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Small Business Employee Benefits and HR Blog

When Should We Transition to Defined Contribution Healthcare? [Worksheet]

As the cost of traditional group health insurance becomes unsustainable for businesses and employees, more and more small and medium sized businesses are canceling their group health plan and transitioning to "pure" defined contribution healthcare.when_to_transition_to_defined_contribution

This article provides tips for assessing when your business is ready to transition to defined contribution healthcare.

Unfamiliar with defined contribution healthcare? See this overview.

Assessing When to Transition to Defined Contribution Healthcare

This worksheet will help you assess readiness for defined contribution. If you answer yes to all (or several) of these questions, transitioning to defined contribution now could be a good fit. This worksheet is from our new eBook "Planning for the Transition to Defined Contribution Healthcare" (free download here).

General Questions

Does your company have 1 or more employee(s)? 

Defined contribution healthcare works for companies of any size.

Do you want to offer health benefits and contribute toward employees’ healthcare?

If you want to contribute any amount to employees’ health care, you can afford defined contribution healthcare.

Are you looking to grow your company and increase or maintain staff size?

Defined contribution can help you recruit and retain quality employees.

If You Do Not Currently Offer Health Benefits… (if you currently offer benefits, skip to the next section)

Do you worry about losing employees because you don’t offer health benefits?

Defined contribution is a formal benefits package that helps retain talent.

Do you fear losing new hires because you don’t offer health benefits?

Defined contribution is a formal benefits package that helps recruit new hires.

Have you shopped for group health insurance before but found it is too expensive, or that you don’t qualify?

Defined contribution allows you to set and control the cost, and there are no minimum participation requirements.

Do you have an automated payroll system (payroll software, or through a payroll vendor)?

Defined contribution integrates with your existing payroll system.

If Currently Offer Health Benefits… 

Is your group health insurance becoming too expensive, or did your annual renewal increase 20+%, again?

Defined contribution allows you to set and control the cost, and there are no renewal fees/increases.

Have you had to decrease health benefits year after year, instead of increase them?

Individual health plans cost less than group health plans, so your health benefits dollars go further with defined contribution.

Can you no longer meet minimum participation requirements?

There are no minimum participation requirements with defined contribution.

Do you have employees in multiple states?

Defined contribution works well with employees in one state, or with employees located in multiple states.

See these related articles on planning for defined contribution healthcare:


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