A Self Directed health Plan (SDHP) is a kind of health insurance combining elements of a PPO plan and a self-directed account. At its core, it is a PPO with a high deductible that allows the monthly premiums to remain low. So that the patient can have coverage for preventive care costs that are less than the deductible, he has a savings account dedicated to medical expenses.
In an SDHP plan, the patient can lower costs by using in-network or preferred providers. It may also be expected that he choose a primary-care doctor in the network. Expenses decrease because of the discounts available within the network. However, the patient has to pay all costs up front until the deductible is met, and is required to pay a percentage of costs afterwards.
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Advantages of a Self-Directed Health Plan
- Insured individuals who primarily go to the doctor for preventive care save through lowered premiums.
- Preventive care expenses are paid for through accumulated savings deposits.
- The lower premiums and the savings deposits combined are less than the higher premiums charged in other plans.
- Costs can be substantially lowered by using the preferred provider list and choosing a primary care physician.
- The accumulated savings or allowance remaining after each quarter may be rolled over to pay for costs in the next quarter.
Disadvantages of a Self-Directed Health Plan
- Out-of-pocket expenses are high because of the high deductible. The plan does not begin to pay until you have met the deductible amount. If you are unlucky enough to have a serious illness or accident before you have had the chance to accumulate funds equal to the deductible, this type of plan could be extremely expensive.
- The insured must pay out-of-pocket expenses not included in the preventive care allowance until the deductible amount is met.
- You will be penalized unless you choose an in-network doctor.
- All hospitalizations and most elective treatments require pre-certification.
Self-Directed Health Plan (SDHP) Details
The focus of an SDHP is to reduce expenses with low premiums, a high deductible, and an emphasis on prevention. Young, healthy people would be able to take advantage of this plan that stresses managing wellness. They also would be able to accumulate a sufficient amount in their accounts over time if they did not need care. It is probably not the best plan for families with young children.
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