Every day, you decide how you’re going to spend your money. You decide what you need, how much you’re going to spend, and when you’ll spend it. Later, you’ll decide whether you are satisfied with your purchase.
A consumer directed health plan lets you use these same steps to figure out the best way to spend your health care dollars.
Remember, when it comes to your budget, you’re the expert.
Let’s compare consumer directed health plans to traditional health insurance plans.
Consumer directed health plans are high deductible versions of other health plans that you may already be familiar with. These other plans include HMOs, or health maintenance organizations, and PPOs, or preferred provider organizations.
All these plans cover preventive care, such as your annual physical. They cover visits to the office of your primary care doctor and to specialists. If you need emergency care or other hospital services, as an outpatient or an inpatient, all these plans can help. That’s also true for the tests, lab services, and prescription drugs you doctor wants you to have.
But there are some key differences in these plans.
Consumer directed health plans help control costs because the monthly premiums are lower than those of many other health plans. In return, you must meet a higher annual deductible. But to keep you healthy, a consumer directed health plan offers preventive care at no cost, or with just a copay. Your annual checkup, for instance, is not subject to the deductible. Many consumer directed health plans have a combined deductible for medical and pharmacy expenses. You will need to need to meet the deductible before your benefits start for both medical and pharmacy expenses.
Whether you pay for your health insurance yourself or contribute to the premium that your employer pays, your cost will probably be lower if you enroll in a consumer directed plan.
You can also take advantage of some tax benefits if your consumer directed health plan includes a health savings account or a health reimbursement arrangement.
With a health savings account, or HSA, you can use the money in your HSA to pay your medical expenses tax free.
In another type of consumer directed plan known as a health reimbursement arrangement, or HRA, your employer makes arrangements to reimburse you for a portion of your out-of-pocket medical costs.
If you find some of this a bit confusing, click on “Some Basics About Health Insurance” at left for a little background.
Taking care of your health is always a good idea. With a consumer directed high deductible plan, you won’t just feel better. You’ll also save money.
You can focus on staying healthy because preventive care is covered in full, or subject only to a copay.
How can you take care of your health? Here are some important steps:
Visit your doctor on a regular basis for annual check-ups, mammograms, certain cancer screenings, and other routine services.
Live a healthy lifestyle that includes exercise, a good diet — and no tobacco.
Follow your doctor’s advice. That includes taking medication as directed to manage chronic conditions such as asthma, diabetes, or high blood pressure.
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Return to Index
Health Insurance Basics
High Deductible Health Plans
Health Savings Accounts
HSA Tax Benefits
How HSAs Work
Health Reimbursement Arrangements