What is a CDHP and How Does It Work?

Buying health insurance can be very confusing, and we all want to choose the best plans for our needs. Here’s a closer look at the consumer-directed health plan also referred to as a consumer-driven health plan (CDHP), which is in a category of plans called high deductible health plans (HDHPs). Oh my, what does that mean and how is it different from all the other plans out there? We’ll tell you everything you need to know about a CDHP and you can decide whether it may be right for you.

With a consumer-driven, or consumer-directed health plan (CDHP), you are required to pay your medical costs before your health plan does. With other health plans such as a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO) , costs are shared at the onset of coverage. For example, with a PPO and an HMO, you typically have a copay when you visit a doctor. Additional covered medical costs that occur from that doctor visit, would be covered by your health plan. With a CDHP, you are required to pay medical costs upfront to reach your deductible amount before the health plan starts paying its share of covered medical expenses.

A CDHP is a health insurance plan with a high deductible. While that may not be attractive to consumers, on the flip side, consumers with a CDHP pay lower monthly premiums to have the plan than they do with a PPO.

Why you should choose a CDHP

CDHPs are designed to encourage consumers to become actively involved in their health care decisions. Here are a few:

1. Choose your health care provider.
2. Select health services and managing your own fitness and wellness.
3. Make cost-effective health care decisions according to your budget (e.g., designing your health insurance coverage.
4. Get access to a tax-friendly account to help pay for medical expenses.

If your typical year involves you visiting a doctor for your annual wellness exam or women’s wellness exam and perhaps seasonal cold, a CDHP may be economical for you over the course of the year.

Why you should choose an HSA with your CDHP

High-deductible health coverage often pairs with having a Health Savings Account (HSA) or health reimbursement account (HRA) that can be used to help meet the deductible. With an HSA you:

1. Get a pre-tax account that you contribute to and the money can only be used to pay for qualified medical expenses, which are set by the Internal Revenue Service (IRS) every year.
2. Get reimbursed for qualified, out-of-pocket medical expenses.
3. Your employer probably contributes to both of these kinds of savings accounts making it cheaper for you!
4. In addition to contributing to the accounts before taxes, you also earn interest, the money never expires and you can take it with you even if you change jobs.

When you and your employer contribute to either of these accounts, it’s an incentive to get you more involved and aware of the money you spend on your health care services from doctor visits, to medical tests and prescription drugs. Studies at BCBSTX show that people who have switched from traditional plans to CDHPs are four percent more likely to use preventive services, like an annual well woman exam or annual physical with a primary care physician. These preventive services proved to lower follow-up costs due to late discovery of health related issues.

With a CDHP, you have a broad set of medical and professional services that are in your network. It’s often the same larger network of doctors available in a PPO. Because all networks are NOT the same, it’s important to make sure all your doctors and services are in your network to save you money. You can still use out-of-network providers with a CDHP, but it will cost more. Remember to always use BCBSTX’s Provider Finder to make sure your doctor is in network. If you ever need an MRI or CT scan, call the number on your member ID card to reach your Benefit Value Advisor to help you find the lowest cost provider.

If you decide the network of doctors and the price are right for you, you may choose to buy a CDHP during the next open enrollment period . Once you’re a member, you can log on to your personal account in Blue Access for Members (BAM). There you will find a place to ask all your health insurance questions regarding your plan, and someone will reach out to you with answers.

Remember these advantages to having a CDHP:

• You have lower monthly premiums .
• Your plan comes with a pre-tax savings account dedicated to qualified medical expenses that you can contribute as much or as little as you like to.
• Your HSA or HRA earns interest, never expires and goes with you wherever you go.
• Studies show your spending on health care goes down.
• You get access to a broad network of providers (doctors, hospitals, testing facilities).
• You take a more active part in your health care decisions.

Choosing the right health insurance coverage is a big decision and it’s important to make the right choices for you and your family. Hopefully this helps offer you guidance. If you still have questions about your health plan, HMOs, PPOS, IROs, etc., leave a comment!