Different than the “one size fits all” model, the idea of a defined contribution health plan allows employees to choose a health insurance plan of their choice with funds (a fixed dollar amount - a “defined contribution”) given to them (set aside) by the employer. The benefits of selecting a defined contribution plan are many for both the employer and employee. An employee is more involved in their healthcare choices and can choose a plan that is tailored around his/her needs, which reduces risk on employers. Also, both employer and employee save a significant amount of money on premiums and taxes, while retaining health benefits that are just as good, if not better than a traditional group plan.
Defined contribution plans are easy to set up and maintain. The employer will need to join a private exchange (an on-line insurance marketplace where various carriers participate and compete for business) and select the specific plans they want to make available to their employees. Then, the employer will need to allocate a monthly amount (premium) for each employee who will participate. Employees will be given access to the private exchange to select his/plan of his choice and will be able to manage their benefits 24/7 through the on-line account provided by carrier/plan selected.
Defined Contribution Plans
To determine if a Defined Contribution plan is right for your company, please contact Snowden & Associates, Inc. for a detailed analysis and of your existing plan.
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