What is a Consumer Directed Health Plan (CDHP)?

A Consumer Directed Health Plan (CDHP) is correctly defined as a plan that combines high deductibles with savings accounts. This structure empowers consumers by giving them greater control over their healthcare spending. The high deductible typically leads to lower monthly premiums, which can be more affordable for consumers. To assist with the costs that come with higher deductibles, CDHPs often incorporate health savings accounts (HSAs) or health reimbursement arrangements (HRAs). These accounts allow individuals to set aside money tax-free to pay for qualified medical expenses, further encouraging them to be more mindful of their healthcare choices.

This model of healthcare planning promotes consumer engagement in their health decisions, urging them to consider the cost and quality of care, as they bear more upfront costs. Consequently, CDHPs aim to reduce overall healthcare spending while providing individuals with a sense of ownership over their healthcare finances.