Maximize Your Healthcare Savings: Understanding CDHP / HSA Plans

All the Medical Trust plans provide care through a network of doctors, dentists, hospitals, pharmacies, laboratories, and other providers. However, the different types of plans offer a range of options regarding the availability and cost of care in and out of network.

For many people Consumer-Directed Health Plan (CDHP)¹ / Health Savings Account (HSA) Plans are a flexible and cost-effective option for managing healthcare expenses. They typically offer advantages like lower premiums and tax advantages.

CDHP / HSA Plan Information

A CDHP/HSA member’s coverage consists of two parts:

1. A traditional health plan (CDHP) that promotes preventive care and protects members against catastrophic healthcare expenses (Consumer-Directed Health Plan) and
2. A tax-advantaged savings/reimbursement account (HSA) that allows members to take control of their day-to-day healthcare costs.²

Except for certain types of preventive care, the benefits from a CDHP begin after the member meets the annual deductible.³ Contributions to a HSA help members build savings for current and future medical expenses that fall within the deductible of the health plan. A list of qualified medical expenses that may be paid with funds held in the HSAs can be found at the IRS website.

How CDHP works

The Consumer-Directed Health Plan works much like a PPO. Members can receive services from any provider, and they do not have to coordinate their care through a PCP. While the CDHP covers services in and out-of-network (like a PPO), it provides very strong financial incentives for members to use network providers.⁴ Under these plans, certain preventive care services are not subject to the deductible and require no cost share if provided by network providers.

How the HSA works

An HSA is funded by the employee and/or employer, with a “tax-favored” status. Members can open an HSA only if they are enrolled in a qualified high deductible health plan. When they incur medical expenses, they can choose to pay with either HSA funds or out-of-pocket. If HSA funds are not used, the balance continues to grow with tax-free earnings and is available for future medical expenses. 

Funds deposited in an HSA belong to the member until they are spent. Unused dollars may earn interest tax-free, with certain restrictions. If members change employers or retire, they can take their HSA with them. Withdrawals from an HSA are tax-free, as long as they are used to pay for qualified medical expenses. Distributions from an HSA that are not used for qualified medical expenses will be assessed a tax penalty. For tax reporting, it is important for members to retain records of these expenses.

How to Learn More

Download more information:
CDHP/HSA Fact Sheet for Members
CDHP/HSA Fact Sheet for Administrators
HSA Investment Guide

¹Note that the Medical Trust refers to HDHP as CDHP.

²In general, members and/or their spouses are not eligible for the CDHP/HSA option if they have any other health coverage that would apply to services covered by the CDHP/HSA, such as coverage through a spouse's employer. Participation in a flexible spending account (FSA) may also limit a member’s ability to obtain coverage under the CDHP/HSA option.

³The CDHP deductible is a combination of medical and pharmacy deductible requirements. Therefore, to begin receiving benefits from the CDHP medical and prescription drug plans, members must meet one combined deductible.

⁴ The Kaiser CDHP-20/HSA is built on a managed care platform, and therefore requires the selection of a Primary Care Physician, requires a referral to see a specialist, and does not have out-of-network benefits.

For an overview of health benefits, visit your section of the website.

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