Traditional defined health benefit plan: A company provides its employees with a defined healthcare benefit -- doctor visits, hospitalization, pharmacy and so on -- at uncertain annual cost. The benefit is administered through an employer-sponsored group health benefits plan.
New defined contribution health benefit plan: A company provides its employees with a tax-free allowance or "contribution" to spend on their own healthcare -- at an annual cost that the company controls. Employers utilize Defined contribution health benefit plans to reimburse employees tax-free for the premiums on their own individual health insurance policies or to reimburse their out-of-pocket medical expenses.
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Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state. See a licensed agent for detailed information on your state. PeopleKeep, Inc., does not sell health insurance.