In today’s health benefits market, there is a notable shift from defined benefits towards defined contribution. This is not surprising given the massive shift in the pension sphere where the majority of plans have made the shift away from defined benefit. Defined contribution for health benefits is the future of employer-offered plans. It is estimated that up to 70% of Gen Y employees prefer alternatives to traditional group health insurance.
The advantage of defined contribution employee health benefits is the cost savings for the employer. By agreeing to contribute up to a fixed rate for each employee’s health benefits, the employer is limiting their costs. The employee then makes decisions on how best to use their benefit dollars empowering them to take control of their healthcare and select a plan that works best for them and their needs.
What are Defined Benefit Health Plans?
With defined benefit health plans, the employer is setting specific health benefits that are available to their employees. The coverage is provided through an employer-sponsored health benefits plan. With these plans, the employee is restricted to annual and sometimes lifetime maximums per coverage type for example, $300 per year on vision expenses. They are often given specific deductible, co-insurance and co-pay amounts, as well as a rigid list of what is and is not covered under the plan.
What Are Defined Contribution Health Benefit Plans?
With defined contribution health plans, the employer contributes a set amount to the total cost of the employees’ healthcare, but does not dictate the exact benefits. This is a new way to think about employee health benefits. The employer contribution is provided to the employee to select health care options suited to their needs and wants. This works likes a stipend and is an effective way for employers to control cost by giving them complete control over their annual contribution.
Benefits of a Defined Contribution Health Plan
With a defined contribution health plan, employees are given access to a broader range of products that may be limited or not available at all in a defined benefit health plan. With an increasingly diverse workforce, it is becoming essential for employers to adapt; adding the flexibility of options for employees of differing ages, family status, and income is one of the best ways to do so. By putting decision-making power into the hands of the employee, they are given the opportunity to select from a pool of options that meet their needs, wants and expectations more sufficiently than a traditional employer health insurance plan ever could.
Introducing Honeybee Benefits
Benecaid’s new Honeybee platform is an innovative and powerful tool built for Advisors. Now you can have a true defined contribution plan that takes minutes to set up online, and allows employers to choose the types of benefits their employees actually want and will use. Honeybee is a fully supported solution, with expert licensed Benecaid sales support available through real time chat or by phone.
Honeybee makes it easy for employers to understand benefits, and even easier for employees to recognize the value provided by their employers. Employers simply set the budget and select products that will be made available for their employees. Employees customize their selections and buy products using their benefit dollars, and manage their benefits using a simple and intuitive mobile app.
If you’re like to find out more about defined contribution benefit plans or arrange for a personalized demo of our new Honeybee platform contact your Benecaid Benefits Consultant or email us at advisors@honeybeebenefits.com.
