- 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.
- 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.
- 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.
- 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.
Defined Contribution Plan Design
Effect on Management and Staff
|Fixed Cost||Happy CFO|
|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.|
|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.||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.|
|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!||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
|Ever-growing Costs||Anxious CFO|
|Menu may not meet risk protection concerns of Employees; therefore benefit package is less competitive and company productivity can be less.||Hassled HR and Broker during and after enrollment; with reduced productivity; and CFO not seeing profits commensurate with overhead.|
|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.||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. HR deals with uninformed and misinformed Employees with little mutual satisfaction.|
|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.||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.|