Smart Benefits: Enhanced Defined Contribution Health Plans

Group health insurance has traditionally been “the way” to provide health benefits to employees. Today, group health insurance is often a source of frustration because of declining benefits and increased costs. As a result, defined contribution and individual health insurance solutions are being adopted by many businesses as an alternative to traditional employer health benefit plans.

With defined contribution health benefit plans, allowances are set by the employer, so there are no minimum or maximum contribution requirements. And when defined contribution plans are paired with a reimbursement strategy for employee individual health insurance premiums, a creative alternative to group health insurance for small businesses and nonprofits, as well as for some larger organizations, is now available.

These Section 105 medical reimbursement plans (appropriately designed to comply with the market reform requirements of the ACA) are starting to gain attention because they:

  1. Help employers realize significant savings as compared to the costs of offering traditional group health insurance.

  2. Are easier to implement and administer than traditional group health insurance.

  3. Facilitate employee access to the benefits of the individual health insurance market including lower costs, choice, and portability.

As important as the trends toward defined contribution, consumer-directed health, and individual health insurance are -- and make no mistake in my view these solutions are the future of health care and health insurance -- they are still only part of the total solution for consumering health care. If we only focus on how to structure the financing of health insurance we will have a temporary solution to the rising costs of health care. In a few short years, as employees are faced with continuing health care inflation, the pressure to raise defined contribution amounts will increase and we will be right back to trying to figure out how to shift the costs of health care around again.

That's were Smart Benefits come in.

Smart Benefits are employer funded defined contribution health plans that also include a health engagement component that ties premium allowances to activities that are proven to stabilize health care costs:

  • A focus on completing important preventive screenings and exams

  • Awareness and understanding of emerging or prospective health risks

  • Monitoring of lifestyle habits like activity, weight, and blood pressure that contribute to lifestyle diseases such as obesity, diabetes, heart disease and more.

As an example, if a employer sponsored premium reimbursement plan offered employess up to $250 per month in allowances, a Smart Benefits approach would offer perhaps $350 per month in allowances when the employee demonstrates that they are current with their preventive screenings and are monitoring their risks and lifestyle habits.

At DHI we have combined all of these capabilities into a simple mobile app available on iOS and Android devices. The HealthJibe app leverages a personalized preventive care plan, automated metabolic syndrome lab testing through LabCorp Patient Service Centers, and the leading wearable health and fitness trackers, as a well as a network of retail health kiosks, to make it simple for employees to easily stay on top of prevention, risks, and habits. And of course, they can also submit premium and preventive care reimbursement requests from HealthJibe as well.

In the end, solving the health care crisis in this country is all about health care consumerism. Smart Benefits, which combine modern financial structures for purchasing health insurance with consumer health engagement, will help employees become smart healthcare consumers.

And as proven time and again, the American consumer, when provided with the right information, is the most powerful force there is in lowering costs in any industry. It can work in health care too.

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