How Does Consumer-Directed Health Care Work?
A trend that bears watching is consumer-directed health care. The basic idea is that we can reduce medical spending by making consumers better informed and giving them a financial stake in their medical care choices. The Medicare Prescription Drug, Improvement, and Modernization Act established health savings accounts (HSAs) as part of the new consumer-directed approach to paying for health care. The approach combines tax-free HSAs to pay for moderate and routine health expenses with a high-deductible health plan with low premiums for medical catastrophes. To start an HSA, people must first enroll in a high-deductible health plan, either through an employer or on their own. They establish the HSA either through their health plan or from an independent HSA provider. Both employees’ and employers’ contributions to HSAs are tax-deductible. Workers and employers can contribute up to the amount of the policy’s annual deductible yearly, subject to a cap of $2,600 for individuals and $5,150 f
