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General Consumer Directed Health Care (CDHC) FAQs
What is Consumer Driven Health Care (CDHC)?
Consumer Driven Health Care (CDHC), defined narrowly, refers to health plans in which employees have a personal health account such as a Medical Savings Account or a Health Reimbursement Arrangement; which they pay medical expenses directly.
The phrase is sometimes used more loosely to refer to defined contribution health plans under which employees receive a fixed dollar contribution from an employer to choose among various plans. Those opting for plans with rich benefits may have to contribute significant amounts of their own money in addition to the employer's contribution. Those choosing bare-bones health plans contribute less of their own money.
Why is CDHC better than alternative forms of Health care?
The consumer-driven approach offers employees a wide range of plans they can purchase with the employer's contribution, their own money, or both.
In contrast to traditional managed care plans, consumer-driven health care:
- Enables employees to customize their health benefits -- for example, by allowing them to trade lower premiums for higher out-of-pocket maximums.
- Charges employees the actual cost of insurance
- Lets providers, instead of insurers, set prices for their services and reap the benefits of innovation.
- Offers employees comparative quality and cost information about both insurers and health care providers.
What is a "high-deductible health plan" (HDHP)?
Sometimes referred to as a "catastrophic" health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn't pay for the first several thousand dollars of health care expenses (i.e., your "deductible") but will generally cover you after that.
For 2006, the minimum deductible for an individual is $1,050, and $2,100 for a family. The annual out-of-pocket expenses (including deductibles and co-pays) for 2006 cannot exceed $5,250 (self-only coverage) or $10,500 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and co pays & coinsurance) for non-network services.
