Your Life, Your Health, Your Consumer-Driven Health Plan
Students, Listen Up: Healthcare Can Seem Like a Daunting Subject
It’s a system of abbreviations, terms, conditions, and fine print that every American is associated with-- whether we understand it or not.
The good news is that we live in an age where gaining information on this subject is as easy as the click of a button.
So lets start hacking away at healthcare, starting with Consumer-Directed Health Plans.
Gone are the days when the first sign of a cough meant a trip to the doctor’s office; instead we hop on the Internet, plug in our symptoms, and find a solution. This is just one of the factors that has led to a consumer-driven health plan, where the consumer is intended to have more control over where their healthcare is spent. That’s where the CDHP comes into play. Think of it as a bank account strictly for your health needs. Typically provided through your employer, CDHPs are split into three categories:
Health Savings Accounts (HSAs)
This one is pretty simple to summarize. Basically treat it like you would a regular bank account. Money can be added or withdrawn, by you or family member. What’s nice about HSAs is that the money in them accumulates year after year. To qualify for this plan, you must have a high-deductible health plan, HDHP. Pros: it’s typically the plan with the lowest premiums, that is, the factors that will affect cost-- age, location, marital status, and tobacco use. What’s more, they allow you more control and flexibility with your healthcare spending. Although you should be mindful of the high deductibles attached to HDHPs.
Health Reimbursement Arrangements (HRAs)
Medical expenses funded by your employer. Your healthcare will either be paid for with a debit card, or you will have to provide an official statement with the total cost of the visit. In this case, you will be reimbursed either with a check or direct deposit.
Flexible Spending Accounts (FSAs)
Another plan provided through your employer, it’s money put aside before taxes, from your salary. The great thing about FSAs is that they can be used for prescriptions, medical equipment, copayments, and over-the-counter medicine. It’s also based off pre-tax expenses, so you’ll end up paying fewer taxes. Be careful though, the money in this account does not carry over year after year, so what ever you don’t spend will not be repaid.
That was a lot to take in-- I know. You may think, oh, it’s too early for me to worry about healthcare-- but the more you’re informed, the less you’ll be stressed.