Defined Contribution Health Plans
One trend in health plan design that has continued to
gain popularity is consumer-driven health care, including defined-contribution
health plans intended to make employees more conscious and responsible
for the cost of their health care. In its simplest form, the employer
provides a fixed sum for the employee to buy insurance on his or her
own. Under another scheme, the employer provides a voucher for a fixed
sum per year for health coverage and allows the employee to choose
from an array of less- to more-expensive plans.
Hybrid defined-contribution plans combine a high-deductible
plan with a tax-exempt medical expense savings account that could
cover the deductible, copayments, or the cost of out-of-network care.
Another type of plan provides a fixed sum for routine care and a high-deductible
insurance plan to cover major illnesses.
Currently, health savings accounts (HSAs), health reimbursement
arrangements (HRAs), and medical savings accounts (MSAs) are the three
types of tax-favored consumer-directed plans that have legal authorization.
While HSAs and MSAs require coverage under a high-deductible health
plan (HDHP), HRAs are also frequently coupled with an HDHP.
Summary for [Your State]