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Small Business Employee Benefits and HR Blog

Defined Contribution Health Plans

August 12, 2010
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Due to the rising costs of group health insurance, many companies can no longer afford to offer traditional health insurance to their employees. Fortunately, defined contribution health plans can provide an affordable alternative to traditional group health insurance.

defined contribution health plans

The general concept of a defined contribution health plan is that a company gives each employee a fixed dollar amount (a "defined contribution") that the employees choose how to spend.  Employees can use their defined contribution to pay for individual health insurance or other medical cost such as doctor visits and prescription drugs.  

Rather than pay paying the costs to provide a specific group health plan benefit (a "defined benefit"), employers can fix their costs on a monthly basis by establishing a defined contribution health plan.

See Defined Contribution Health Plans vs Defined Benefit Health Plans for more information.

Click below for answers to Commonly Asked Questions about Defined Contribution Health Plans... 

Is there a Maximum Employer Contribution Limit for Defined Contribution Health Plans?

Is there a Minimum Employer Contribution Requirement for Defined Contribution Health Plans?

Is There a Minimum Employee Participation Requirement for Defined Contribution Health Plans?

Is a Company or Employer Required to Fund a Defined Contribution Health Plan in Separate Bank Accounts?

Can a Company or Employer Give Employees Different Amounts with Defined Contribution Health Plans?

Why Can't Employers Just Pay Directly for Employees' Individual Health Insurance Plans?

What Types of Expenses Are Covered by Defined Contribution Health Plans?

How Can Employers Contribute to Individual Health Insurance Plans without Violating Federal Law? 

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