Risk Sharing with Employees

Defined Health Benefits (Insurance)

The plan sponsor identifies what services will be reimbursed to what extent. Employees are reimbursed (or service provider paid) for services performed. Employers accept the financial risk but use coinsurance and maximums discourage employees from overspending. Insuring large or infrequent claims facilitates budgeting.

Defined Contribution (Health Spending Account)

The plan sponsor sets an annual health budget for employees to use any way they choose (within the law). Employees accept the financial risk. Preventive care and wise purchasing can result in savings that can be spent by the employee on other health services.

The employer can administer the plan by paying claims or out-source the administration to a third party. The latter is most common in order to maintain confidentiality of medical information and take advantage of economies of scale.

Unfortunately only unlimited drug coverage is legal in Quebec.