Defined contribution employer health benefit trend advances
Last week saw developments in both the large and small group markets signifying advancement of defined contribution employer health benefits. As the term implies, rather than selecting one or more health plans for employees and deciding on deductibles, co-pays, co-insurance and dependent coverage, under a defined contribution system an employer offers employees a fixed dollar amount to be applied toward health coverage. Employees then “buy up” or “buy down” depending on the scope of health coverage they prefer.
The Wall Street Journal reported Sears Holdings Corp. and Darden Restaurants Inc. are adopting the scheme. At the same time, Aon Hewitt announced the imminent rollout of its “corporate health exchange” that it says will offer a broader array of health, dental and vision benefits options than a traditional employer-sponsored plan. According to the firm, benefits will be offered by nine national and regional carriers, including UnitedHealthcare, Cigna and Health Care Service Corporation. According to the WSJ, Sears and Darden Restaurants will use the Aon Hewitt-administered corporate exchange, which will offer five different coverage levels. (Public exchanges that will begin selling coverage in 2014 can also offer five coverage levels based on the actuarial plan value)
Meanwhile, in the small employer market, the Pittsburgh Post-Gazette reports United HealthCare is launching a defined contribution product in the Pittsburgh market. United’s Multi-Choice allows employers with 50 or fewer workers to select any number of plans among 30 separate options, from high-deductible to full-coverage plans.