What is a CDHP and How Does It Work?

Buying health insurance can be very confusing. We all want to choose the best plans for our needs. One plan worth a close look is the consumer-directed health plan (CDHP) – sometimes called a consumer-driven health plan and high-deductible health plan (HDHP).

With a CDHP, you must pay your medical costs before your health plan does. Here’s an example. With a PPO and an HMO, you typically have a copay when you visit a doctor. Extra covered medical costs that occur from that doctor visit are covered by your health plan. With a CDHP, you must pay medical costs up front to reach your deductible amount before the health plan starts paying its part of covered medical expenses.

If your average year involves visiting a doctor for an annual exam, a well-woman exam and a nasty cold, a CDHP may make economic sense for you over the course of the year. A CDHP is a health insurance plan with a high deductible. You pay a higher amount out of pocket before your insurance starts paying. While that may not be attractive to some people, some members with a CDHP actually pay lower monthly premiums than they do with a PPO.

What you get with a CDHP?

CDHPs are designed to encourage consumers to become actively involved in their health care decisions. With a CDHP, you:

1. Make cost-effective health care decisions according to your budgets
2. Select health services and manage your own fitness and wellness
3. Choose your health care provider
4. Get access to a tax-friendly account to help pay your expenses

What is an HSA and what do you get with it?

High-deductible health coverage often pairs with a health savings account (HSA) or health reimbursement account (HRA). The account can be used to help meet the annual deductible. With an HSA you:

1. Get a pre-tax account you contribute to and the money can only be used to pay for qualified medical expenses set by the Internal Revenue Service every year.
2. Earn interest on the money in your pre-tax account (this money never expires) and take it with you if you change jobs.
3. May receive contributions from your employer which makes these savings accounts cheaper for you.
4. Be reimbursed for qualified, out-of-pocket medical expenses.

When you and your employer contribute to either of these accounts, it serves as an incentive. It encourages you to be more involved and aware of the money you spend on doctor visits, medical tests, prescription drugs and other medical services. These preventive services proved to lower follow-up costs linked to the late discovery of health issues.

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 all networks are NOT the same, it’s important to make sure all your doctors and services are in your network so you can save you money. You can still use out-of-network providers with a CDHP, but it will cost more. Always use BCBSMT’s Provider Finder^® to make sure your doctor is in network. Call the number on your member ID card to reach your Benefit Value Advisor to help you find the lowest cost provider for any MRIs or CT scans.

In summary, a CDHP offers these advantages:

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

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^SM (BAM^SM). There you will find a place to ask all your health insurance questions regarding your plan.

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, we’ve provided some insights to help you better understand a CDHP. If you still have questions about your health plan, leave a comment!

Originally published 8/10/2016; Revised 2023