You may hear a bunch of new terms floating around the health care world. Don't let them confuse you. 

In a time of drastic increases in health care expenses, a new strategy has emerged to control costs. Employers are transferring the responsibility and risk of choosing and using health insurance to their employees. 

Defined contribution, self-directed, consumer driven, Consumer Directed Health Care Plans (CDHP), e-health and tiered-benefit designs. They all mean the same thing: Consumers are taking charge of their health care expenditures. 

How Defined Contribution Plans Work
Consumers have been demanding more choices and better quality plans for years. Employers are meeting these demands in the only affordable way they can--by having them share the load. 

When used properly, these plans can be financially rewarding to health-conscious consumers that are attentive to the way they use health care. Terms are often confused and used interchangeably. Don't worry about that. You can always break consumer directed plans into two categories: 

Tiered Benefits.
An employer contributes a specific amount (the defined-contribution!) per employee. Employees choose from a broad array of plans with different price points, many of which can be customized to their needs. 

For instance, you might be offered a tiered menu of options that include indemnity (FFS), HMO, PPO and HSA plans. If you choose a more expensive health plan, you pay the difference in cost. 

Alternatively, you can elect to refuse health insurance and pocket the money being contributed by your employer. Sounds good! At least, until something bad happens. 

Health Care Savings Accounts.
These include Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA) and Flexible Spending Accounts (FSA). Generally speaking, tax-deferred funds are contributed into an account for use towards doctor's visits, deductibles, hospital bills, visual needs and other qualified health care expenses. Depending on the type of account, you, your employer, or both may make contributions. In some cases, these plans can be used as financial investment tools. 

No insurance plan is a perfect fit for everyone. To help control costs, employers must help you to select the right health care plan for your needs. Employers can do this by providing information tools that compare plans, hospitals and physicians. It is also necessary to provide current and accurate information on managing specific disease states, as well as preventive health measures. 

For small business owners and those that are self-employed, you must take the time to seek out this information on your own.