Are Consumer Driven Health Plans the Right FEHB Plan Type for You?

Consumer Driven Health Plans (CDHPs) have been around for a while, but we still get a lot of questions about them. Here’s why they’re one of the lowest-cost plans in FEHB.

How CDHPs work

CDHPs have much higher deductibles than traditional HMO and PPO plans in the FEHB program. Depending on the CDHP, the deductible ranges from $1,600 to $2,200 for self-only coverage and $3,200 to $4,400 for self-plus-one or self & family coverage. Before you meet the deductible, you’ll pay the full allowed charge for a medical service, and after you meet it, you’ll generally pay a percentage of the service, or a coinsurance amount. This varies by plan but is generally around 15-20%.

While having a higher deductible can lead to more out-of-pocket costs, keep in mind the following:

• CDHPs tend to have lower premiums than other FEHB plans, so many people will save on that for-sure expense.
• All preventative care is free, before and after the deductible. This includes annual physicals, well-child visits, immunizations, mammograms, and more.
• Finally, CDHPs fund a savings account that helps you pay for out-of-pocket costs.

The combination of lower premiums and the savings account contribution makes CHDPs one of the cheapest plan types available to federal employees and annuitants.

How the Health Reimbursement Account Works

A CHDP’s savings account is referred to as a Health Reimbursement Accounts (HRA), a Personal Care Account, or Medical Fund.

On the first day of a new plan year, the CDHP will deposit the full amount of the yearly contribution into the HRA. That amount varies by plan from $900 to $1,200 for self-only coverage and $1,800 to $2,400 for self-plus-one or self & family coverage. Qualified medical expenses are automatically deducted from the HRA at the point of service. This continues for any medical expenses you incur throughout the year until the HRA balance is exhausted, at which time you’ll pay out-of-pocket for your share of expenses. If you have any money left over at the end of the year, that unused amount will roll over to the next plan year. There is no use or lose penalty with HRAs, but there is a roll-over maximum of $5,000 for self-only enrollment or $10,000 for self-plus-one or self & family enrollment.

There are a few other HRA details that you need to know:

• You can’t contribute additional funds to the HRA; only the CDHP can fund it at at the beginning of a new plan year.
• Non-medical distributions are not allowed.
• There is no HRA portability. What that means is if you enroll in a CDHP and decide to enroll in any other plan in the future, any unused funds in your HRA will be forfeited once you switch plans.

CDHPs with Medicare

There are three national CDHPs with low plan premiums to choose from—Aetna Direct CDHP, APWU CDHP, and NALC CDHP.

Of the three, Aetna Direct offers tremendous value to annuitants with Medicare because it waives the deductible and copayments when Medicare is primary and you use preferred providers. That leaves prescription drugs as one of the only out-of-pocket costs you’ll face. Aetna Direct packages a Part D prescription-drug plan for plan members with Medicare that has a$2,000 out-of-pocket catastrophic maximum not found in most other FEHB plans, which reduces how much you’d have to pay out-of-pocket for prescription drugs.

With Aetna Direct, annuitants can choose to use the plan-funded HRA contribution of $900 for self-only enrollment or $1,800 for self-plus-one or self & family enrollment to reimburse a portion of the Part B premium. However, keep in mind that any prescription drug costs you incur in the plan will be drawn from the HRA, so you may not be able to use the full HRA contribution for Part B premium reimbursement alone.

The combination of a low plan premium, few out-of-pocket costs besides prescription drugs, and the plan-funded HRA makes Aetna Direct one of the cheapest FEHB plans for annuitants with Medicare.

The Final Word

CDHPs are one of the lowest cost FEHB plan types for both active federal employees and annuitants. Before deciding to enroll in one, carefully consider your predicted healthcare expenses to see if the CDHP benefit structure will work for you. Before enrolling, make sure to check the provider directory found on the plan website to see if your current doctors will be in-network with the plan. Many federal employees and annuitants could save thousands of dollars in estimated yearly costs switching from their current plan to a CDHP.