Millions of small and medium businesses suffer the dilemma of providing competitive health benefits to their employees but get restricted due to the high costs involved. Apparently, affording employee benefits is a challenging task for growing businesses. As a result, 44% of the businesses, with 200 or less employees, across the U.S. still don’t offer health insurance or other health benefits to their employees.
Although, it is not mandated by ACA for small businesses to offer healthcare benefits to their employees, but most of the businesses want to provide these benefits in order to set different standards and stand out in this brutal competition.
But how? That’s the main concern!!
To make healthcare benefit offerings affordable, prudent small business executives have come up with an entirely new approach to achieve the above said target.
Unlike a traditional healthcare model, where employees are provided a specific health insurance plan by their employers, the new model suggests that employees should be offered a personal health insurance policy allowance through which they can purchase any policy suiting their requirements. To avail this “defined contribution” healthcare model, businesses keep a defined amount aside to reimburse the money spent on employee healthcare.
Higher acceptance of this model is due to the cost-saving factor associated with it. Additionally, when compared to traditional group health insurance, defined contribution model is far more cost-effective and provide total control to business owners to assign annual healthcare budget.
Kaiser Family Foundation survey findings indicate that in small organizations, that are not offering health benefits, around seventy five percent of the employees prefer to avail an additional $2 per hour rather than a health insurance policy. With the defined contribution model, small businesses satisfy these workers by offering a defined amount per month by which they can purchase a healthcare policy of their choice.
1 2 3 & That’s All
Adopting defined contribution employee health benefits is extremely easy and possible if an employer is ready to contribute a fixed amount. One just need to fix a healthcare budget, allot it among the employees on monthly basis as health benefit allowance and reimburse the amount once they avail the benefit.
To ensure that you comply with all the Federal & State rules for reimbursement, it is better to take help of an expert or contact a defined contribution service provider.
Long story short, in order to stand out from the competitors, small businesses too need to provide healthcare benefits to their employers, even if it is not mandated by ACA. But, in the race to retain and attract top talent, most organizations fear the expenses that are going to occur. Defined contribution model makes the whole process affordable and easy for small & medium enterprises. It is in every way fruitful for employers as well as employees.