Defined Contribution

Defined Contribution

Reining in rising costs

Recruiting and retaining key employees is important to every company, and your employee benefit program is a key part of the compensation you offer to your employees. Due to the rising costs of traditional employer-sponsored health insurance, defined contribution is gaining popularity across the U.S.

You decide how much, they decide what works.

With defined contribution, you give your employees a set amount of money to spend on benefits—it’s like an allowance for their insurance—and they use that money to shop for the coverage that meets their individual needs. So instead of offering a “one-size-fits-all” health and benefits package, you empower your employees to choose the combination of coverage that’s just right for them.

You set up rules around where the money is spent.

For example, if you gave your employees a monthly allowance of $350, you could decide that $300 can be spent on health insurance, and $50 can be used for dental coverage, a vision plan or other benefits. And if you want to keep offering some plans that are 100% employer-paid—like long-term disability or life insurance—that’s up to you.

We make it easy for you to decide how to allocate the funds, and our decision support tools help your employees decide which plans work best.

Defined Contribution Advantages

For Employers:
  • Control the employer’s rising costs of health care
  • Promote consumerism
  • Flexibility to tailor the health and benefits allowance for your employees
  • Fast and easy to implement
For Employees:
  • Easy to understand allowance concept
  • More freedom to choose from a greater number of plan options
  • Potential for additional, more personalized coverage
  • Decision support tools help decide which plans fit best