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.
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.