Imagine a world where offering health benefits feels exciting, empowering, and full of possibilities—for you, as the broker, and your employer clients. It might sound too good to be true, but it’s exactly what defined contribution health plans promise.
Instead of the annual headache of helping your clients navigate rising premiums and limited options, defined contribution health plans, offered via Individual Coverage Health Reimbursement Arrangements (ICHRAs), provide you with a whole new way to serve your clients with creativity and care—while helping you diversify revenue stream and keep your business competitive in this changing market.
With these plans, employers give employees a set amount of money each month. Employees then use those funds to choose individual coverage that fits their needs—a refreshing change from traditional, one-size-fits-all, traditional group plans.
Before we paint a picture of how defined contribution health plans can transform health benefits for you and your clients, let’s take a step back to explore how we got here.
What’s driving the shift to defined contribution health plans?
Employers have been frustrated with group health plans for years. Costs continue to rise at steep and unpredictable rates, the one-size-fits-all structure zaps any chance of employee choice, and meaningful options for part-time, contract, seasonal, and distributed workforces are nearly impossible to offer. To top it off, traditional group plans are a headache to manage.
In many ways, these challenges mirror those employers faced with pension plans before 401(k)s became the norm: high costs, administrative headaches, a mobile workforce wanting portability and control, and new government regulations that made 401(k)s preferable.
As a result, 401(k) plans solved retirement plan challenges and drove pension plans out of most benefits packages. We now see this exact story repeating itself in the health insurance market.
Similarly, defined contribution health plans are solving today’s group health plan challenges because they:
- Result in predictable costs and stronger benefits. Employers love the ability to set a predictable healthcare budget while still delivering meaningful health benefits. It’s a win-win: cost control for businesses and value for employees.
- Are backed by bipartisan support. With new legislation making these plans more affordable, tax-advantaged, and ACA-compliant, they’re a smart and sustainable choice for employers of all sizes.
- Empower employee choice. Employees get to choose health coverage that fits their lives—no more one-size-fits-all plans. It’s about empowering people with options and eliminating the guesswork for employers.
- Work for modern, distributed workforces. Research predicts the “gig economy” market size to triple from 2024 to 2032. The ability to offer strong and portable benefits to part-time, seasonal, contract, and remote employees helps companies meet the needs of a changing workforce.
Just like 401(k) plans revolutionized retirement benefits, defined contribution health plans do the same for health insurance—offering flexibility, controlled costs, and greater choice. This shift gives brokers a powerful chance to strengthen client relationships by introducing a smarter solution for both businesses and their employees. It shows you’re not just meeting needs—you’re anticipating them.
Help your clients thrive with health benefits that work for everyone
How defined contribution health plans work
Fortunately, it’s simple.
Employers start by offering an ICHRA plan (with your help), setting monthly contribution allowances for employees, and then letting employees take the reins. Employees then use these funds to purchase individual health insurance that fits their unique needs.
It’s no longer about forcing everyone into a single plan—it’s about offering freedom, choice, and a sense of ownership over health benefits.
Employers can also use defined contributions to fund additional benefits like dental, vision, life insurance, and other non-insurance products. Doing so sweetens their benefits package in a way that’s both appealing to employees and affordable for the business.
The biggest hurdle for defined contribution health plans used to be how difficult it was to manage contributions. But now, with Nexben’s payment solution, employers pay one simple invoice, and we take care of the rest—seamlessly distributing funds across all plans, no matter how many insurance carriers employees choose.
Here’s a quick look at how defined contribution health plans stack up against traditional group plans:
Why now’s the time to embrace defined contribution health plans
Defined contribution health plans are a modern, flexible alternative to traditional group health plans. They’re gaining momentum—and for good reason.
As a broker, we know navigating this change is frustrating when you’ve built your career designing the best group health plans for clients. But the brokers who adapt quickly will thrive. We recommend you learn more about defined contribution health plans, identify clients who could benefit most, and find a partner to help you streamline the process.
Because on the other side of this change is the joy of choice and control—for you, your clients, and their employees.
With defined contribution health plans, employees gain the freedom to choose coverage that fits their lives. Employers enjoy peace of mind with controlled, predictable costs—and the ability to offer their teams the choices they deserve. And for you, it’s an opportunity to open new doors for your clients, offering solutions that help their businesses and teams thrive. Which will help yours thrive, too.
The future of health benefits is here. Help your clients take control with Nexben’s payment solution.
About Nexben
Nexben is a financial technology company that makes it easy for health insurance brokers and distribution partners to offer defined contribution health plans while avoiding the pitfalls of traditional ICHRA models. Get in touch if you’d like to learn more about how offering Nexben solutions can help you deliver the best options to your employer clients and their employees.