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Consumer-Driven Health Care (CDHC) Plans

Consumer-driven health care plans are employer-sponsored health plans that are often referred to as defined contribution health plans. Common features of these plans include a high deductible health plan that pays for major expenses, accompanied by an employer-funded personal health account from which employees pay medical expenses. (The employer gets a tax deduction for the contributions, which are considered business expenses.) These accounts are known as Health Reimbursement Accounts (HRAs), and the employee controls them. Medical expenses are reimbursed, typically at 100%, until the account is exhausted. Even if the money in the HRA is exhausted, a deductible must be met. When the deductible has been met, expenses are reimbursed through coinsurance. There may be an in-network and out-of-network feature: If you use in-network providers, you will pay less out-of-pocket and will not need to file claims. Typically there is some level of preventive care covered under the plan, assuming in-network providers are used, which is not charged against the HRA. Money that is unspent in the account at the end of the year rolls over from year to year. The health reimbursement account remains with the employer if employment is terminated, but former employees, including retirees, can have continued access to their accounts. These plans typically do not require a primary care physician or referrals for specialty care.

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