Health Benefits - reducing your risk

Health Spending Account

Defined Contribution vs. Defined Benefit

Good health care is a relative concept that can not be universally agreed upon.

Defined benefit plans use specific definitions and limitations to avoid over-utilization. Costs are controlled through deductibles, specific definitions of covered services, limits and numerous exclusions.

Change the focus from reimbursing specified medical and dental services, to reimbursing any product or service, permitted by law, up to a certain maximum. This will allow staff to make personal health care decisions when they make purchases with their limited resources.

New Paradigm

A health spending account promotes a positive change in attitude whereby:

employees scrutinize expenditures and make individual cost-benefit decisions.
claim adjudicators pay all claims permissible by law.
the employer controls the funding level and is not the victim of inflation and over-utilization.

Claims Control

Instead of the plan sponsor deciding how to allocate limited resources by dictating what level of health care will be covered, the employee decides.

Cost Increases

The plan sponsor decides the cost of the benefits by adjusting the funding formula. The double digit cost increase of the past two decades can become history.

Discrimination

Does marital status and number of dependents have any impact on your pay scale? If not, then base the funding schedule on a rate per employee or percentage of income. Traditional plans cost two to three times as much for employees with dependents compared to those without.

Another important feature of a defined contribution plan is that all employees can be treated equally, without discrimination based on dependent status.

Health Spending Account