This weeks meeting with affiliates included - Vesta Worksite, Vesta h&l, and Vesta p&c!  We continued our discussion about Def-Con (also known a "Benefit Credit Plan" and a benefits related "Defined Contribution Plan".

Several individuals had contacted us by email and on Linkedin commenting that Def-Con Plans were similar to, if not the same as, traditional Cafeteria Plans".  This was a topic we had discussed at the "Think Tank" we co-sponsored  in Philadelphia during the 1990s.

We concluded at that time that the similarities, differences, and confusion about Def-Con vs Cafeteria Plans  came from the individual's age, experience and semantics.

• Age - Many of us who had been in the Employee Benefits Market for a number of years referred back to a time when larger organizations, working with their Brokers and Consultants, experimented  with offering Employees "Credit/Dollars" to spend selecting from a  limited number of  "Benefit Choices" offered by the Employer.  Employees were often given an opportunity to "Opt-Out" of the Employer's Benefit Plan and receive a "Dollar Amount".  In many ways this form of a Cafeteria Plan is similar to the modern version of a Def-Con Plan without the cash "Opt-out".  
• Experience (1)  In the late 1980s, and gaining traction in the 1990s, "Payroll Deducted" Benefit Plans became more available and popular.  These plans were generally introduced to Employers by quasi-captive agents representing carriers who specialized in these types of plans - Aflac, Colonial Life, and Capital America were some of the leaders.  The plans - generally Cancer, Accident and Short-Term Disability - were offered to Employees at their own cost and discretion.  Originally the Plans were offered to smaller blue-collar groups and  Government Entities.  This market matured into the Worksite/Voluntary Benefit Marketplace. These Plans were, and often are referred to as "Cafeteria Plans".  
• Experience (2)  In the 1990s Tradition Employee Benefit  Specialist (EBS) Brokers and Agents specializing in Payroll Deducted Plans, now referred to as Worksite Benefit Specialists (WBS), began to take advantage of Section 125 of the IRSC offering Premium Conversion (POP) Plans.  These plans permitted the Employer to Pre-Tax -- subtract the premium of selected qualified plans from the Employee's pay check before taxes were calculated.  This creates a saving for the Employer and Employee!  In addition to Premium Conversion Plans, the IRSC permitted Medical Reimbursement Plans, Dependent Care Accounts and more recently Transportation and Parking Reimbursement Accounts.  All were based on pre-taxing certain Employee "Voluntary Contributions" to the Employer's Benefit Plan.  These choices have also been called "Cafeteria Plans"!  
• Experience (3)  More recently the Worksite/Voluntary marketplace has matured with expanded types of coverage offered, ie. Life, Dental, Vision, Critical Illness (CI), Hospital Income (HI), GAP Plans, Limited Benefit Plans (Mini-Meds), Legal Plans, Pet Coverage, etc.  In addition, a plethora of traditional Employee Benefit Carriers have entered the markets with a wide variety of programs, products, and services.  EBS and WBS have joined together to offer a variety of plans to Employers of all sizes and industries.  Employees are enjoying greater "Choice" and participation in the decision-making process.  These plans are also being referred to as "Cafeteria Plans"!   
• Semantics - All of the above, the jargon of the Carriers represented, and the Region in which you live and work, play into the understanding and usage of the term "Cafeteria Plans".  

Given the potential for confusion using the term "Cafeteria Plans", we have chosen to use the term "Def-Con" to describe a specific type of Plan Design (also differentiating the term from "Defined Contribution" as referred to in Retirement Plans).  Employer and Broker designed Def-Con Plans share the following characteristics. They:  

• Allocate benefit "Credit Dollars" to products and services made available to eligible Employees. 
• Forecast and Budget the Organizations benefit expenditures on an annual basis.
• Work more closely on Strategic Plan Designs for cost savings.
• Provide a "Choice of Plans" for the Core Health Plan Design.
• Build a "Menu of Worksite/Voluntary Benefits" made available to the Employees to provide "Choice".
• Using "Benefit Credits" they value one plan choice over another to promote "Consumerism" and "Wellness".
• Take advantage of IRSC and other Tax-Advantaged Programs. 
• Promote Employee Education and Participation in the decision-making process.
• Empower the Employees and their Families with Education and Communication.
• Reduce the Time and Cost of "Benefits Decision-Making".  

In future Blogs and with discussions in our Linkedin Group, "Insurance Forum", we will further discuss the design and advantages of looking at a Def-Con plan design alternative!

For more information about Worksite/Voluntary Plan "Choices" click on: BenefitPlace and join the "Insurance Form"!  Please share your comments with our community and HAVE A GREAT WEEK!