What is a CDHP and How Does It Work?

 Buying health insurance can be very hard to understand, and we all want to pick the best plans for our needs. To help you through your decision, here’s a closer look at the consumer-directed health plan also referred to as a consumer-driven health plan (CDHP). It’s also in a category of plans called high deductible health plans (HDHPs). So, how is a CDHP 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 or not it’s best for you.

With a consumer-directed or consumer-driven health plan, you pay your medical expenses up to a limit, called your deductible, before your health plan starts helping pay the fees. With other plans such as a Preferred Provider Organization (PPO) or a Health Maintenance Organization (HMO) , costs are shared from the time coverage starts.

Here’s an example. With an HMO and a PPO, you generally have a copay when you visit a doctor. Extra covered medical costs that occur from that doctor visit, would be covered by your health plan. With a CDHP, you must pay the full cost of the doctor visit until you meet your deductible amount before the health plan starts paying its part of covered medical expenses. The deductible is different with every plan, so be aware. If your average year involves you visiting a doctor for your well woman exam or annual wellness exam and perhaps a seasonal cold, a CDHP may be economical for you for your plan year. You may have to pay up front, but your monthly payment, or premium, to have the plan is much lower than with an HMO or PPO.

What comes with a CDHP?
CDHPs are designed to encourage consumers to become actively involved in their health care decisions. Here are a few:

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

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 BCBSMT 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.

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

  1. In addition to contributing to the accounts before taxes, they also earn interest, the money never expires and you can take it with you even if you change jobs.
  2. Your employer probably contributes to both of these kinds of savings accounts making it cheaper for you.
  3. 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.
  4. Get reimbursed for qualified, out-of-pocket medical expenses.

With a CDHP, you have a large set of medical and professional services that are in your network. It’s often the same broad network of doctors available in a PPO. Because NOT all networks are 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 doctors and hospitals with a CDHP, but it will cost extra. Always use BCBSMT’s Provider Finder to make sure your provider is in network. Call your Benefit Value Advisor with the number on your member ID to help you find the lowest cost provider for any MRIs or CT scans.

Remember these advantages to having a CDHP:

  • Your plan comes with a pre-tax savings account dedicated to qualified medical expenses that you can contribute as little as or as much 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.
  • Your monthly premiums are lower.

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.

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, PPOs, HMOs, IROs, etc., leave a comment!