30 Second Insurance Tips©

Tip 180- “Elegant Cost Shifting”

The buzz in the benefits industry – at least amongst some – is the defined contribution approach to health insurance.

This is where the employer sets a dollar limit on what it will contribute toward benefits. And then, employees are sent to a Private Exchange to buy their own health, dental, vision, life & disability coverage.

The thinking is, an employer setting a monthly contribution at $500, for example, can more easily budget annual increases of 2%, instead of unpredictable health insurance premium trends of 9-13% (or more).

Think about that a minute (on your clock, not my ’30 Seconds’).

Kaiser Family Foundation surveys show the average single premium for health insurance is about $485/month. Inflate that number by 9% over ten years. Compare the result ($1,053) to increasing a $500/month defined contribution by 2% over the same time ($597).

At a recent forum, the speaker called this “elegant cost shifting.”
Without controls on the underlying cost of health care, I’d use a different adjective!