Internal Revenue Service gives OK for consumer-directed health plans

More companies are expected to offer these plans, which give patients a greater incentive to be cost-conscious about health care.

By Amy Snow Landa, AMNews staff. July 29, 2002.

Washington -- If they haven't already, physicians soon may notice a shift in the type of health insurance that some of their patients are using to pay for medical care.

Consumer-directed health plans have become the choice of a small but growing number of patients as more employers have begun adding this new type of coverage to their menu of employee health benefits.

The trend is expected to accelerate this fall when workers will have a chance during the open enrollment period to choose their health coverage for 2003.

For physicians, this means that some patients are likely to become more cost-conscious about health care buying decisions than they were under traditional managed care. They may want to know the full price of an office visit or lab test up front because they likely will pay for it out of a personal health spending account.

This year has seen a surge in employer interest in offering consumer-directed health plans to workers -- particularly now that the Internal Revenue Service has provided clear guidelines for establishing such plans.

The IRS issued a ruling last month that details for the first time how employers may set up the employer-funded health spending accounts that are a key feature of consumer-directed plans.

The agency has given companies wide latitude in how they may design these accounts and still maintain the tax advantage provided for employer-sponsored health benefits.

"It basically gives the green light for a lot of employers to implement or explore these plans more vigorously," said Steven Wojcik, director of public policy for the Washington Business Group on Health, which represents the health care interests of 165 large employers. [...]