More Employers Eye Defined Contribution

With the full implementation of the Affordable Care Act coming 2015, many employers are looking into defined contribution health plan models, according to a report by Prudential. Forty-seven percent of employers say they are moving or have moved to a defined contribution model. The top two reasons are to lower health care costs and offer employees more choice (59% and 40%, respectively). Employees say they would allot 75% of benefit dollars to health, dental, and vision coverage, leaving 25% for other coverage, such as voluntary life, disability, accident, and critical illness insurance. Forty-two percent of brokers say that the shift to defined contribution plans will lead to an increase in voluntary sales. Brokers say that increased choice will be the biggest boost to voluntary sales in the next five years while the biggest detriment will be employees not fully recognizing their financial needs. “While employers struggle to fund increasing health care costs and more look to shift to defined contribution plans, employees will realize a higher level of choice…Carriers and brokers have an opportunity to ramp up employee awareness and educational efforts in order to help ensure employees fully appreciate the value of the voluntary benefits available to them,” said Jim Gemus, senior vice president of Products for Prudential Group Insurance. For more information, visit

Last Updated 08/10/2022

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