Defined Contribution in Health Insurance

 

Many in the health insurance and employee benefits space are claiming to have found the next new, innovative and sure fire way to reduce health insurance costs.  Actually its an old idea, originally deployed in the retirement/pension area of the overall employee benefits palette, and fairly recently resurrected for use in employer provided health insurance.  The next "silver bullet"?

DEFINED CONTRIBUTION

(Remember 401(k)s gradual replacement of many defined benefit retirement pension plans in the eighties?)
Two large, well known U.S. businesses recently announced their intent to go with a defined contribution strategy for their health insurance offering (Time Magazine and Hilton Worldwide), joining others previously taking the plunge including Darden Restaurants, Sears, and Walgreens.  So what are the pros and cons to such an approach?  What is it exactly?  How does an employer deploy it?

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