We believe that it is! The answer is Defined Contribution (Def-Con)! How's it work? Read on!
Working together, the Company CFO, the Company HR Team, and the Broker(s) can develop a Def-Con Plan specific to the Company's financial capacities and the needs of the Employees. We're not talking a Defined Contribution for Retirement Planning. We're talking about a Defined Contribution Plan Design for Health, Life, Voluntary, and Ancillary Benefits!
What is a Def-Con Plan for Health, Life, Voluntary, and Ancillary Benefits? Def-Con in this context is a Plan Design that establishes a one-time annual company-funded FIXED amount of dollars (within non-discrimination guidelines) – broken down monthly and allocated to each Employee. The Benefit Dollar/Credits may be spent on a Company/Broker(
1. The Company CFO enjoys a controlled budgetary line item cost for the entire Company Benefit Package for an entire year. The cost is not subject to arbitrary premium increases—although most companies annually adjust the Employee allocation to help manage upward inflation costs.
2. The Company HR Department works with the Broker(s), most often with Employee input, to develop a menu of Health, Life, Voluntary, and Ancillary Benefits from which to individually select.
3. Should the Employee choose Plans, Programs, or Services for risk protection for his/her family from the menu of benefits which exceed the Employer's dollar contribution, the Employee contributes the balance out-of-pocket through payroll deduction to meet their needs.
4. The Benefit Dollar/Credits allocated and utilized by the Employees remains deductible for the Employer and for qualified benefits the Employee can pre-tax the premium.
In sum, take a look below at the overall balance sheet comparing a Defined Contribution Plan to conventional Employer Plans. Which makes most sense to you?
Defined Contribution Plan Design's Effect on Management and Staff
1) Fixed Cost / Happy CFO
2) Menu of Benefits chosen as a Team by HR, Broker, with Employee input to create a company competitive edge attracting and retaining talented, productive Employees.
Happy HR, Broker, and Employee Team operating with mutual respect during and after enrollment and contributing to a better company bottom line.
3) HR works with Broker and Enrollment Team to strategically educate, communicate, empower and enroll Employees with respect to the best risk protection and affordable costs for their families.
4) Happy HR, Broker, Employee group, and CFO. Efficient enrollment saves company time and HR duplication while reducing Employee stress with respect to protecting his/her family risk. The result? Employees come to work feeling appreciated, willing and able to work most productively without worry.
5) Employees make cost-conscious, consumer-driven benefit service decisions with respect to the health care services for their families resulting in stabilized or lower annual premium percentage increases. Less Emergency Room visits for routine procedures!
6) Happy Employees and CFO. The Teamwork approach to menu selection, education, enrollment, and a fixed, dependable Employer dollar contribution creates a culture of mutual respect leading to higher Employee productivity and Company profits with a more balanced overhead factor.
Traditional Plan Design Effect on Management and Staff
1) Ever-growing Costs / Anxious CFO
2) Menu may not meet risk protection concerns of Employees;
Hassled HR and Broker during and after enrollment; with reduced productivity;
3) Haphazard education, communication, and enrollment strategies instituted by HR with minimal help from the Broker does not create an informed, empowered employee able to best protect his/her family risk.
4) Hassled CFO and HR. Poorly designed education, communication, and enrollment strategies don't support an appreciated Employee workforce; productivity is not maintained at strong levels and profits are eroded by overhead costs.
5) Uninformed or misinformed Employees don't manage their health care service needs in the most cost-conscious ways; the annual premium percentage increases for the health care premiums is most likely to increase each year.
6) Disgruntled Employees and CFO. The imposed menu design, haphazard education opportunities, inadequate support for the actual enrollment process, and an imposed cost-sharing obligation with little choice to meet family risk needs creates a mistrusting, unappreciated workforce reducing productivity and a top-heavy overhead burden.
Defined Contribution may not be the answer to all your Benefit Blues. But it may be worth serious consideration to ameliorate a good many of those blues. Make Employee Benefits a Financial Decisions while Empowering Employees to be Better Consumers!
What's In it For You? The promise of a productive start to a new Benefit Strategy and Design with the capacity to reduced costs while increasing productivity and profits. You can control the effects of a skyrocketing Employee Benefit overhead with little but aggravation to recommend it!!
Contributed by Maxine Collin
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