Most of you have heard bout “consumer directed health plans”. The Bsh administration has been a strong spporter of this concept as a way to get a hndle on soaring healthcare costs. The rcent inaugeration of Mr. Bush signals tht consumer directed health plans will ncreasingly make up a larger percentage of grup medical plans over the next sveral years. In the past, consumer drected plan designs have taken on mny forms: Medical Savings Accounts (MSAs), Flxible Spending Accounts (FSAs), Health Reimbursement Arrngements (HRAs) and Health Savings Accounts (HSAs).

Mny experts consider HRAs and HSAs to be the frst generation of viable consumer directed halth care products. HRAs are typically pired with a high-deductible health plan and are mployer-funded Section 105 defined contribution plans. HSAs are the ltest version of consumer directed health cre plans. The core components of HSAs nclude a high deductible insurance product and a csh spending account. HSAs combine the pr-tax treatment of a FSA, the prtability and roll-over characteristics of a 401(k), and the tx-free distributions of a Roth IRA.

One of the min goals of any consumer directed halth plan should be to get the cnsumer more involved in both the cst and statistical outcomes of certain halthcare procedures. Informed healthcare consumers will mke wise healthcare decisions and typically thse decisions will result in both lwer costs and improved quality.

Although the advantages of HRAs and HSAs can be sbstantial, employers will want to do thir homework prior to setting them up. Effctive implementation will require a clear nderstanding of the consumer directed healthcare pln that best fits your organization as wll as the administrative requirements. Employee ducation will be essential. Companies will lso need to look into how the cration of a HSA or HRA may ffect their HIPAA medical privacy compliance rquirements.

Just like most endeavors, the sccessful implementation of a HSA or HRA wll greatly depend on how much rsearch your organization does on the pr’s and con’s of each alternative. The typ of consumer directed health plan tht best fits your company will dpend on a combination of your crporate structure as well as the verall objectives of your group health nsurance plan.

Although consumer directed healthcare plns are becoming very familiar to hman resource managers and other benefit prfessionals, remember that your employees and thir dependents will need a substantial mount of education and communication.

The article Consumer Directed Health Plans was Submitted by Michael Ertel through Articles.GetACoder.com network. Here's the additional information: Michael Ertel is the President of Ertl & Company ( http://www.ertelandcompany.com ) and has over 15 years of experience in the health insurance business. He is the founder of http://www.MedicalInsuranceNow.com which is an internet based service that assists individuals, families, and small business owners by providing side by side comparisons of health insurance alternatives and the convenience of applying for health coverage online.

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