Introduction to Consumer-Directed Health Care with recent statistics as of March 2009.

1. Consumer Directed Health Care Winnie Nelson, PharmD, MS

2. CDHP Consumer Directed Health Plans

3. Potential Solution to Premium Growth

6. HSA vs. HRA HSA HRA Ownership Employee Employer Contributors Employee, employer and/or family members Employer only Annual limits on contributions Federally-set limit No limit; employer usually sets limit Tax Treatment Qualified medical spending exempt from income taxes; employee contributions  tax-deductible; employer contributions  excluded from gross income and not taxed Employer contributions excluded from gross income; not treated as taxable income to employees

7. HSA vs. HRA HSA HRA Portability Fully portable No requirement; many employers do not make accounts portable Unspent funds Rolls over yearly without limits May roll over yearly but employer may set maximums; funds may revert to employer if employee leaves or retires Qualified medical expense definition Specified by IRS; payment for health insurance premiums may be restricted Specified by IRS Non-medical use Subject to income tax with additional 10% penalty before age 65 Forbidden

8. Overall Enrollment Still Low

9. CDHP Growth

10. 2008 Best Seller for Large Group Amount Avg Annual Deductible Single: $2,046 Family: $3,998 Avg Annual Out-of-Pocket Limit Single: $3,194 Family: $6,110 Avg Lifetime Max Benefit Single: $3.6 Million Family: $3.7 Million Avg Annual Premium Single: $3,185 Family: $8,241

11. CDHP Effects

13. Cost-Sharing Effects Davis K, 2004.

16. Patients Becoming More Cost Conscious

17. Patients Price-Conscious on Medication