The End of Employer-Provided Health Insurance: Why It's Good for You and Your Company

Chapter 17How to Communicate Defined Contribution to Employees

When your company makes the transition to defined contribution healthcare, the change should be fully supported by employees. If your company does not properly communicate the advantages of individual health insurance and the financial benefits of your new defined contribution program, employees may incorrectly view the change as a benefit reduction. It is hard to blame employees—after all, most businesses have been reducing employee health benefits every year since 1999. As you transition to defined contribution, you are setting the foundation for a new approach to health benefits—one your employees should welcome. If you successfully communicate the benefits of individual health insurance to your employees, they will fully appreciate the new benefit your company is providing and they will know exactly how much your company contributes toward their healthcare.

Communicate Early and Frequently

The first reaction any employee will have when you tell them your company is canceling employer-provided health insurance is panic. Therefore, it is vital for your company to be prepared to address all concerns quickly and transparently. During your initial communication, your company should make it clear you are not cutting health benefits; instead you are giving them access to better benefits by implementing a defined contribution program for individual health insurance plans that will lower costs for everyone.

The vast ...