Tax-Favored (Consumer-Driven) Health Plans

June 1, 2015


ACHI Communications

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The Health Care Independence Act of 2013 (Act) authorized the state to extend healthcare coverage to lowincome Arkansans with earnings up to 138 percent of the federal poverty level (FPL) through an innovative premium assistance program called the Health Care Independence Program (HCIP). The Act also called for the creation of Health Independence Accounts (HIAs) that operate similar to consumer-driven health care (CDHC) products but have distinct characteristics. The goal of HIAs is to promote cost-effective use of the healthcare system. The enabling Act required–and the federal government approved in waiver amendments–the enrollment of non-elderly, non-disabled HCIP enrollees earning more than 50 percent of the FPL in HIAs and use of the account to pay for cost sharing. CDHC products like HIAs are designed to involve consumers financially and incentivize them to make more conscientious healthcare choices.

The purpose of this fact sheet is to describe CDHC products and compare these products to HIAs. Importantly, although the federal government approved cost sharing and HIA participation for individuals earning from 50 to 99 percent FPL, the state did not implement this requirement due to subsequent changes in state law.

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