The most significant difference between a standard fee-for-service plan and a consumer-driven health plan is the deductible. Most CDHPs are high-deductible health plans because their deductible, the amount you must pay out-of-pocket before the health insurer pays (not including premiums), is significantly larger than a standard FFS plan. CDHP design intends for the consumer to decide how much, from who and where he seeks his health care. Because more dollars come from out-of-pocket, the consumer is keenly aware of how his health-care dollars are spent. He may make different choices than if covered by a FFS plan such as seeking urgent care vs. an expensive emergency room visit.
The Internal Revenue Service defines qualified high-deductible health plans. They do not specifically define fee-for-service health plan criteria. CDHPs considered HDHPs, per IRS guidelines, must meet defined minimum and maximum deductible amounts and include preventative care and health screenings. Each calendar year, the IRS defines the deductible amounts, which the HDHPs must meet to qualify as a HDHP. In 2011, the minimum annual deductible is $1,200 for individual coverage and $2,400 for family coverage. The maximum deductible and out-of-pocket costs, excluding the premium, is $5,950 for individual coverage and $11,900 for family coverage.
Health Reimbursement and Savings Accounts
Health reimbursement accounts (HRA) and health savings accounts (HSA) complement most CDHPs. Both accounts contain funds used to cover health-care expenses. While employers set up HRAs for employees, individuals open HSAs. Standard fee-for-service plans do not have the HRA or HSA component. Under IRS guidelines, only those covered by a HDHP can qualify for an HSA. HSA funds are can grow tax-free and be invested if not used for medical expenses. HRAs, offered alongside a group plan, contain a specific dollar amount distributed upon submission of a claim.
Selecting Health Insurance
When choosing a health plan, consider all costs including premiums, deductibles, co-payments and maximums. Consider how much you use your insurance and if you have a condition that requires utilizing frequent health-care services. Additionally, review the flexibility of each health plan, limitation of benefits and covered services. Always check if your doctors are in the plan’s network to save on costs. If you need help selecting a plan, your state’s department of insurance has consumer representatives to assist you.