Survey Says: 42% of employers find defined contribution plans appealing

For many employers, health benefits and their costs are the proverbial rock and a hard place.

Most want to continue offering health benefits to their employees. But they’re struggling with rising health costs. Many realize they might need to consider a different approach to financing and implementing employee health benefits (e.g., defined contribution models) to dislodge themselves from this predicament.

These are some of the key takeaways from an online survey of 329 benefit decision makers at Michigan companies that offer health insurance to 25 or more employees. Notable survey highlights included:

  • Roughly 80% of respondents believed health benefits are important to employee morale, recruitment and retention; 71% felt morally obligated to offer these to their workforce.
  • On the other hand, as a result of mounting costs and pending health reform regulations:
    • One in five employers has considered dropping employee benefits altogether.
    • 42% say it is highly likely they will make a major change in employee benefits in 2014.
  • 42% with a defined benefit plan feel that defined contribution plans could be an appealing way to finance benefits; about one-third said their companies would definitely or probably consider switching to a defined contribution model within the next few years.

The survey respondents’ interest in defined contribution plans reflects a growing national trend among employers looking for ways to control their costs. Such plans enable employers to set aside a fixed-dollar amount (defined contribution) for each employee (or retiree), which they can use to buy their health insurance. According to another survey of 2,809 employers by benefits consultant Mercer, 45% were either using or are considering a defined contribution approach.

What should you do about your employees’ benefits plan? How will healthcare reform impact your business? What do you need to know to make good choices for your business and employees?

The purpose of this new blog content is to give employers practical information to help you answer these and other questions. Our intent is to keep you well-informed so you can find your own path to a health benefits plan that fits your business strategy, employee mix and preferences, and budget.

Do you have any questions about health reform or employee benefits? Any particular topic you’d like to see covered in this blog? Just let us know and we’ll get right on it.



Rising benefit costs is a challenge for all companies. GlidePath, a new solution from Blue Cross Blue Shield of Michigan and Blue Care Network, offers your mid-size company an innovative way to manage spending and risk. It can transform the way you finance your company’s health insurance coverage. With GlidePath’s defined-contribution solution, you can determine your company’s health benefit budget and simplify the administrative work that goes along with offering health benefits.

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