Turn on the news, scroll through social media, or glance at the latest headlines, and it’s easy to feel like the world is spinning out of control. For employers and employees, this uncertainty affects decisions both big and small. While the future will always be unpredictable, this enrollment season, brokers can empower clients to take meaningful control with defined contribution health benefits. Defined contribution models, like Individual Coverage Health Reimbursement Arrangements (ICHRAs), are reshaping the benefits landscape by giving employers control over their budgets, employees freedom to choose the coverage that works for them, and brokers the ability to deliver smarter, more strategic solutions. During a time when control feels scarce, this approach puts it back in the hands of employers, employees, and brokers alike.
3 Ways Employers Get Control with Defined Contribution Health Benefits
Defined contribution health benefits give employers control in clear, outcome-oriented ways. From setting and sticking to a benefits budget to customizing benefit offerings and reducing administrative burden, this approach allows employers to shape benefits in ways that align with both their business goals and employee needs. Here are three key ways employers can take control with defined contribution health benefits.
Defined contribution health benefits give employers control in clear, outcome-oriented ways. From setting and sticking to a benefits budget to customizing benefit offerings and reducing administrative burden, this approach allows employers to shape benefits in ways that align with both their business goals and employee needs. Here are three key ways employers can take control with defined contribution health benefits.
1. Employers Get Control Over Their Budget
With traditional group health plans, employers are at the mercy of the market and their employees’ health. While monthly spend can be estimated, the real cost only becomes clear once claims start coming in. If the cost of the plan exceeds the budget, employers can switch to something different, but it often means settling for a no-frills plan that offers limited coverage. On the flip side, defined contribution health benefits are immune to employee claims and market changes, making it possible for employers to set and stick to a benefits budget that’s aligned with the company’s current and long-term financial goals. With ICHRAs, employers offer their employees a set monthly dollar amount, known as a defined contribution, and the employees use these funds to buy coverage through the individual market that best fits their needs. With defined contribution health benefits, not only do employers know exactly how much they will spend on health benefits, but they also get to control the amount.
2. Employers Get Control Over What They Offer
While controlling costs is often a top priority for employers, recruitment, retention, and employee satisfaction are also high on the list. Unlike traditional models that take a one-size-fits-all approach, defined contribution health benefits can be tailored to meet the unique challenges of each business.
Wide-ranging employee demographics: Younger workers may prioritize affordability, while employees with families may value comprehensive coverage. With defined contribution health benefits, employees choose the individual coverage that meets their needs.
Geographically diverse and/or remote workforces: For employers hiring across multiple states and/or managing remote teams, defined contribution health benefits remove network and carrier limitations.
Different employee classes, different goals: Businesses aren’t locked into offering all employees the same benefit. With defined contribution health benefits, employers can vary contributions and the type of benefit they offer (e.g., ICHRA vs. traditional group) to each class of employee.
3. Employers Get Control Over How Their Time Is Spent
Administering traditional group health plans can monopolize a significant amount of employers’ valuable time, especially for small and midsize businesses without dedicated HR teams. Defined contribution health benefits simplify administration, reduce hassle, and give employers control of their time, allowing them to focus on business priorities. Top ways administrative burdens are simplified through defined contribution health benefits:
-
-
-
-
- Employers no longer have to manage plan designs, network issues, or claims because employees purchase their own coverage through the individual market.
- Employers’ defined contributions can be payroll-deducted and managed efficiently. With the support of a benefits partner like Nexben, brokers can advise on best practices for setting up and overseeing contributions.
- Employers are removed from managing employees’ private health information, reducing administrative burden but also protecting employees’ privacy and minimizing compliance risks.
- Brokers help clients streamline and ensure compliance with IRS and ACA regulations, so employers don’t have to navigate the complex rules alone.
-
-
-
3 Ways Employees Get Control with Defined Contribution Health Benefits
While defined contribution health benefits give employers the control they need and crave, employees also win with this forward-thinking approach. For too long, employees have been at the mercy of their employer when it came to what health plan they got and how they were required to pay for it. (To be fair, employers were given the nearly impossible task of choosing a few health plans that needed to satisfy all of their employees’ needs and budgets.) Defined contribution health benefits change this dynamic. This approach puts employees in the driver’s seat, giving them the freedom to choose the coverage that best meets their unique health needs and budgets.
1. Employees Get Control Over Their Benefits Spend
Much like with employers, defined contribution health benefits give employees control over their benefits spend. Employees’ financial situations and priorities are wide-ranging. Some employees might prefer to pay a high monthly premium knowing they will have few out-of-pocket costs throughout the year, while others might opt for a lower monthly premium and prefer to pay as they go for the healthcare services they access. The beauty of the defined contribution approach is that it allows employees to choose the coverage, deductible, and premium that’s aligned with their needs and financial goals. A bonus is that when people are in control of their spending, they often make wiser, more economically efficient choices.
2. Employees Get Control Over Their Coverage
Historically, one-size-fits-all plans leave employees unsatisfied—and sometimes even frustrated with their employer—when coverage fails to meet their needs or comes at a cost they can’t afford. With defined contribution health benefits, employees get the freedom to compare networks and coverage to choose one of the many individual plans that best fits their lifestyle and healthcare priorities. The flexibility offered by the defined contribution approach empowers employees to make informed, personalized choices that lead to greater satisfaction and greater retention.
3. Employees Get Control Over Coverage For Each Family Member
With defined contribution health benefits, not only do employees get personalized coverage, but their family members can too. With ICHRAs, each member of an employee’s household can choose the individual plan that best meets their needs, rather than being locked into the same coverage. For example, parents can opt for more comprehensive coverage, while younger dependents may prefer more affordable plans. Defined contribution health benefits ensure everyone gets what they need without compromise.
Brokers Who Offer Control Rise Above the Competition
This enrollment season, brokers who lead with defined contribution health benefits will not only empower their clients and their employees with a newfound sense of control, but also gain greater control themselves.
Brokers who tap into this innovative approach collaborate with clients to create tailored benefits packages that are both sustainable and aligned with each business’s unique needs. This level of customization and transparency builds trust, strengthens relationships, and drives retention. Brokers also gain peace of mind knowing they’ll be able to deliver on their promises.
Nexben partners with brokers to help clients leverage the power of defined contribution health benefits, streamlining everything from contribution strategies to marketplace facilitation to reporting and compliance. When brokers work with Nexben, they remain their clients’ Broker of Record (BOR), allowing them to continue to serve their clients in matters related to their health benefits and, of course, earn their deserved commissions.
By embracing defined contribution health benefits, brokers diversify their portfolios, unlocking a whole new market of potential clients. ICHRAs can be offered as a standalone benefits solution for businesses of all industries and sizes, and they can also be offered alongside a traditional plan when it’s in a client’s best interest. With defined contribution health benefits, brokers gain control over their own growth by delivering value to businesses of all shapes and sizes.
Defined Contribution is the Future of Health Benefits
During a time when so much feels uncertain, defined contribution health benefits give your clients and their employees exactly what they need this enrollment season—control. This approach empowers employers to set and stick to their benefits budget, gives employees the freedom to choose coverage that’s right for them, and provides brokers the ability to deliver lasting value. By moving away from traditional models that give all the power to the health plans toward defined contribution solutions like ICHRAs, brokers can shape the future of health benefits, putting control back where it belongs: in the hands of employers and employees.
Ready to help your clients regain control? Let’s talk. Nexben’s platform makes it easy to deliver defined contribution health benefits, like ICHRAs, to employers of all sizes.
About Nexben
Nexben is a financial technology company that makes defined contribution health benefits simple, seamless, and powerful. Connect with us to learn how partnering with Nexben can help you deliver smarter, more cost-controlled solutions to your clients.