Employers are required to make a contribution to the health insurance premium

With hybrid financing, the employer has ability to make BOTH a defined benefit (e.g., a percent of plan premium) AND a defined contribution (e.g., a cash contribution).

  1. Defined Benefit: Employer designates the low-cost HSA qualified health plan as the “default plan,” and then bases employer contribution on this plan. Employer pays 50% to 100% of the default HSA-Qualified HDHP. Making this the default plan will encourage employees to learn about this plan in order to make a good choice of health plans.
  1. Defined Contribution: Employer who wants to offer richer benefits can optionally provide defined monthly cash contribution in addition to the defined benefit. For example, $50/month or $100/month. Employee can deposit this cash into a health savings account, or use to pay the additional premium for a plan with a low deductible and low office visit and prescription copays. Because employees can elect how to use this cash contribution, this health insurance strategy can be called “Employee Directed Health Plan.”
  1. Optional Strategy: If employer already offers several traditional plans, employer can keep current defined benefit or contribution for traditional plans. Since the consumer directed health plan has both an insurance plan and a savings plan, employer can make a defined benefit contribution (e.g. 50% to 100% of HDHP) and a defined HSA contribution (e.g., $50 to $100/month).

Employers – Learn more about employer/employee shared costs!

Continue to – ACTION 3 – “Employees Choose”