ascertain which policy will be suitable for him/her. Even the insurance seller can also help the customer in this regard. But in case of CDHP, the customer will need to ascertain for themselves, whether CDHP is right for them or not. So before purchasing CDHP, question yourself the ones mentioned below and clear out a few queries:

  • Ascertain that whether you earn a considerable quantity of money every month; a part of which will be deposited in your HSA.
  • Determine that whether paying for the low premium of CDHP really compensates the charges that would have been applied to a high deductible health insurance plan.
  • CDHP allow its customers to choose doctors and healthcare centers as per his/her choice. So find out that whether you need such a benefit or if you can manage with any pre-approved doctor and hospital, whose fees and medical charges will be covered by those health insurance programs other than CDHP.

In case a customer’s answer is ‘Positive’ for all the above stated queries then, definitely the CDHP is the apposite choice for him/her. They can then move out to purchase a CDHP.

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