Consumer Choice Products

In today's marketplace, employers and insurers are exploring a new type of health insurance product, known as consumer-choice or consumer-driven health insurance. The goal of this type of health insurance - which is really a range of insurance products that have common features - is to provide financial incentives for consumers to consider the cost of services and the value of alternatives.

These products move away from the most common health insurance model, which includes coverage for prepaid, discretionary services (in other words, for services like routine check-ups), to a more traditional approach, with the consumer responsible for lower-cost services (like check-ups), and insurance coverage responsible for higher-cost care that is frequently not discretionary (like a necessary surgical procedure). Consumer choice approaches seek to replace incentives that promote the unnecessary use of medical services with incentives and opportunities to exercise personal preferences in the choice of health care services.

A common model involves employer-funded health reimbursement accounts (HRAs) that each employee can use in conjunction with a high-deductible health insurance policy. Employees draw from the HRA to pay for out-of-pocket costs such as deductibles, office visits, diagnostic tests, and prescription drugs or for services not covered under their health plan; HRA funds left over at the end of the year can be rolled over. The employer contribution to the HRA usually does not equal the amount of the deductible on the insurance policy, and if the HRA is exhausted, the consumer is responsible for paying medical care costs incurred until the deductible for the insurance plan is satisfied.

Increased awareness of the value of self-care is part of the design of consumer-directed care. These plans also typically provide information (often over the Internet) to help consumers develop self-care regimens and to acquaint them with prevention and wellness techniques. They also are providing ways to help consumers manage health care decisions and expenditures such as a health risk assessment, a personal health record, physician and hospital ratings and quality profiles, and health information libraries as well as health-related news stories.

Self-insured Plans

Your employer may have set up a financial arrangement that helps cover employees' health care expenses. Sometimes employers do this and have the "health plan" administered by an insurer or another company; but sometimes there is no outside administrator.

With self-insured health plans, many state regulations do not apply; instead, certain federal laws may apply. Thus, if you have problems with a plan that isn't state regulated, it's probably a good idea to talk to an attorney who specializes in health law.

Source: Federal Citizen Information Center and the Health Insurance Association of America