Consumer-Directed Health Plans: Do You Like To Gamble?

Recently insurance companies, and George Bush, have been championing a new kind of health-care called “consumer-directed health plans.”

More complex and riskier than traditional health-care, these new plans have patients pay lower monthly premiums in exchange for higher annual deductibles.

If this sounds appealing, keep these questions in mind.

• What health care services am I likely to use?
• How much of my health care costs am I responsible for?
• What is covered?
• Can I save toward future health care costs?
• How can I learn more?

Get informed, because after all, you’re essentially placing a bet that you won’t get sick.

Rolling the Health Dice [NYT]

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  1. So much depends on how the employer puts together these plans. When my husband’s employer started offering this sort of plan, they simultaneously introduced an employer-matched health care FSA *IF* you enrolled in the dramatically-cheaper-for-them high-deductible plan. What we basically did was switch to the high-deductible plan ($1500 for the family rather than $750), which includes free yearly well-care, though less-generous coverage after we hit the deductible until we get up to $10,000 or somewhere (that is, higher co-pays) where the plans completely even out.

    We save more than $1500 in lower premiums, so we took the difference and had that plopped directly into the pre-tax health care FSA, which his employer matches, though it doesn’t roll over. Which meant not only could we cover bills up to our deductible with that money, but we could use it for prescriptions, eyeglasses, dental co-pays (separate insurer), and even OTC allergy drugs and things.

    When matched with an FSA this plan was an excellent choice for us, since we more than saved the difference in premiums and we were able to have the saved difference turned into pre-tax medical money. However, if you’re dropping from, say, $200 to $150 a month in premiums and going from a $500 to a $2000 deductible, it’s not nearly such a deal, particularly not if your budget is so tight you’re going to spend that extra $50 every month.

    There’s also a gamble because our flex spending account doesn’t roll over; we came out almost perfectly even this year, but if my husband hadn’t broken his glasses, we would have had $300 “extra” in there that we lost at the end of the year. I read somewhere to break monetarily even on a pre-tax account like that you only have to spend 75% or so of it? But it still feels better to hit it on the nose!

  2. Triteon says:

    If only everyone would think things through as Eyebrows did…can you imagine the money that could be saved.
    Also, the five questions posed above– we should be asking ourselves these questions regardless of whether we’re looking at a consumer-directed plan, don’t ya’ think?

  3. krakbuste says:

    Well Eyebrows, you’re right, but a few years behind the curb. First off, Ben, don’t listen to those numbnuts at the NYT for investment advice. Self-directed insurance plans are one of the best ways to save a ton of money at on health care that most of us end up paying out of pocket anyways.

    HSA’s not FSA’s are the way to go. HSA plans are similar to FSA, but THEY ROLL OVER. It’s like having another traditional IRA in order to pay for health care costs, dental (if you opt in, eye care and presciption drugs. Oh and get this, if at age 59 1/2 you have billions (in my Dr. Evil-esk voice) in your untouched account, then you can withdraw that money as you would in a tradional IRA.

    My personal account has a deductible of $2500 per year. I put that money in a very conservative money market, make 5-7% a year and take the tax deduction on the contribution. Also, I am saving about $125 monthly on my monthly premium. The insurance coverage that I have, pays nothing up to $2500 then covers 100% for the rest (or whatever the ridiculous limit of I think $2.5 million, and if you’re that sick then you’re screwed anyways).

    Oh and since I am self employed, I get to deduct 100% of my monthly premium, and that oh so evil president wants to pass a law that let’s eveyone deduct their premiums not just the self employed ones. One aside: The NYT financial pages make better kindling than reading, but that’s just my opinion.

  4. Honestly, Triteon, my husband’s employer makes it dead easy to “think things through.” They provide us with the choice of three different plans (HMO, PPO, and this consumer-directed PPO plan, which they call FSA-PPO). Come November and open enrollment, they give us a memo that lists (for individuals and families) what each plan costs the COMPANY as well as the total and monthly costs to employees. (So we can see exactly why the company prefers us to enroll in the FSA-PPO and is willing to match the FSA — we KNOW what it’s costing them!)

    Come November there’s a woman in HR who does nothing but answer questions about health care plans. They give us online calculators to help us figure costs, including savings by doing things pre-tax, total monthly deductions by combining different plans, etc.

    And, most impressive of all to me, the higher up in the company you are (and the more money you make), the MORE you’re required to pay for your health care! Partners pay 50% of their premiums, associates 25%, and staff/secretaries 10 or 15%!

    They’re totally transparent about the entire thing. When they introduced the FSA-PPO, they told us why they were introducing us, and what the benefits were to the company and to us as health care consumers. They suggested who it was best for, and why we might NOT want to choose it. And reassured us that the PPO and HMO options would continue to be available.

    If all companies made health care this transparent and provided this much employee support, I think people would be able to make better decisions.