There is rapid rush among small and medium sized employers to switch their employees from defined benefits programs (group health insurance) to defined contributions model (individual health insurance).
Here are the major reasons for this shift:
#1 Saves Health Insurance Costs for Employers as well as Employees
This is one of the prime reasons for the shift. Switching from group health insurance to individual health insurance can reduce costs upto 60%.
#2 Gives Full Choice To Employees for Health Insurance Plans
Defined contribution model and individual health insurance give complete health plan choices to employees along with a better control over healthcare. Employees get the opportunity to select and buy any health insurance plan from any carrier of their choice and get reimbursements for premiums upto the pre-fixed defined contribution amount.
#3 More Flexibility and Health Insurance Options for Employees
The model provides better and flexible health insurance options to employees. All the employees can purchase individual coverage policy that is better than the existing group health insurance options.
These are the basic reasons that encourage small and medium sized employers to switch to Individual Health Insurance and Defined Contributions Model. Moreover, it is estimated that approximately 60% of small employers may move to this model by 2017. Thus, if you are small or medium sized employer and concerned about coming open enrollments, its better to consider the pros and cons and take informed decisions.