As employers and individuals alike, face increasing health insurance premiums, consumer-driven health care (CDHC) plans continue to grow in both importance and popularity. The CDHC system is one of accountability that promotes responsible health care utilization. As the direct consumer of health care, patients are given the opportunity to manage their own health care dollars. Each patient is responsible for the decision with regard to accessing care, for shopping the cost of care among health care providers and for the result of spending decisions.

CDHC plans use a high deductible health plan (HDHP) in conjunction with benefit vehicles, such as a Flexible Spending Account, Medical Savings Account, Health Reimbursement Account (HRA) or Health Savings Account (HSA).

I will focus on the use of HRA and HSA benefit plan designs with regard to employer-sponsored health insurance programs. It is important, however, for those who buy their insurance outside of an employer-sponsored plan to know that the concepts behind CDHC are also effective for controlling the premium cost.

CDHC benefit plans have a growing presence in the health insurance market due to their competitive premium pricing and comprehensive benefit designs coupled with the ease of access to the money that has been set aside in the HRA or HSA accounts to pay for out-of-pocket health care costs. Implementing the right CDHC program requires an analysis of utilization and spending habits, as well as an understanding of the coverage needs and expectations in the future.

For a company facing extraordinarily high renewal increases, CDHC plans assist with steering utilization to help reduce excessive claims and thus aid with stabilizing premiums. For a company with low utilization, you may be paying premiums without receiving justified value in the form of insurance benefits.

The foundation of any CDHC program is finding the most competitive HDHP with the strongest first-dollar preventive care benefits.  It is crucial to fully understand the preventive care benefits included with every plan option being considered.  First dollar means services designated under the coverage contract will be covered and paid for at 100 percent by the insurance carrier, without any amount being applied to the patient’s deductible or out-of-pocket.

With many HDHPs, the insurance company will pay for designated in-network preventive care services, such as routine physical exams (including related labs), child and adult immunizations, well child exams, routine mammography, routine pap test, routine colonoscopies, etc. Some carriers offer a HDHP, whereas a number of prescription drugs are also designated in the preventative care category offering coverage at either the same first-dollar benefit or subject to a co-pay schedule. The availability of prescriptions under this option is commonly extensive and can include drugs that treat conditions such as diabetes and high blood pressure.

Generally, HDHP options can reduce premiums substantially, allowing a portion of the savings to be allocated to the employee’s HSA or HRA to help offset the out-of-pocket change in the HDHP. Those individuals who become true consumers of health care by adjusting their spending habits and realizing the actual cost of care can benefit greatly.

Alexander H. Due is executive vice president of the employee benefits division at Roemer Insurance.

This entry was posted on Friday, February 13th, 2009 at 9:48 am and is filed under Finances, Toledo Business Link.
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