As an employer, you probably want to offer health insurance benefits to your employees. However, you may be concerned about how much it might cost. After all, you have just so much money in your budget that you can allocate to employee benefits. So, what is the answer? Defined Contribution.
What Is Defined Contribution?
With Defined Contribution, you have the ability to determine (or define) the amount of money you want to pay toward each of your employees’ health insurance benefits. (The amount you choose has to be the same for all of your employees.)
With the CaliforniaChoice small business, multi-carrier private exchange, you can choose a fixed dollar amount or a fixed percentage of the cost for a specific health plan – for example, 50% of the lowest-cost plan available in your area. Then your employees can use the generous contribution you make toward their coverage to pay for their preferred health plan.
When you offer CaliforniaChoice, your employees have access to dozens of plans from seven different health insurers, including popular regional providers like Sutter Health Plus and Western Health Advantage in Northern and Central California and Sharp Health Plan in San Diego. Statewide, employees can choose coverage from Anthem Blue Cross, Kaiser Permanente, Health Net, and UnitedHealthcare.
If your employees choose a plan with a premium that exceeds your Defined Contribution, the employee pays the difference. It’s that simple.
The amount you select is locked-in for one year – and you have the flexibility at renewal to adjust your premium contribution, up or down. The choice is yours.
Why Offer Employee Benefits?
One of the most important reasons to consider employee benefits is they can help your employees. They can also help you stand out as an employer in an increasingly competitive talent marketplace. They are highly desired by employees, so they can aid you in attracting new employees and keeping your current employees happy, too. According to the Society for Human Resource Management (SHRM), the vast majority of employees rank health care benefits as the most important.
Getting Started Is Easy
If you want to learn more about Defined Contribution – and how it can help you expand your employee benefits, while still controlling your cost – ask your broker. If you don’t have a current broker, we’ll help you find one who represents CaliforniaChoice, and who can meet with you to discuss a custom quote for your employees.
The health insurance industry – like many others – uses a lot of jargon. For employers and employees, insurance terms are sometimes hard to understand. But, we can help. In this article, we will explain four of the most-common health insurance terms, so you’ll be better able to understand your health insurance and employee benefits.
Premium is the amount of money you pay for your (and your employees’) health insurance every month. Several things, including what type of coverage you select, determine the price you pay. The CaliforniaChoice multi-carrier, small business private exchange offers a variety of options for you and your employees, including Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Exclusive Provider Organization (EPO) plans as well as High Deductible Health Plan (HDHP) options and Health Care Service Plans.
Other factors influencing your cost are your age and the ages of your employees – and eligible dependents, if they are covered – as well as your home ZIP Code.
The premium for your selected coverage is fixed for the term of your plan, 12 months for most employer-sponsored coverage. The monthly amount could change at your renewal, when you will also be given the opportunity to shop and compare other options.
At its core, as with other types of insurance, your premium is the amount you pay in exchange for the promise by your insurance carrier to pay claims for covered services during your contract period.
Beyond the premium that you and your employees pay, you may have other out-of-pocket costs during your plan year. Those other costs include your annual deductible, copayment amounts (for doctor office visits or other services), and coinsurance, all of which we’ll explain below.
Deductible is the amount you must pay each year before your health insurance plan starts to pay for covered services. For example, if your plan has a $1,000 deductible, you would need to pay $1,000 for what your health plan categorizes as eligible, covered services before your insurance begins to pay.
It’s also worth noting that some health plans have an in-network deductible, a separate out-of-network deductible, and, sometimes, a deductible for prescription drugs. Other plans have only one deductible for each insured person. If you have family coverage, your health plan very likely has a deductible for you and a separate deductible for your insured family members. Be sure to review your health plan details concerning your deductible before selecting your coverage or seeking medical care.
After you pay your annual deductible, your out-of-pocket costs are usually limited to your copayment amounts or coinsurance for covered services. Your insurance company will pay the rest of your covered health care charges.
Under the Affordable Care Act (ACA), preventive health care services – like shots and screening tests – are available at no cost and are not subject to a deductible. Copayments and coinsurance amounts do not apply either. Therefore, if you offer an ACA-compliant plan to your employees, they will be able to get some health care services at no out-of-pocket cost (beyond their contribution to the health plan premium, if any).
Generally, plans with lower monthly premiums have higher deductibles. Plans with higher monthly premiums usually have lower deductibles.
What are Copayments?
Copayments are typically fixed dollar amounts you must pay (in addition to your deductible) when seeking medical treatment. If, for example, your health plan has a $15 copayment for a $100 doctor’s office visit, you would have to pay $15 and your insurance would pay the rest (if you have satisfied your annual deductible).
If you had not met your deductible, you would need to pay the full $100 charge, which you could count toward your annual deductible.
What is Coinsurance?
Coinsurance is usually a fixed percentage of the total cost for covered services that you must pay (in addition to your deductible) when seeking treatment. If, for example, your health plan has a 25% copayment for a $125 specialist office visit, you would have to pay $25 and your insurance would pay the rest (if you have satisfied your annual deductible).
If you had not met your deductible, you would need to pay the full $125 charge for the specialist office visit, which you could count toward your annual deductible.
Different services covered by the same health plan can have different copayment percentages or amounts. This is especially true when it comes to prescription drugs, lab tests, and visits to in- and out-of-network medical specialists. You will want to keep this in mind when selecting a plan – and when seeking treatment.
Plans with low monthly premiums generally have higher coinsurance, and vice versa.
If you are interested in an explanation of other health care-related terms, your employee benefits broker is a great source of information. If you do not already have a broker, we can help you find one who will meet with you to discuss your needs and provide you with a custom quote for CaliforniaChoice coverage for your employees.
Highlights/Key Takeaways for Brokers
Two proposed bills in the California legislature that could affect health care pricing in the Golden State and future health care-related mergers are attracting a lot of industry attention. State Assembly Bill (AB) 3087, sponsored by Ash Kalra (D-San Jose) would create an independent authority, the California Health Care Cost, Quality, and Equity Commission, which would review health care pricing for hospital stays, doctor’s visits, and many other medical services covered by commercial insurers. Assembly Bill 595, authored by Jim Wood (D-Healdsburg), would require health plans wanting to merge or acquire other health plans to receive prior approval from the California Department of Managed Health Care (DMHC).
AB 595: Merger Review Legislation
The measure on health care service plan mergers and acquisitions would give authority to the state’s DMHC to consider the potential impact of any consolidation on health care costs, quality, and care for Californians. Under the proposed law, the department could approve, conditionally approve, or disapprove of any proposed purchase, acquisition, or control agreement involving a health plan or licensed health insurer. Current law requires health plans to provide the state with notice of any planned merger; however, California has limited authority to review or comment on proposed affiliations between health plans and insurers.
The chances of passage for AB 595 are not known. It was approved by the State Assembly in January and referred to the State Senate for reading. It was read the same month and referred out to the Senate committees on Health and Judiciary in March.
September 30th is the last day for Governor Jerry Brown to sign or veto any bills passed by the state legislature during the current session.
AB 3087: Pricing Legislation
Under this measure, the new California Health Care Cost, Quality, and Equity Commission would set the rates for all commercial health plans, including those offered to employees by their employer as well as individual and family health plans. Rates would be based, at least in part, on what the federal government pays for services under Medicare. Maryland adopted a similar measure in 2014. Consumer groups and some of the state largest labor unions, including the California Labor Foundation, support the proposed legislation. The California Hospital Association, California Chamber of Commerce (CalChamber), and physician groups oppose the measure.
CalChamber says the legislation interferes with an employer’s ability to negotiate health plan benefits and costs for its employees, interferes with the state’s public exchange (Covered California) to negotiate with health insurers, reduces access to care, and creates an unnecessary added layer of bureaucracy for Californians. Advocates of the measure note many residents have seen dramatic increases in their health care costs, including deductibles that have increased faster than wages, so they so a review of health care pricing is warranted.
AB 3087 was amended by the California Assembly in early May, and then referred to the Committee on Appropriations. After a hearing set for May 16 was canceled at the request of the bill’s author, a hold was put on the measure just before Memorial Day. Committee Chair Lorena Gonzalez-Fletcher said she hopes work to control costs will continue and warned that inaction could threaten the state’s economy.
SB 562: Universal Health Care Legislation
While the Healthy California Act, Senate Bill (SB) 562, generated a lot of press last year, the single payer health care measure has not progressed very far in Sacramento. The proposed legislation that would create a state-run universal health care system stalled after its introduction in February 2017. It was last amended by the State Assembly on May 25, 2017, but no action has been taken since that time. Legislators could revisit the idea in 2019, after the fall 2018 election.
The California Association of Health Underwriters (CAHU), which advocates on behalf of consumers and health insurance professionals, is monitoring two health care-related (consumer-driven) initiatives that Californians could see on the ballot in November. These include Initiative 17-0048, the California Managed Health Insurance Premiums Initiative (also known as the Accountability in Managed Health Insurance Act) and Initiative 17-0047, the California Care Act, both of which are in the “signature collection” phase that closes in late June.
Your broker can help you stay up to date on what’s happening at the state and federal levels with regard to health care reform and regulation. If you don’t already have a broker, we can help you find one who will meet with you to discuss your needs and provide you with a custom quote for your employees.
The Affordable Care Act (ACA) introduced the concept of a public health insurance exchange (like HealthCare.gov) to most Americans. However, what many business owners and benefits managers may not realize is that California has been home to the most-successful private health insurance exchange for more than 20 years.
The CaliforniaChoice private exchange for small businesses was introduced in 1996. It was the first multi-carrier, employee-choice program established by a private organization specifically to help employers with 100 or fewer employees find affordable health insurance.
A Look Back at Its Origin
The private health exchange concept grew out of a need to give small employers more options than a single-carrier solution. In the 1980s, small businesses were generally only able to choose a single carrier to meet the needs of their entire staff.
Employees often did not like the “one size fits all” approach, so the multi-carrier program was born. It broadened the options available and gave employees the power to find a carrier and benefit plan that made sense for their individual needs.
How Does a Private Exchange Work?
With a multi-carrier private exchange, like CaliforniaChoice, you determine the amount you want to spend on your employees’ benefits. You can choose a Fixed Percentage (50% to 100%) of a specific plan and/or benefit, or you can choose to contribute a Fixed Dollar Amount for each employee. It’s your choice.
Your employees then get to choose the HMO, PPO, or other coverage that best fits their individual or family health care needs. Like with travel aggregator websites like Priceline and Expedia, a health exchange gives your employees the ability to shop and compare plans before making a choice.
Each employee applies your contribution toward the cost of the health plan they like best. If the cost for their preferred plan exceeds your contribution, they simply pay the difference. And everything is consolidated on a single bill, regardless of what each employee selects.
The table below shows other ways an exchange is similar to online tools you may already be using. It includes the value-added benefits offered by each and the value-added features of CaliforniaChoice, the only multi-carrier exchange in California developed for small businesses.
|Product or Service Category||Direct (Single Source)||Consolidated (Multi-Source)|
|New and Used Autos or Trucks||Individual dealerships – you have only vehicles from one manufacturer from which to choose
||Shop for every brand using an auto megastore.
|Retail||Individual stores – you have only a single brand to shop: Nike, Coach, Brookstone, etc.
|Shop online or at big-box stores like Amazon and Costco, where you can find multiple brands.
|Real Estate Nationwide||You can view listings for only one location/metro area at a time using city-specific franchisees of Coldwell Banker, Better Homes & Garden, and RE/MAX.
|You can view and compare properties nationwide using online services like Redfin, Zillow, or Trulia.
|Fashion||Individual stores – you can shop only a single brand: ALDO, Burberry, J. Crew, Levi’s, Tommy Bahama, Calvin Klein.
|You can shop and compare multiple brands at department stores like Nordstrom and Macy’s.
|Travel||You can visit individual hotel, airplane, and rental car websites and view only one brand at a time.
|You can shop and compare multiple hotels, airlines, and car rental firms – planning your vacation through a single site like Priceline and Expedia.
|Small Business Health Insurance||Carrier-direct health care: you can get coverage directly from a single carrier – limiting choice for your employees.
|You can shop and compare plans from seven different differ health plans through CaliforniaChoice.
*All product, company names and logos are trademarks™ or registered® trademarks of their respective holders. Use of them is for reference only and does not imply any affiliation with or endorsement by them.
It’s Easy to Quickly Compare Available Products and Services
CaliforniaChoice is similar to online tools and retailers you may already use. It makes shopping for employee benefits easy for everyone, similar to CarMax, Nordstrom, Amazon, Costco, Priceline, and Expedia.
Multi-Carrier Vs Single Carrier Solution
You know how convenient it is to go to the mall and find multiple shops in the same location – or to go to Costco or Amazon and be able to shop for a wide variety of merchandise in one place. The same principle applies to health insurance for small businesses.
Travel websites like Priceline and Expedia are popular because they allow you to find flights for lots of airlines and cars from many different car rental companies – as compared to going to the individual websites of American, Delta, United, Alamo, Avis, Budget, and others to get schedule and cost information. You generally know what you want to spend and when you want to travel, so these aggregator sites make it easier.
In the same way, a multi-carrier, employee-choice program like CaliforniaChoice lets your employees shop and choose from a broad selection of medical carriers in one place – while also giving them options for other coverage like Dental and Vision.
One of your employees might choose a PPO because of a particular doctor or hospital in their network, while another employee who rarely visits the doctor might choose an HMO. A third employee might choose a Health Savings Account (HSA) compatible HMO because of cost and tax considerations. The choice is up to each employee. But you still have just one bill to pay for all of your employees.
And when you renew, you have the option to adjust your premium contribution up or down, giving you complete control over what you spend on employee benefits for another year.
Talk With Your Broker
To learn more about how a multi-carrier program can expand your options for employees, contact your broker. If you don’t already have an employee benefits broker, we can help you find a CaliforniaChoice broker to speak with about a quote for Medical, Dental, Vision, and other coverage.
Your broker may also tell you about the Automated Choice Profiler from CaliforniaChoice, which gives you and your employees the power to compare plans not just based on premium, but on doctor availability, quality, affordability, and how you expect to use your plan.
|Spring Cleaning Things to Remember:
Spring Cleaning Tips For Small Business Offices
It’s Spring and that means it’s time to dust off desks or workstations, remove all (or, at least, some) of the clutter, and clean up around the office. (It is not just something to do at home.)
Here’s Your Quick Office Checklist
1. Clean up your work area:
Take the opportunity, maybe on a quiet Friday, to file papers and put things you don’t need in storage. Ask yourself “Do I really want to keep this?” Then ask, “When is the next time I am likely to need it?” That can help you decide if you should file it, put it into storage, or throw it out altogether.
Dust and disinfect your workspace, including your telephone. Review what’s stashed in your desk drawers. Can you cut down on your desktop clutter? Maybe some of that stuff should be in your drawer, rather than on your desk. Do you have a lot of office supplies? (Maybe too many pens, Post-It® Notes, or paper clips?) Check your supply closet, too. Consider donating any excess to a local charity or share the surplus with others (in or outside of your department), who may be able to put surplus items to use.
In your effort to purge old files, remember to keep in mind any document-retention guidelines or company policy on shredding documents that could contain sensitive information.
2. Clean up your computer (inside & out):
Use a compressed-air duster to clean your keyboard and computer vents. Use a disinfecting cleaner to wipe down your keyboard and mouse. Clean your monitor or display screen with a dry, soft, lint-free cloth; if needed, a liquid solution of mild soap and water is okay, too.
After cleaning the exterior of your laptop/tablet/desk/tower computer, review what is on your computer. Delete files you don’t need – including those on your desktop. Consider reorganizing your files into folders – perhaps by month and year, project name, or whatever works for you. That will help make your searches for information in the future much easier.
Go through your email. Discard messages you no longer need and sort those you want to retain, putting them into folders. You may be one of those folks who uses a “flag” on email for follow-up, but never go back to “un-flag” items and mark them as complete.
3. Change up your décor:
Keep your workspace fresh by swapping out your photos, color scheme, artwork, or whatever décor you have. To the extent possible (based on power outlets and phone and computer station wiring), move things around to give your area a new look. Doing so can make the area more inviting and comfortable. Wipe down your office chair with a disinfectant or other cleaner. (Even if you have a cleaning crew, they may not be as thorough as you think.)
4. Clean your coffee maker:
For health reasons, it’s good to clean your office coffee and/or tea maker routinely. Even if you have a Keurig® or other brewing system, it is important to wipe it down regularly and discard old supplies like napkins, cups, filters, stirrers, and pods.
5. Don’t forget the department frig – and snack area:
Be sure to empty and clean your department refrigerator as well as the microwave, toaster, or other appliances. Use a disinfecting cleaner. Organize what’s on top of your snack table, throwing out any old sugar, salt, or pepper. Check your stash of paper or plastic cups, plastic knives, forks, or spoons as well as straws and paper plates.
Pro Tip: Consider hiring a cleaning service (or one that is used by your property owner or building management firm) for heavy duty work like carpet cleaning, painting and changing fixtures, another thing to consider is asking about a semi-annual or annual steam cleaning of any carpeted areas at your business (including enclosed offices and conference rooms).
You really can revitalize your work area – and your workers – with a little spring-cleaning.
Owners and managers of small businesses in San Diego can sometimes find it difficult when shopping for employee health insurance benefits. However, it doesn’t have to be that way, if you know about the CaliforniaChoice multi-carrier, employee-choice program offering access to seven of the state’s leading health plans.
In San Diego, you and your employees can choose coverage from Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and UnitedHealthcare. You have access to some of the region’s top networks, hospitals, and medical centers, including Scripps Memorial Encinitas, Scripps Memorial Hospital La Jolla, Sharp Memorial Hospital, Rady Children’s Hospital, and UC San Diego Medical Center.
We also deliver valuable tools to help you and your employees easily match your health care needs to your health plan – and to enroll online when you are ready.
There are many reasons why an employer might want to offer “benefits” to their employees. Health insurance, dental and vision coverage are tax deductible for your business. They are also increasingly important as the California unemployment rate continues to decline. (The state’s unemployment rate in December 2017 was 4.2 percent, down from 5.2 percent a year earlier.)
Today, the competition is really heating up among businesses when it comes to the recruitment of new employees and retention of existing workers. In fact, according to a recent New York Times article, employers are increasingly taking more time to fill open jobs – and they are actively considering candidates they might have overlooked in the not-too-distant past.
What Do Employees Want?
If you’re investigating the addition of new benefits to your employee benefits package – or you’re considering benefits for the first time – you might be asking “what are the most popular employee benefits?” Should you consider health care, in-house child care, or doggie day care? The choice is yours.
In a study by the Society for Human Resource Management (SHRM) and Colonial Life, the five most popular employee benefits were:
- Health care and personal welfare (health insurance, vision, etc.)
- Preventive health and wellness programs
- Retirement and savings planning
- Leave benefits (paid time off)
- Flexible work schedules (including telecommuting)
Also popular among employees were compensation bonuses, career development (company-paid training), business travel perks (reimbursement of costs while traveling on business), and relocation benefits.
A 2016 SHRM report, Leveraging Benefits to Retain and Recruit Employees, found 73 percent of employees rank health care as the most important benefit. In a separate survey, Benefitfocus found 78 percent of workers base their acceptance or rejection of a job offer in part on the employer’s benefits package.
For the period 2013 through 2017, some benefits increased in popularity, while others saw a decline. The table below summarizes SHRM’s 2017 research.
|Benefits on the Rise||Benefits on the Decline|
|Free coffee||Medical Flexible Spending Accounts (FSAs)|
|Meal reimbursement for business travel||Defined contribution plan hardship withdrawals|
|Health Savings Accounts (HSAs)||Service anniversary awards|
|Financial advice||Undergraduate educational assistance|
|Meal flex (flexibility to make up time during the day due to a longer meal break or leave early due to a shorter meal break)||Graduate educational assistance|
|Standing desks||Defined contribution plan loans|
|Employer contributions to HSAs||Shift premiums|
|Sign-on bonus (for executive positions)||Compressed workweek|
|401(k) fund conversion to Roth 401(k)||Auto subsidy for business use of personal vehicle|
|Accelerated death benefit for terminal illness||Long Term Care insurance|
|Wholesale generic drug program for injectable drugs||Credit union membership|
|Sign-on bonus (non-executive positions)||Onsite cafeteria subsidized by employer|
|Shift flexibility||Paid travel expenses for spouse|
What you include in your organization’s benefits program is up to you – and driven, at least in part, by what portion of your budget you can allocate toward your employees’ benefits. Competitive wages are important, but some employees may be willing to work for a lower hourly or annual wage, if you offer a more comprehensive benefits program. That’s exactly what Aflac found in a previous study, in which 16 percent of employees said they have left a job or turned down a job due to the benefits offered.
Determining Your Budget
A health insurance broker can help you determine your employee benefits budget. Then, each of your workers can use your contribution to the plan premium like a gift card to purchase the coverage they like best.
If you choose a private health insurance exchange, like CaliforniaChoice, you can give your employees access to more choices and multiple plans from several different health insurers. CaliforniaChoice includes dozens of coverage options from seven of the state’s leading health plans: Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, Sutter Health Plus, UnitedHealthcare, and Western Health Advantage. That means your employees can shop and compare plans to find the coverage that best fits their individual or family health insurance needs.
Your company costs are fixed for a year (subject, of course, to any new hires or employee departures). Each of employees receives the same contribution to his or her coverage. (You can’t pay 100 percent for one employee, while paying 30 percent for another.) At renewal, you can adjust your contribution to coverage, up or down, and stay with the CaliforniaChoice program.
If your employee chooses a health plan with a premium that exceeds your contribution, the employee pays the difference. It’s that simple.
Ready to get started?
If you want to boost morale, increase employee retention, and offer more benefit choices to your workers, click below to get a custom quote for your business.
Orange County business owners and managers sometimes find it difficult when shopping for employee benefits and health insurance. It doesn’t have to be when you know about CaliforniaChoice, the small group multi-carrier, employee-choice program that offers California small businesses access to seven of the state’s leading health plans.
In Orange County, you can choose coverage from Anthem Blue Cross, Health Net, Kaiser Permanente, and UnitedHealthcare, and give your employees access to more than three dozen plans. Employees have access to some of the region’s top health care facilities, including St. Joseph Health (St. Jude Medical Center, St. Joseph Hospital and Medical Center, Mission Hospital Regional Medical Center, and Mission Hospital Laguna Beach), UC Irvine Health, Hoag Memorial Regional Medical Center, and Saddleback Memorial.
Plus, we offer valuable tools to make it easy to match your health care needs to your health plan – and to enroll when you’re ready.
Business owners and managers in the San Joaquin Valley sometimes find it difficult when shopping for employee benefits and health insurance. For others, it’s less of a challenge – because they know about CaliforniaChoice and our employee benefits program that offers California small businesses access to seven of the state’s leading health plans.
In the Central Valley, you and your employees can choose coverage from Anthem Blue Cross, Health Net, Kaiser Permanente, Sutter Health Plus, and UnitedHealthcare. Plus access to some of the region’s top networks and facilities, including Dameron Hospital, San Joaquin General Hospital, Sutter Gould Medical Foundation, and Sutter Tracy Community Hospital.
On top of all that, we offer valuable tools to make it easy to match your health care needs to your health plan – and to enroll when you’re ready.
If you’re a business owner or manager in Sacramento, and you’re shopping for employee benefits and health insurance, you should know about CaliforniaChoice. It’s a multi-carrier, employee-choice program that gives small businesses access to six of California’s leading health plans: Anthem Blue Cross, Health Net, Kaiser Permanente, Sutter Health Plus, UnitedHealthcare, and Western Advantage.
You can choose from top networks and hospitals, including Dignity Health (Mercy Medical Center), Sutter Health, NorthBay Healthcare, and UC Davis Medical Center, among others. Plus, we deliver the tools to make it easy to match your health care needs to your health plan – and to enroll when you and your employees are ready.