To CDHP or not?

[myself]

My employer has offered a CDHP plan along with an HSA. They've also offered to fund the HSA with $1,500 the first year and $1,000/yr after that.
My family and I rarely get sick, aside from the occasional virus or allergies, and the only one that's been to the hospital is me for the past decade or so. Even then it was goofy stuff like when I cut 2 fingers to the bone with a utility knife after having shot a 3" nail through the same fingers only 8 months before that!

So, we make use of the FSA but don't fund it that much because we don't want to loose it at the end of the year. However, the HSA allows us to fund future healthcare needs using today's money and in a pre-tax way!
The difference in cost between 2 plans comes down to about $130/yr, and that's if we fund the HSA by $3k/yr. Almost half of that would have to be paid out in increased premiums for the lower deductible plan.

Since I didn't really ask a question, in the body here it is. Does it make sense to do a CDHP, and does anybody on the boards have any experience with a CDHP?

 

[myself]

My employer has offered a CDHP plan along with an HSA. They've also offered to fund the HSA with $1,500 the first year and $1,000/yr after that.
My family and I rarely get sick, aside from the occasional virus or allergies, and the only one that's been to the hospital is me for the past decade or so. Even then it was goofy stuff like when I cut 2 fingers to the bone with a utility knife after having shot a 3" nail through the same fingers only 8 months before that!

So, we make use of the FSA but don't fund it that much because we don't want to loose it at the end of the year. However, the HSA allows us to fund future healthcare needs using today's money and in a pre-tax way!
The difference in cost between 2 plans comes down to about $130/yr, and that's if we fund the HSA by $3k/yr. Almost half of that would have to be paid out in increased premiums for the lower deductible plan.

Since I didn't really ask a question, in the body here it is. Does it make sense to do a CDHP, and does anybody on the boards have any experience with a CDHP?

Wow, can't believe nobody has done this on the boards. Maybe wait for over the weekend? LOL

 

[Gotadimple]

Yes, I have a CDHP with an HSA. It's a no-brainer, especially if your expenses are low and the premium difference helps to offset the cost of the deposit to the HSA.

You may want to do a search on HSA or CDHP here on the site. There was a rather extensive discussion over a year ago. You can claim your employer's deposit by using the HSA they have selected. Check out the fees for the HSA to be sure you know what it is really costing you.

- Rita

 

[pb4uski]

My employer offered a high deductible health plan coupled with a HSA the last 4 or so years that I worked.

I think it is a great way to augment your retirement savings if your health is good - in my mind it is similar to a Roth IRA since it can accumulate tax free. The insurance piece was just to protect from some sort of catastrophic loss if one of us were to have a major illness and get access to negotiated rates for medical services.

I didn't choose it the first year it was available because DW had some surgery that she needed, but we did after that. I then chose to pay any health care expenses (mostly deductibles) from cash flow rather than the HSA and I have let the HSA grow tax free.

 

[Live And Learn]

My CDHP has an out of pocket max of $3k .... I spend ALOT on doctors so even tho I see folks recommending CDHPs for the relatively healthy, for me (I think !) the CDHP option was the best choice. The other plan had a $5k out of pocket maximum (which is about what I spend on co-pays etc) and had a higher premium.

 

[JoeWras]

I guess you learn something every day. Apparently, I have a CDHP with HSA. But MegaCorp uses an internal marketing term for it.

I really like it. It covers preventative, but everything else has a high deductible and then coinsurance until max is reached.

It makes me think. I don't cheat myself on healthcare, but I sure ask questions and pay attention to what care I am accessing.

It works for me because I usually have a fairly low bill each year (under $1k) including visits and prescriptions. Some years only a few hundred bucks. Copays on the other plan would come close to that.

The HSA is great though, especially for the reduced income part. MegaCorp also contributes a yearly start to the HSA, and the premium is lower. We can also can take some web based learning and earn real money that goes right into the HSA. The other plans have this too, but it is a use or lose it kind of thing: funny money. Nothing funny about the HSA, it is cash to keep - just follow the rules.

Now, I might need an operation sometime. If it happens, so be it. It would only be a bit more than traditional plans for a typical minor outpatient operation. For a catastrophic operation (hospital stay), the CDHP/HSA actually comes out cheaper than the traditional plans.

They've really weighted us to go in this direction, and I frankly am glad I have so far... Especially with the taxes I pay. It really adds up.

One caveat: some states take back the HSA deducted income for taxing purposes. Mine doesn't, but be aware that some states do.

 

[Brett_Cameron]

I don't know what a CDHP is.

 

[JoeWras]

I don't know what a CDHP is.

Consumer Driven (Directed) Health Plan

Like I said, MegaCorp has a internal marketing name to make it more obvious.

Consumer-driven health care - Wikipedia, the free encyclopedia

 

[rbmrtn]

Consumer Driven (Directed) Health Plan

Like I said, MegaCorp has a internal marketing name to make it more obvious.

Consumer-driven health care - Wikipedia, the free encyclopedia

I had never heard the term either. So it's just a High deductible plan with HSA. The last year I was megacorp they went to that plan but never called it CDHP.

 

[Gotadimple]

I had never heard the term either. So it's just a High deductible plan with HSA. The last year I was megacorp they went to that plan but never called it CDHP.

It might not have been a CDHP. There are specific requirements that need to be met to be called consumer directed. You may have just had a plan with a higher deductible. CDHP deductibles start at $1500 for individual and $3000 for families.

-- Rita

 

[Brett_Cameron]

I had never heard the term either. So it's just a High deductible plan with HSA. The last year I was megacorp they went to that plan but never called it CDHP.

it seems to me you are correct. This is what I have as retiree benefit.

 

[Brett_Cameron]

to answer OP question: yes, the cdhp (HDHP+Had) is a good thing for me and family. Our typical mix of Dr visits and prescriptions makes this the lower cost option vs a poo plan with perpetual co-pays for office and prescriptions. I
Th HSA is a good way to reduce taxable income.

 

[myself]

Thank you for all the replies, they are greatly appreciated.

I believe DW and I are going to go with this plan at this point. Our expenditures for this past year (which were larger than the previous 2 years), were $906 for the entire year. That's for a family of 6, although not counting the premiums for our healthcare plan of course (which is currently the other option that we have to choose from.

We believe that due to our relatively healthy lifestyle we have, and what we've experienced over the past several years in expenditures going with the CDHP plan can set us up for a better future.

 

[myself]

I've also heard of these plans called HDHP (or High Deductible Health Plan), as opposed to our MegaCorp's "flavor" called Consumer Driven Healthcare Plan.

I don't know how the CDHP would work out for some folks (such as those planning on having babies), because when we had our 4 wonderful kiddos, the cost was merely $100 Gyn visit for my wife and everything else was covered (well aside from any phone calls or TV in the hospital for the 3 days DW was in the hospital.

Apparently even on the other 2 options we have, that is no longer the case.

 

[growing_older]

So, when I get a doctor bill using my health insurance they show a considerable discount compared to what they would bill without insurance. How effective are CDHP at getting lower negotiated rates for service, since I will have to pay those directly as part of the high deductible. A plan that doesn't get good low fee billings will be very costly.

 

[MichaelB]

So, when I get a doctor bill using my health insurance they show a considerable discount compared to what they would bill without insurance. How effective are CDHP at getting lower negotiated rates for service, since I will have to pay those directly as part of the high deductible. A plan that doesn't get good low fee billings will be very costly.

The insurance company negotiates a rate for each provider, and you should get it regardless of which plan you choose.

 

[rbmrtn]

So, when I get a doctor bill using my health insurance they show a considerable discount compared to what they would bill without insurance. How effective are CDHP at getting lower negotiated rates for service, since I will have to pay those directly as part of the high deductible. A plan that doesn't get good low fee billings will be very costly.

I guess this another thing that is wrong with the whole system. What you pay depends on what a third party has negotiated for you. I think you get whatever rate your insurance carrier has negotiated, regardless of the plan. But if you change carriers, the same procedure might be a different cost.

 

[MichaelB]

I've also heard of these plans called HDHP (or High Deductible Health Plan), as opposed to our MegaCorp's "flavor" called Consumer Driven Healthcare Plan.

I don't know how the CDHP would work out for some folks (such as those planning on having babies), because when we had our 4 wonderful kiddos, the cost was merely $100 Gyn visit for my wife and everything else was covered (well aside from any phone calls or TV in the hospital for the 3 days DW was in the hospital.

Apparently even on the other 2 options we have, that is no longer the case.

With high deductible plans it is critical to understand the "total out of pocket" amount. That is the sum of deductible, copays and all other charges you are expected to pay, per year. As long as you are prepared to pay this amount each year the total cost of a health care plan is not so different between the high and low deductible options. The advantage of a high deductible plan is when you choose not to go to the doctor, you save. If the doctors visit isn't really necessary it is real savings. OTOH, if you really need a doctor but don't go because you choose savings over health, you may lose.

 

[pb4uski]

So, when I get a doctor bill using my health insurance they show a considerable discount compared to what they would bill without insurance. How effective are CDHP at getting lower negotiated rates for service, since I will have to pay those directly as part of the high deductible. A plan that doesn't get good low fee billings will be very costly.

Getting negotiated rates is one of the two main reasons that I buy health insurance - the other more important reason being to insure against the financial risk of a major illness given how expensive health care is today.

What I have found is that even with negotiated rates that some providers (mostly hospitals) are willing to give me an additional discount (as much as 20%) if I pay then and there. I call and ask if they offer an additional discount for immediate payment - if they say yes I try to put it on my credit card then and there and gain the "points" with the credit card company and I don't need to actually pay it for 30 days or so.

 

[myself]

So, when I get a doctor bill using my health insurance they show a considerable discount compared to what they would bill without insurance. How effective are CDHP at getting lower negotiated rates for service, since I will have to pay those directly as part of the high deductible. A plan that doesn't get good low fee billings will be very costly.

The insurance company negotiates a rate for each provider, and you should get it regardless of which plan you choose.

I agree with what Michael B said. That is exactly what my benefits department stated. And FWIW, we have the same medical benefits provider for both the lower deductible plan and the higher deductible plan.

For instance, we've negotiate a rate of $35/visit with our chiropractor that we visit 1-2 times a year. That was not even using my medical plan. So fundamentally I can use the HSA card in the future to pay for those (much like I used our FSA card prior to this).

 

[growing_older]

The insurance company negotiates a rate for each provider, and you should get it regardless of which plan you choose.

Which was my point exactly. I get to pay the rate negotiated by my insurance. A high deductible plan has much less incentive to negotiate lower fees for everyday services, so potentially I pay inflated prices for these. I understand that some carriers have multiple plans, so those plans for that carrier will share the negotiations, but usually when I am choosing between an regular health insurance plan or a CDHP they are different carriers and different negotiated rates will apply. Further the results of these negotiations and hence the actual costs to me are not visible to me until after I choose and start to get bills for services.

 

[Gotadimple]

And those negotiated rates will never be visible to you, or to your state insurance department. They are considered proprietary. Insurance carriers do not share their fee schedules to keep their competition on their toes.

The best you can do in this situation is to use the carrier's web site to determine which providers they show as having the lowest out of pocket cost. Carriers do provide that information to customers so they can make decisions about which providers to use.

-- Rita