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Consumer Driven

Consumer Driven Health Care

What is Consumer Driven Health Care?

Consumer-Driven health care also referred to as “CDH", is a type of health plan that gives members more choice and flexibility in making health benefits decisions and more control over their health benefits dollars. These plans often include a health fund or account for covered medical expenses. Depending on the type of fund or account, unused dollars may be rolled over annually to cover medical expenses in subsequent years for the duration of the members' enrollment in the plan. Simply put, consumer-directed health care is health care where consumers, not third party payors, make their own choices about how to spend their health care dollars.

What types of Consumer-Driven Healthcare Products are there?

This chart will shed light on the different aspects of each plan and help you find the right one for your unique situation.

Question:	HSA	MSA	HRA	FSA
Who owns the money in the account?	Individual	Individual	Employer	Individual (subject to "use it or lose it" rule at end of plan year)
Can the money be invested with interest earned?	YES, tax-free	YES, tax-free	NO	NO
How is the account funded?	Deposited directly into the account.	Deposited directly into the account.	As an "IOU" by an employer to pay employee expenses.	Deposited directly into the account.
Is the fund portable?	YES	YES	NO	NO
Are the funds taxable?	Contributions are 100% tax deductible. Funds spent on medical expenses are tax-free for life. At 65, funds used to supplement income are tax-deferred.	Contributions are 100% tax deductible. Funds spent on medical expenses are tax-free for life. At 65, funds used to supplement income are tax-deferred.	Funds used to pay for medical expenses are not reported as income. ;	Contributions are 100% tax deductible.
Can the funds be used for non-medical expenses?	YES, but they are subject to taxes and a 10% penalty.	YES, but they are subject to taxes and a 15% penalty.	NO	NO
How can an employee access funds?	Employee has direct access to funds with credit card, debit card, checks, or withdrawal form.	Employee has direct access to funds with debit card, checks, or withdrawal form.	Employee provides receipt for services.	Employee provides receipt for services.
Who can contribute to the account?	Both employers and individuals.	Employers or individuals, but not both.	Employer only.	Both employees and employers.
What type of health plan is required?	One with a high deductible. Individual: $1,000 to $5,000.Family: $2,000 to 10,000.	One with a high deductible. Individual: $1,700 to $2,500.Family: $3,350 to $5,150.	No requirements.	No requirements.
Who is eligible?	Any employers or individuals under 65 who have a qualified High-Deductible Health Plan (HDHP).	Self-employed and small employers (50 or less).	Current and former employees. No restrictions on group size.	An employee who satisfies the eligibility requirements established by the employer.
Can the plan be included in a cafeteria plan?	YES	NO	NO	YES
Is there a "catch up" provision for older individuals?	Yes, starting in 2004, an individual age 55 or older may contribute an extra $500 per year. Provision increases $100 each year up to 2009, when the contribution can be $1,000.	NO	NO	NO
Is there a maximum contribution per year?	100% of the annual deductible, not to exceed $2,600 for individuals and $5,150 for families. Pro-rated by the effective date of health plan.	65% of the annual deductible for individuals and 75% for families. Pro-rated by the effective date of the health plan.	NO. It is an arrangement by the employer to pay for medical expenses.	NO

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