Self Directed Health Plan (or SDHP)
Not everyone can afford the level of medical coverage provided by a complete insurance plan. Others may prefer to maintain more control over their finances and not pay a high monthly fee. SDHP plans, which have only been around since 2002, offer lower monthly costs, but this means that you will probably have to pay a high deductible. Generally, the higher the deductible, the lower the monthly premium you pay. With an SDHP plan you don’t pay a lot, but it only covers limited preventative care.
If you are generally in good health, getting regular preventive care (such as routine checkups and immunizations) are important to keep you healthy. This is precisely what an SDHP is all about.
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Details About SDHP Plans:
- A high deductible means that your monthly premiums are low.
- The plan provides “up-front cash,” like an allowance, (probably around $250 for three months) for you to use on selected preventive care as you see fit. This gives you complete control over how your health plan is administered and what is covered.
- If you don’t use your allowance during a certain time period, the funds can be used later. Funds will continue to roll over year after year. If your maximum allowance is $2,000 and you only spend $1,500 at the end of a given year, that remaining $500 is rolled over and added onto your $2,000 the following year, making your new allowance $2,500.
- There is no one to stop you from spending the money in your allowance. Once you run out, you must pay for all of your medical coverage directly out of pocket.
- After you’ve paid your annual deductible, you will also be responsible for “coinsurance,” which is a percentage of medical costs not paid by the provider.
- In other ways, an SDHP plan is similar to a PPO plan; with an SDHP plan, you generally use an approved network of doctors and other healthcare providers (hospitals, specialists, etc.). As a member, you pay less for your healthcare when you use the network.
You Might Not Want a SDHP Plan If...
- You would like more complete coverage and are willing to pay a little more.
- You feel you can provide your own “up-front cash” and better handle your own finances.
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