Consumer-directed healthcare (CDH) plans are evolving — and fast. Once a relatively minor healthcare option associated with the world of high-deductible healthcare plans (HDHP), CDH plans have become a central pillar of employer-sponsored healthcare, and may transform how individuals manage medical expenses and long-term financial goals. 

CDH plans may help reduce income tax liability and enable policy holders to set aside tax-free funds for medical care. More than two-thirds of large employers (69%) now offer CDH plans.¹

The CDH market is growing steadily as it undergoes a fundamental shift: These plans are no longer just about covering doctor visits with low insurance premiums. They’re also becoming a key component of wealth-building strategies, tying together retirement readiness and financial security.

The rise of consumer-directed healthcare

Employers are seeing the benefits of CDH plans as HDHPs take off. Enrollment in HDHPs stands at 19.5% of privately insured people under 65 (either through an employer or individual plan) participating in one.² The combination of rising healthcare costs and an increased focus on healthcare consumerism — where patients become more active in their healthcare decisions — is leading employers to offer more flexible and cost-effective HDHPs.³

Health Savings Accounts (HSAs) sit at the center of this shift, as they offer a tax-advantaged way for participants to pay for healthcare costs. In 2024, HSA assets reached $137 billion, with projections climbing to $175 billion by 2026.⁴ With healthcare expenses on the rise for the average American and employers seeking to manage the cost of benefits, HSAs are being treated as more than just short-term spending accounts: They could be investment vehicles with long-term financial potential.⁵

Read more: GLP-1 medications: Transforming health and spending habits

Where CDHs and HSAs meets retirement planning

The growing adoption of CDH isn’t just about containing healthcare costs. Many employers and financial advisors recognize the power of these accounts as wealth-building tools. Companies are bundling HSAs with traditional retirement benefits, offering employees a more holistic approach to financial planning.⁶ 

Traditionally focused on retirement accounts like 401(k)s and IRAs, many financial professionals are now incorporating CDH strategies into their recommendations. Here are some of the ways CDH plans and HSAs provide benefits beyond healthcare. 

HSAs as a retirement tool: HSAs offer triple tax advantages* — contributions, any earnings, and withdrawals are federal income tax-free if used to pay for qualified medical expenses.⁷ This means HSAs could act as a complement to 401(k) plans, especially since healthcare expenses in retirement can be significant.⁸

*State income taxes may still apply. HSA funds used for nonqualified medical expenses may be subject to applicable federal and state income taxes and/or penalties.

Customized strategies for employers: Some advisors work with businesses to design benefits packages that blend retirement and healthcare savings, assisting employees in getting the most out of employer contributions and tax-advantaged accounts.

As more employees treat HSAs as investment accounts — using them for future healthcare costs rather than immediate expenses — there’s increasing demand for financial guidance on maximizing contributions, managing tax advantages, and aligning HSAs with long-term financial goals.

What sets CDHs apart from traditional healthcare plans

There are distinct differences between CDH plans and other employer-provided healthcare options. Unlike traditional employer-sponsored health plans, consumer-directed healthcare plans are designed to give employees more control over their healthcare spending. 

To do that, they often come with different financial and logistical rules around how to pay for care. Here’s how they compare to other options:

Higher deductibles, lower premiums: CDH plans typically have higher deductibles than traditional Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) plans.⁹ This means lower monthly premiums but greater out-of-pocket costs before coverage kicks in. The average CDH plan deductible for single coverage is approximately $8,275.¹⁰

Personalized spending: With HSAs and FSAs, individuals can set aside pre-tax dollars for healthcare expenses, creating a more flexible and customizable approach to managing medical costs.

Portability and investment potential: Unlike many employer-provided healthcare plans that reset annually, HSAs stay with employees even if they change jobs.¹¹ HSAs also offer investment options, potentially making them a long-term asset for healthcare and retirement planning.

Employer contributions vary: Although many companies offer some level of contribution to HSAs or HRAs, traditional plans like PPOs often provide more predictable coverage structures without the need for employee-managed accounts.¹²

CDH plans shift the responsibility of cost management to employees, but in return, they provide more control, tax advantages, and potential savings growth. This flexibility is driving their increasing growth among employers and individuals alike.

Read more: What can I use my HSA for?

Why CDH is more than just a trend

CDH plans don’t just offer cost savings opportunities. The integration of health and wealth benefits reflects a broader shift in how individuals approach financial security. With healthcare costs expected to continue rising, the ability to manage expenses efficiently while accumulating tax-advantaged savings could become a key factor in long-term financial well-being.

The potential for financial flexibility offered by HSAs and similar accounts could make them a powerful complement to traditional retirement savings. The tax advantages are also compelling: HSA contributions are tax-deductible, any investment growth is tax-free, and withdrawals for qualified medical expenses remain untaxed, making HSAs one of the most tax-efficient savings vehicles available.

CDH plans may encourage smarter financial decisions for employees, as well as enhanced preparation for both short-term needs and long-term goals. As the market continues to grow, it’s possible that further integration between healthcare benefits and wealth-building strategies could happen — shaping a future where financial security and health coverage go hand-in-hand.