Defined Contribution – A Great Way to Fight Rising Healthcare Costs

defined-contribution-webRemember when your parents gave you a weekly allowance and told you it was up to you to decide how the money would be spent. The only catch was that when your allowance was gone, it was gone – you would have to do your chores and wait until next week for additional spending money.

This is a good way to grasp a concept currently being offered by Diversified Group. With a defined contribution plan, you give your employees a set amount of money to spend on benefits, and they shop for coverage that meets their individual needs.

Your company gains the ability to control rising healthcare costs plus it’s a way to promote informed decision-making. Employees have the freedom to choose from a greater variety of plan options and your costs are limited to the amount of the “allowance” you provide.

To determine if a defined contribution plan is an alternative your company should consider, talk to Diversified Group today.

2 thoughts on “Defined Contribution – A Great Way to Fight Rising Healthcare Costs

  1. A defined contribution approach only controls who pays, how much. It doesn’t do anything to control the actual costs of services which is the problem facing our nation today. Until someone addresses the ability of the medical community to set their own fees (hospitals especially), costs will continue to rise and the shell game of who pays for what will also continue. That being said, we might go to a DC plan at next renewal. We tried influencing the providers by paying “referenced based fees”. We were successful (saved money) until the push back was too tremendous and providers withdrew from our PPO network. The fight for the balances continues one and 1/2 years later with employees stuck in the middle unfortunately.


    • We agree, DC plans are limited in what they can accomplish but can be a short term solution for some. Well informed employers are trying everything they can to lower health care costs. Health insurance (and self funded) is expensive because healthcare is expensive. As you well know Laurie, the behavior we have seen from hospitals is the worst kind of bullying – bullying when a person is having health care issues. Many would say they are bulling at a time when a person is most vulnerable. Hopefully providers will see the public outcry on soaring health care costs and check their social and economic ethics. The long term play must include reasonable and transparent payments for healthcare. There is good news to be had. Referenced based pricing and its positive effects on costs are spreading despite clear difficulty in some areas.


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