The Lively Blog



Stay up to date on the latest news delivered straight to your inbox

What is a Consumer-Directed Health Plan (CDHP)?

Vicky Warren · March 8, 2019 · 4 min read


The way we pay for our healthcare has evolved over the years. Today, there are many options available to pay for our medical expenses.

Let’s talk about Consumer-Directed Health Plans.

The general definition of a Consumer-Directed Health Plan is one that combines a high deductible health plan with a pre-tax savings account that employees can use to pay for eligible medical expenses.

What is a High Deductible Health Plan?

Otherwise known as an HDHP, a High Deductible Health Plan simply means a health insurance plan with a high deductible. A deductible is the amount of money you have to pay before the insurance company begins paying for healthcare-related expenses.

There are no hard and set rules as to what qualifies as a high deductible plan, as this is very subjective depending on the person. Normally, HDHPs come with relatively low premiums compared to traditional plans.

There are several HDHPs out there, but there is a caveat to watch for when it comes to Health Savings Accounts. The HDHP must be a Qualified High Deductible Health Plan.

What is a Qualified High Deductible Health Plan?

Qualified High Deductible Health Plans have firm definitions. The IRS annually releases the minimum deductible and maximum out-of-pocket amount limits for HDHPs. For a health plan to be combined with a Health Savings Account (HSA), it must be a Qualified HDHP.

Many people think that if a plan meets the deductible and maximum out-of-pocket limits, it’s eligible for an HSA. Unfortunately, there are several small characteristics that can disqualify a plan.

Here are just a few examples:

  • Prescription Drugs – QHDHPs specify that only preventative care can be provided before the deductible is met, which does not include prescription drugs.

  • Office Visits – If the plan covers office visits with a copay before the deductible is met, it does not meet the QHDHP criteria. An exception is for preventative care, such as annual physicals or immunizations.

  • Emergency Care – If a plan covers emergency care with a copay before the deductible is met, it is not a QHDHP.

As you can see, there are several additional rules and regulations QHDHPs have to follow to be HSA eligible. To determine if an HDHP meets the qualifying criteria, look for the designation indicating it does, or ask the insurance carrier which plans are HSA-eligible.

Once you’ve secured a Qualified High Deductible Health Plan, the second part of a Consumer-Driven Health Plan is a Pre-tax Benefit Account. There are three types of accounts available, Health Savings Accounts, Health Reimbursement Accounts, and Medical Flexible Spending Accounts. Let’s explore each type of account.

Health Savings Account (HSA)

Health Savings Accounts (HSAs) are employee-owned and employee and can be employer-funded. HSAs must be combined with a Qualified HDHP. Unused funds roll over year to year with the account, and the money belongs to the employee no matter if employment changes.

Health Reimbursement Accounts (HRA)

Health Reimbursement Accounts (HRAs) are owned and funded by the employer. A group health plan is required, typically an HDHP. Employers determine when funds are available and how funds are handled at the end of the plan year.

Healthcare Flexible Spending Accounts (HCFSA)

Healthcare Flexible Spending Accounts (HCFSAs) are owned by the employer and funded by the employee, though employers can fund them too. Employers must offer insurance to their employees, but there are no specific plans required. Unused contributions do not roll over, although, for some plans, there is a grace period or up to a $500 rollover option.

For the most part, a combination of a High Deductible Health Plan and a Pre-Tax Savings Account is what Consumer Driven Health Plans entail. By having an insurance plan and a way to save pre-tax money for those inevitable healthcare costs, you have more options to pay for healthcare and keep you and your loved ones happy and healthy.

Vicky Warren

Vicky Warren

Vicky Warren, once a nurse, now a freelance healthcare writer and social media coach.

piggy bank on pink background


2024 and 2025 HSA Maximum Contribution Limits

Lively · May 9, 2024 · 3 min read

On May 9, 2024 the Internal Revenue Service announced the HSA contribution limits for 2025. For 2025 HSA-eligible account holders are allowed to contribute: $4,300 for individual coverage and $8,500 for family coverage. If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.

comparing hsa versus fsa


What is the Difference Between a Flexible Spending Account and a Health Savings Account?

Lauren Hargrave · February 9, 2024 · 12 min read

A Health Savings Account (HSA) and Healthcare Flexible Spending Account (FSA) provide up to 30% savings on out-of-pocket healthcare expenses. That’s good news. Except you can’t contribute to an HSA and Healthcare FSA at the same time. So what if your employer offers both benefits? How do you choose which account type is best for you? Let’s explore the advantages of each to help you decide which wins in HSA vs FSA.

Benefits of HSA employer matching

Health Savings Accounts

Ways Health Savings Account Matching Benefits Employers

Lauren Hargrave · October 13, 2023 · 7 min read

Employers need employees to adopt and engage with their benefits and one way to encourage employees to adopt and contribute to (i.e. engage with) an HSA, is for employers to match employees’ contributions.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.



Stay up to date on the latest news delivered straight to your inbox