Choosing a Contribution Strategy for a Client's Health Benefits

Purpose

The contribution strategy decides how each health premium is split between your client and its employees. It is the single biggest driver of what the employer spends and of the deduction each employee sees on their paycheck. You set it on the contribution page while building a proposal. This article explains the three strategies, how each treats dependents, and when to use which.

Who can do this: the client's broker, their agency, and account managers linked to that broker.

Pick a strategy

% or $ on Benefits

The employer pays a percentage or a dollar amount toward each premium. If you set both, UZIO uses whichever gives the lower employer amount. Example: a $100 premium, with 50% and a $100 cap both set. 50% is $50, which is lower than $100, so the employer pays $50.

The employer's share rises with the premium:

Reference Plan

You mark one plan in the package as the reference plan and fix the contribution for it. On the contribution page, Contribution By sets whose share you fix: the employer's (for example, the employer pays 50% of the reference plan) or the employee's (for example, the employee pays a flat amount for employee-only coverage on the reference plan, and the employer covers the rest). The contribution can be a percentage or a flat dollar amount.

The checkbox "Select to choose a reference plan for contribution calculation" decides what happens on the other plans:

• Selected: on any other plan (a buy-up), the employer pays the same amount it pays for the reference plan. The employee pays everything above that.
• Not selected: every plan is split by the same percentage or dollar rule, the same way as the reference plan.

With the checkbox selected, the same four plans look like this when Plan A is the reference plan at 50%:

Different reference plans per class. Add the plan to the cart on the plan listing page, then select the classes for which it is the reference plan. Each class can have its own.

Employee Fixed $ Cap

You set the most the employee pays. Example: a $200 cap on a $300 employee-only premium means the employer pays $100. If final rates come in higher than expected, the employee's amount does not change; the employer absorbs the difference. If the cap equals or exceeds the premium, the employer pays nothing.

Dependent Portion or By Entire Tier

After choosing the strategy, choose how it applies to family coverage:

• Dependent Portion: one amount or percentage for the employee's own portion of the premium and a separate one for the dependents' portion. Use it when the client pays generously for employees but less for families.
• By Entire Tier: one amount or percentage applied to the whole premium of each coverage tier.

You can refine the strategy by class, so full-time and part-time employees can have different splits.

Check before you share

• The cart shows the default employer contribution for each plan as you add it. Adjust with Refine contribution values and save with Update in Cart.
• The actual amount for each employee depends on their tier, age (for age-banded plans), and class. Check a few real employees from the census on the review page, not just the plan totals.

What your client sees

Your client sees the contribution split in their proposal, and, if they run payroll in UZIO, it becomes the benefit deduction and employer contribution on each employee's payroll record. See Viewing Your Benefit Proposals and, for payroll mechanics, Setting Up Company Level Contributions. Employees see their cost per paycheck in Understanding Your Coverage and Costs.

Common problems

The employer contribution shows $0.00. Under Employee Fixed $ Cap, the employee caps meet or exceed the premium, so nothing is left for the employer. Lower the caps.

An employee on a buy-up plan pays less than I expected. The reference-plan checkbox is probably not selected, so the buy-up plan is being split by the same percentage instead of at the reference plan's fixed amount. Edit the contribution and select the checkbox.

One class should use a different reference plan. Designate the reference plan per class from the plan listing page. See Reference Plan.

Related articles

• Building a Benefits Proposal and Sharing It With Your Client
• Creating and Managing Benefit Classes for a Client
• Changing a Proposal After It Has Been Shared
• Your client's view: Viewing Your Benefit Proposals