What’s Defined Contribution? A Good Way to Fund Employee Benefits
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.