A Consumer Directed Health Plan (CDHP) is a strategy that requires employees (the consumers) to make decisions about their health care.
CDHPs come in various forms, but most commonly a CDHP means offering a high-deductible health plan paired with a spending account for out-of-pocket costs such as a Health Savings Account (HSA) or Integrated Health Reimbursement Arrangement (HRA). CDHPs encourage employees to make informed decisions and spend wisely - which can lead to lower costs for the company.
For example, a company switches from a lower-deductible plan to a high-deductible plan to realize premium savings. To keep the coverage level and employee exposure the same, they offer an Integrated HRA to cover the additional out-of-pocket deductible costs. The employer reimburses employees through the HRA for their additional deductible costs. The company achieves savings because on average, employee utilization of the HRA is only 30-50%.
History of CDHPs
In the early 2000's employers began utilizing CDHPs as a cost-savings and cost-containment strategy. Since the early 2000's, CDHPs have been on the rise. In 2013, 23% of employers with 10–499 workers and 39% of employers with 500+ workers offered either an HRA- or HSA-eligible health plan.
Growth of CDHPs
CDHPs, HRAs, and HSAs have become a popular option for many individuals and businesses, and they continue to grow in popularity.
In 2013, there was an estimated $23.8 billion in HSAs and HRAs, spread across 11.8 million "accounts".
The number of accounts was up slightly from 2012, when there were 11.7 million accounts. Total assets were up from $18 billion in 2012 (source).
Chart Source: EBRI
A third type of CDHP is a "pure" defined contribution health plan, where the employer offers a plan that reimburses for individual health insurance premiums. With this type of CDHP, the employer does not offer a group health plan. Rather, the defined contribution health plan (i.e. the reimbursement of individual health insurance premiums) is the primary health benefit offered.
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