Healthcare costs in the US are growing at an unsustainable rate. According to the US Gross Domestic Product (GDP) report, in 2010 US health expenses were approximately $2.6 trillion and projected to grow at a compounded rate of 5.8 percent per year, reaching $4.6 trillion by 2020. For many decades, health insurance has been a common benefit offered by US employers, who have borne the majority of health plan premium costs for their employees. However, with premium costs steadily increasing, many employers are adopting high deductible health plan types – designed to lower their own costs by shifting more financial responsibility to the employee.
Defined contribution takes this this trend a step further by also giving employees greater responsibility for selecting and funding the plan design that is right for them. In a defined contribution model, the employer designates a specific monetary contribution toward health benefits, and the employee chooses from a wide variety of plan types (via a private exchange) – including options to pay higher premiums for richer benefits or lower premiums for higher deductible plans.
With healthcare reform and the resulting interest in public and private exchanges, adoption of defined contribution health benefit programs is expected to grow significantly in coming years. According to the 2012 Employer Health Plan Study by J.D. Power and Associates, 47 percent of employers say the “definitely will “or “probably will” switch to defined contribution healthcare.
“It’s clear that the employer-sponsored health benefits market is moving in the direction of defined contribution – similar to the shift that previously occurred in retirement benefits, from pensions to defined contribution 401K programs,” said Tom Torre, CEO, Alegeus. “Alegeus is well-positioned to support this market shift with its integrated defined contribution and private exchange platform, called WealthCare Marketplace.”
Alegeus is the market leader in consumer directed healthcare solutions, offering the industry’s most comprehensive platform for the administration of healthcare benefit accounts (including FSAs, HSAs, HRAs, wellness incentive, dependent care, and commuter accounts), the industry’s most widely-used benefit debit card, and powerful engagement solutions to help consumers maximize savings and optimize spending for their healthcare. Over 350 clients – including health insurance plans and third party administrators – leverage Alegeus’ deep expertise and proven technology to administer benefit accounts for more than 30 million members and process more than $9.1 billion in consumer healthcare payments annually. As the healthcare and benefit markets continue to evolve, Alegeus delivers solutions that enable clients to evolve their service offerings, operate their businesses more efficiently, and focus on their customers. The company is headquartered in Waltham, MA with operations in Orlando, FL and Milwaukee, WI.