Building Your Defined Contribution
The Component Parts
5 Strategies for Success - 2014 & Beyond
Solutions For PPACA/Obamacare!
What is a Defined Contribution(DC) Plan Design? Defined Contribution (DC) - as we are defining it - is a refined and updated version of what was once referred to as a "Full Flex" Cafeteria Plan and works for Small, Medium, and Large Employer Groups. As we will explain, DC integrates a Credit/Dollar Allocation System utilizing Traditional Health Plans, CDHPs, HDHPs, HRAs, HSAs, Section 125 and other IRS Codes Beneficial to the Employers, Employees, Brokers and Carriers creating Efficiencies and Cost-Savings!
Advantages of a DC Plan Design! Especially when presented on a Private
Exchange Platform - DC Plans provide Brokers and Employers many Opportunities,
Capabilities, Efficiencies, and Cost Containment Strategies unavailable in the past.
> Budgeting the Employee Benefit Costs - The Employers CFO and Financial
Managers are empowered to budget year-by-year the Organization's contribution
to the Employee Benefit Plan. DC gives the Employer the opportunity to budget
and forecast on a longer term basis. Credits/Benefit Dollars are allocated to the
Employees by classification without discrimination and placed in a Benefit Bank.
The Credits/Benefit Dollars can then be utilized by the Employees and their Families
to meet specific Risk Coverage needs. When the Credits/Benefit Dollars have been utilized, additional
costs are out-of-pocket for the Employee.
> Reduced Complexity in the Benefit Decision-Making Process - The Broker - working with the Employer's Management and HR Department - no longer selects the Employee's and their Family's Benefits. Instead, the Broker builds a Menu of Benefits to offer the Employees to assist in meeting their specific Needs and Price Points.
> Increased Flexibility - Credit/Benefit Dollar Allocation Strategies - Credit strategies allow the Broker and Employer to not only assign the Credit/Benefit Dollars to specific types of Benefits by category, ie. Health Plans, Dental, Vision, Disability, Voluntary/Worksite, etc. but also to allocate Credit Prices to specific Competitive Plans. When Credit Pricing is utilized, the Broker and Employer can Price Up or Down the Employee's cost of one Plan compared to another, ie. a Self Funded Plan compared to a Fully Insured Plan; HSA/HDHP compared to a lower deductible choice; Valuing participation in Wellness Plans.
> Increased Benefit Choices - The Broker is positioned to be the Trusted Advisor assisting the Employer's benefits decision-makers in building a Menu-of-Benefits - Core, Voluntary/Worksite, and Ancillary. The choices should include the opportunity for Employee's to pre-tax qualified plans under Section 125 and to participate in Reimbursement Accounts, ie. Medical/Health, Dependent Care, and Transportation/Parking saving both the Employees and Employers tax dollars.
> HR Departments Save Time - The managers are freed-up to focus on Hiring, Training, and Retaining Employees instead of the laborious process of Pricing and Selecting Benefits.
> Employee Appreciation & Participation - Employees appreciate Choice and the opportunity to better meet their Individual and Family needs. Better utilization of Invested Benefit Dollars provides for Peace-of-Mind and Greater Coverage from Risk!
> A Pro-Active Compared to a Reactive Approach to Benefits - Brokers, Employers, and Employees are positioned to control their contribution to the Employee Benefits Decision-making Processes that include Time, Effort, and Dollars.
2014 & Beyond For Brokers and Employers offering Employee Benefits can be confusing and threatening in the face of the Disruptive Changes introduced by PPACA/Obamacare! While the Private Exchange marketplaces are new, Defined Contribution(DC) Plan Designs are a proven opportunity to reduce the Time and Cost of Employeee Benefits.
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