Consumer Driven Healthcare Plans (CDHP) – Many employers have exhausted plan design changes and can’t afford further health care cost increases. And traditional managed-care plans shield consumers from the true costs of health care. To meet today’s health care demands, health insurers offer several consumer-driven options that encourage members to become better informed and take control of their health care experience:
Low Cost, High Enrollment Consumer-Driven PPO
Moving to a consumer-driven plan can be a big step in bridging bridges the gap between traditional managed care and CDHC through a hybrid Consumer Driven PPO using deductibles, copays and coinsurance – plan elements people understand. It directly addresses the reality of escalating costs by providing comprehensive coverage when employees need it most, at a cost employers can afford.
As an example, the Oxford Direct plan offers only minimal in network cost sharing and universal coverage in and out of network without referrals. This includes 100% day one coverage on prescription drugs, in network routine physician and lab visits. The Oxford Q and A is along with a sample benefit summary shed some light on this.
Through a three-tiered PPO using deductibles, copays and coinsurance, these plans offer comprehensive coverage at a cost employers can afford. The plan engages employees in cost-sharing without requiring you to fund an employee health care account; reduces utilization by more than 9 percent in addition to a 10-20% savings on health care costs over a traditional PPO.
Flexible Design for Diverse Employee Needs
The HRA encourages cost-conscious use of health care services and can be tailored to meet the needs of a diverse employee population. With its pay-as-you-go plan design – money only leaves the account as claims are incurred – the HRA engages employees in health care spending decisions, which helps contain costs. At the employer’s discretion, the HRA may be offered alongside a Flex Savings Account (FSA), providing considerable pretax savings to employees.
Easy Administration, Tax Advantages and Investments
The HSA combines affordable medical coverage and a savings account that can be used to help pay for deductibles and non-covered medical expenses. It allows employers and/or employees to fund tax-advantaged accounts (e.g., investment options such as mutual funds). And, its low-cost administration, roll over and portability and tax-saving features make theHSA an appealing consumer-driven option. And, because employees contribute, save and pay for health care on a tax-free basis, HSAs increase the likelihood that employees will choose a consumer-directed plan.
1 Reden & Anders, May 2005
2 Great-West Healthcare Research, January 2005