Self-Directed Health Plans (SDHPs)

In today's modern society, people are demanding more and more control over their finances and the range of health plans available to them. In response to this, insurance companies now offer self-directed health plans (SDHP). With these plans, which were introduced in 2002, consumers design and customize their own plans to meet their specific needs.

If you're considering a self-directed health plan, there are many things to remember. You will have nearly complete control over how your health plan is administrated and what is covered. There is no one around to stop you from spending the money in your account, and once it's gone, your medical coverage is paid directly from your own pocket.

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SDHP Plan Details

Self-directed health plans can help you save money, if used correctly. The advantage to this kind of health plan is that funds can be rolled-over from one year to the next. The process is simple: you invest money in a special directed account, paying up to a maximum allowance. Money is withdrawn as it is needed throughout the year. Any money that remains in the account at the end of the year is rolled to the next year. So, if your maximum allowance is $2,000, and you have spent only $1,500 by the end of the year, the remaining $500 is rolled over and added to your $2,000 allowance for the second year. Now you have $2,500 in your account, rather than having to begin with a new deductible or co-insurance.

A self-directed health plan would benefit those who are naturally self-reliant and organized. Your medical records are kept on special software, which has to be protected. Medical choices you make are as a result of your own research and decisions. You are literally placing your health in your own hands. If you or one of your dependents has a condition that would require frequent hospitalization, this plan wouldn't be the best for you, as the SDHP by itself does not cover in-patient surgery and emergency visits.

The SDHP is usually offered alongside a PPO high-deductible plan; for those services not covered by the self-directed plan, such as hospitalization and prescription benefits, you pay the deductible for the associated PPO plan before it begins covering (usually as a co-insurance) this care as a normal PPO plan would. And like a PPO, you'll have to pay more if you choose a doctor out of the network.

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