Small Business Employee Benefits

 Employer Defined Contribution Health Benefits

Defined Contributions for employee benefits is not a new concept, it’s quite the contrary.  When actuaries in the 1970’s took a look at employee pension plans and determined that providing employees a retirement benefit for life would bankrupt the providing company companies began offering 401ks and other fixed cost benefits for employee’s retirements.  Health insurance and employer provided health benefits are now following the same trend.

Fixed Cost Health Insurance Benefits

By using a Defined Contribution for employee health benefits employers are able to offer a fixed cost benefit for an employees health needs.  The employer is defining the contribution and therefore defining the cost.  Once the employer determines what the contribution will be the employer is able to determine and budget the rest of their business.  It is not uncommon to see group health insurance premiums increase by 20 to 30 percent each year.  The uncontrollable price increases with group health insurance is making it increasingly difficult for businesses to operate.  Budgeting for other important expenditures like new hires, payroll and marketing are almost impossible until the group health insurance increase is determined.  When a company provides a defined benefit they are able to fix the cost of employee health benefits allowing them to better control the rest of their business.

An Employer Defined Contribution is Not Health Insurance

A defined contribution is not health insurance at all.  It is simply a money benefit.  Tax free money for an employee to use on qualified health care expenses as defined in IRS Publication 502.  There are hundreds of expenses that an employee can be reimbursed on.  This provides a benefit that employees and employers never thought possible with group health insurance.  Chiropractic, holistic medicine, lasik eye surgery are a few qualified expenses that allow an employee to choose what is really important for them and their health.  This really empowers an employee to take control of their own health.  They are in charge of their contribution and it’s up to them to determine where the money should be spent.

A True Employee Benefit – An Alternative to the Non-Benefit Benefit

Many companies offer group health insurance but require the employee to pay a portion of the premiums.  In many companies this can be referred to as the non-benefit benefit.  This is because group health insurance premiums are so expensive that when required to pay even part of the premium the employee simple cannot afford it and opts out of the coverage.  Many times these employees find out that even with the employer paying for part of their group health insurance premium it can be less expensive to pay for their entire premium on their own individual health insurance policy.

More on Defined Contribution Employer Health Benefits

We have partnered with Genesis Health One, another Colorado company and Zane Benefits which provides the platform through which Defined Contribution Health Benefits are available.  To learn more and explore your options with Employer Defined Contribution Health Benefits click the link to Genesis Health One’s website.