3. Consumer-Driven Health Plans

Typical elements of CDHPs

1. A high-deductible health plan (HDHP) 2. An individual health account to pay for expenses not covered by the HDHP 3. Information and tools to provide health education and help find the highest-quality providers at the lowest cost 4. A communications program to encourage consumerism and healthy behaviors 5. A health coach or consultant to help individuals use available information and provide guidance on use of health care providers 6. for serious chronic conditions, a proactive medical professional to coordinate care for the patient

Plan design considerations for CDHPs

1. Establishing the parameters of the HDHP 2. Selecting a type of health care account 3. Level of preventive care coverage a) Most offer an initial health screening or physical at no, or very low, cost b) Also included are immunizations, routine annual physicals, and well-mother and well-baby visists 4. Whether the CDHP will be a full replacement plan or one of multiple options. A full replacement plan will minimize adverse selection and maximize cost savings, but may face employee resistance. 5. Employer contribution strategy a) Must decide how much to contribute to the employee's accounts b) CDHP contributions are often set to compare favorably with other options 6. For HRA plans, whether to permit carryovers of unused balances

Basic plan structures of CDHPs

1. First-dollar coverage provided through a health care account 2. Employee is responsible for the difference between the account amount and the deductible 3. After the deductible, the plan coinsurance and copayments apply 4. Deductibles, coinsurance, and copayments differ for single versus family coverage and in-network versus out-of-network services

Types of health care accounts

1. HSA 2. HRA 3. FSA

Types of health care accounts HRA

Can be used to pay for qualified medical expenses, health insurance premiums, and LTC premiums

Types of health care accounts FSA

a) Can be used to pay for qualified medical expenses b) The contribution amount must be specified at teh beginning of the period, and the employee can use the full amount at any time in the coverage period c) Funds not used by the end of the period are forfeited

Types of health care accounts HSA

a) Must accompany a high-deductible health plan with a minimum deductible ($1,200 individual, $2,400 family) and maximum out-of-pocket limit ($5,950 individual, $11,900 family) (year 2011 amounts, indexed for inflation) b) Can be used to pay for qualified medical expenses, health insurance premiums in limited circumstances, LTC premiums, and LTC services c) Owned by the employee, who gets to keep the unused balance upon terminating employment