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Small Business Employee Benefits and HR Blog

Quiz - Are You an Ideal Fit for Defined Contribution?

Defined_contribution_quiz

Because traditional group health insurance costs have been on the rise for well over a decade now, small business owners have turned to new, affordable options -- one being Defined Contribution (also known as a Defined Contribution Health Plan). To see if your small business is a good fit for Defined Contribution, we’ve put together a quiz. After completing the quiz, keep reading for additional resources based on your results.

Quiz - Are You an Ideal Fit for Defined Contribution?

Defined Contribution Resources for Your Small Business

If your small business is an ideal candidate for Defined Contribution, you’ll need to better understand what, exactly, Defined Contribution is. The general strategy of a Defined Contribution Health Plan is that:

  1. The employer implements a Section 105 Medical Reimbursement Plan to give each employee a fixed monthly healthcare allowance to spend on an individual health plan.

  1. Employees select and purchase the individual or family health plan of their choice. Employees may purchase their own policy directly from any health insurance company, through a broker, or from the state Health Insurance Marketplaces.

  1. The employer reimburses employees up to the amount of their Defined Contribution allowance.

Defined Contribution Health Plans by themselves are not health insurance plans. Defined Contribution plans give the employer control of benefits, while giving employees choice and a great benefit. Defined Contribution benefits include:

  • No minimum contribution. The business determines its own contribution amounts and controls all costs.

  • No minimum participation. The business sets its own eligibility requirements.

  • Easy administration. Business owner spends less than five minutes per month, and no annual renewals.

What’s Next?

You’ve come to the conclusion that a Defined Contribution Health Plan is for your small business, but where do you go from here? You can get started by diving into more detail on Defined Contribution Health Plans by downloading our eBook “Defined Contribution Health Benefits for Small Business” or by reading our other great resources.

Conclusion

Defined Contribution is an alternative to traditional group health insurance for small businesses. Many small business owners use Defined Contribution as a way to provide their employees with affordable health benefits, save time, and also save the business money. We hope our quiz and resources help you decide if Defined Contribution is right for your small business. 

What questions do you have about Defined Contribution? Comment below and let us know!

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