With the cost of health insurance and other medical bills rising year after year, looking into consumer-driven health care may be an excellent option for you and your family. Consumer-driven health care is also referred to using the acronym CDHC, and is growing more and more popular as more people switch from conventional health insurance plans to different types of medical savings accounts.
Simply put, consumer-driven health care refers to third-tier health insurance plans which allow you to use personal medical savings accounts to pay for your medical expenses. These medical expenses include routine healthcare costs as well as catastrophic medical costs. For example, for routine medical costs such as health check-ups, you are covered by the health savings account or the Health Reimbursement Arrangement (also known as the Health Reimbursement Account). If anything unpredictable and catastrophic happens, you are covered by your high-deductible health insurance policy (HDHP). The flexible spending account is also an example of consumer-driven health care, which some choose to use.
Under most types of consumer-driven health care, if you end up with any unused funds within your medical savings accounts at the end of the year, you are able to rollover these funds to use for the future.
Instead of using a traditional health insurance plan, consumer-driven health care allows you to pay for routine medical costs with a personal account. This allows you to have more control over your medical spending, giving you even greater control than a health insurance account.
Many who use a consumer-driven health care plan are able to save money over using a health insurance plan. In addition, users of a consumer-driven health plan are more conscious of spending, and have been found to be more likely than those using health insurance plans to research different treatment plans.
Consumer-driven health care plans provide numerous benefits. For example, studies have shown that in the long run, Americans will pay less for healthcare under such plans. Even more, some forms of CDHC allow them to be funded by employers. For example, the Health Reimbursement Arrangement is employer-funded (which allows tax benefits for the employer), which benefits both the employer as well as employees.