If you’ve read benefits information recently, you’ve probably seen these terms:  CDH, CDHP, HDHP, HSA, FSA, HRA. What do they all mean?

These acronyms are associated with consumer-driven health (CDH). “Consumer-driven” means you control and manage more of your health care dollars so you become a better user of health care.

A consumer-driven health plan (CDHP) is a type of medical insurance or plan that typically has a higher deductible and lower monthly premiums.

A high-deductible health plan (HDHP) is a type of consumer-driven medical plan and it is increasing in popularity. It has a higher deductible and a lower premium than a traditional medical plan. Typically, you take responsibility for covering minor or routine health care expenses until your deductible is met. Once you meet your deductible, co-insurance applies.  “Co-insurance” means that the medical plan shares costs with you; the medical plan pays a percentage of each eligible charge and you pay the rest.  Research shows that 44% of employers are considering offering a high-deductible health plan as the only benefit option in 2014.1

A CDHP may be offered with a combination of the following types of accounts:

  • Health Savings Account (HSA)
  • Flexible Spending Arrangement (FSA)
  • Health Reimbursement Arrangement (HRA)

With each of these accounts, contributions may be made and expenses may be reimbursed on a tax-free or tax-deductible basis to pay for qualified medical expenses. Here’s a brief overview of their unique features.

  HSA FSA HRA
Who owns it?

Employee

Employer

Employer

What type of health plan can it be offered with?

A high-deductible health plan that meets the specific HSA qualifying requirements defined by the IRS

A full-purpose health care FSA is compatible with any type of health plan coverage. A limited-purpose health care FSA is typically used in conjunction with an HSA and its qualifying high-deductible health plan.

The IRS now requires an HRA to be integrated with a medical plan.

Who funds it?

Typically the employee, but the employer and others can contribute

Typically the employee, but the employer can contribute

The employer only

How is it funded?

Money is deposited directly into the account. Contributions can be made:

  • pre-tax, through payroll deduction or by the employer
  • “after tax”: by the employee or other person

Based on the employee’s annual election, the employer designates a specific amount of wages to be deducted from the employee’s payroll check pre-tax.

Employer contributes a set amount

What health care expenses can be paid from the account?

Any qualified medical expense as defined by the Internal Revenue Service (IRS)

Eligible health care expenses as defined by the employer’s plan

Any eligible health care expense as defined by the employer’s plan, including some health insurance and long-term care insurance premiums


Whether you have an HSA, FSA or HRA, the account gives you more control over your health care spending so you can make wise decisions about how to stay healthy.  

Deductible

The amount you owe for covered services before your health insurance or plan begins to pay.

Premium

The amount you pay for your health insurance or health plan.

Co-payment (co-pay)

The fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service.  You may also have a co-pay when you get a prescription filled.

Co-insurance

The percentage of eligible expenses payable by the health plan for certain covered health services after you meet the annual deductible.

 

Resources

Ready to learn more?

Optum Bank®, Member FDIC, with more than $2 billion in assets, is dedicated to providing products and services that help make the health care system work better for everyone. To learn how you can open a Health Savings Account, visit www.OptumBank.com.

Learn more