Consumer-directed health plans get mixed reviews
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Health savings accounts are tax-advantaged vehicles in which workers enrolled in high-deductible plans can save money that can be utilized for health-care expenses.

But here's a stunning fact: Only about 50 percent to 60 percent of workers in CDHPs actually contribute to a health savings account. This means that if they do seek health care, they must pay for it with after-tax dollars (after tapping whatever the employer might have contributed to the account).

Below is a rundown of how HSAs work with CDHP plans:

Plan features and rules for HSAs:

• HSAs can only be opened with high-deductible plans with a minimum deductible of $1,050 for individuals and $2,100 for family coverage. One survey cited in the GAO report found that the deductible amounts of CDHPs are six times higher than those of traditional plans on average. Premiums of CDHPs run 29 percent lower for family coverage, 35 percent lower for individual coverage. One of the employer plans profiled in the GAO study requires a $3,000 annual deductible for singles and $6,000 for families. Yikes! • Maximum out-of-pocket limit for singles is $5,250 for singles, $10,500 for family coverage. That's generally the most you shell out before the coverage kicks in. But while that limit includes deductibles, it doesn't count premiums. And, oh yes, services that aren't covered by the plan aren't applied to the deductible or out-of-pocket maximum. • HSAs are owned by the individual and are fully portable. This means you can keep and use it at your next job, or keep it year after year without using it at all. Even if you obtain different health coverage down the road, you still get to keep the account. • You're not the only person who can contribute money to HSAs. Your employer can contribute and so can family members and "other entities," whatever that means. Roughly two-thirds of employers in the GAO report contributed to these plans, and the average amount contributed was $1,064 in 2004. • You can contribute up to 100 percent of the policy deductible in your HSA but not more than $2,700 for individual coverage or $5,450 for families. These contributions are deductible from federal income taxes, whether you itemize or claim the standard deduction. Those aged 55 or better can contribute another $700 as long as they're not enrolled in Medicare. • You don't pay federal income taxes on contributions, earned interest or withdrawals made for qualified medical expenses. Also, employer contributions don't count toward your gross income. • Withdrawals made for purposes unrelated to your health care are subject to income tax and a 10 percent penalty for those under age 65. • HSAs can be invested in a variety of stock or bond funds, but it's really not a good idea to put money you might need in the next few months or years in a volatile fund. Also, some accounts are charged a monthly maintenance fee, and this will negatively impact your return.

Those people who opted to enroll in a CDHP had higher incomes on balance than those who didn't, according to the GAO report. That makes sense. Folks with large disposable incomes can better afford to spend more on out-of-pocket health-care costs than folks who live paycheck to paycheck.

And of course, there's always the fine print to consider when you join a health-care plan for which you must assume an awful lot of responsibility.

"Participants of one focus group reported that they did not always know whether services were provided by an in- or out-of-network provider, particularly in emergency situations. For example, one participant had to pay $1,800 for transporting his wife 10 miles in an ambulance because the ambulance that was dispatched was not an in-network provider."

This expensive ride may not have even counted toward the out-of-pocket limit.

Chances are good that your employer will be offering a CDHP as part of its menu of insurance options. For some employees, it will become the only option. It may be just a matter of time before we're all stuck with them. But while you still have a choice, do consider their pros and cons before signing up for a health-care plan.

Longtime financial journalist Barbara Mlotek Whelehan earned a certificate of specialization in financial planning. If you have a comment or suggestion about this column, write to Boomer Bucks.