Hudson Reporter Archive

Defining What ‘Defined Contributions’ Means For Work-Based Health Insurance

Recently a Washington Post article http://www.washingtonpost.com asked: ”What if employers started giving workers a chunk of cash to buy health insurance on their own instead of offering them a chance to buy into the company plan? Are workers ready to manage their own health insurance like they do their 401(k)?”
“The idea that employers might decide to drop their health plans and replace them with a “defined contribution” for employees has been around for years. It’s one way for employers to control their expenses in the face of relentlessly rising health care costs. Now that the health law has created new online marketplaces where people can shop for coverage and made the individual market more accessible and affordable, the idea is gaining traction.”
“Rather than abandoning group coverage altogether, some experts expect employers to move more assertively into a slightly different health insurance benefit setup: private health insurance exchanges. These online marketplaces, which got their start several years ago as a way to transition retirees from company plans to Medicare, are increasingly being offered to active employees.
“Once employers have selected a private exchange for their workers, many employers give employees a set dollar amount — a defined contribution –to shop among sometimes dozens of health plans offered by different insurers. The employer may limit the plan choices available to employees, and typically subsidizes a portion of the premium. Since the employer is sponsoring the coverage for the group workers don’t owe income tax on the contributions they receive.”
“Employers, meanwhile, get what they want: predictable health care costs. With a defined contribution arrangement, “the employer can increase or decrease the amount over time depending on business needs,”…..
*to read the full Washington Post article “Defining What ‘Defined Contributions’ Means For Work-Based Health Insurance” by Michelle Andrews, highlight and click on open hyperlink http://www.washingtonpost.com/national/health-science/defining-what-defined-contributions-means-for-work-based-health-insurance/2014/05/13/a963ae06-da7e-11e3-a837-8835df6c12c4_story.html

Doctor, Did You Wash Your Hands? ™ provides information to consumers on understanding, managing and navigating health care options.
Jonathan M. Metsch, Dr.P.H., is Clinical Professor, Preventive Medicine, Icahn School of Medicine at Mount Sinai; and Adjunct Professor, Baruch College ( C.U.N.Y.), Rutgers School of Public Health, and Rutgers School of Public Affairs and Administration.
This blog shares general information about understanding and navigating the health care system. For specific medical advice about your own problems, issues and options talk to your personal physician.

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