If you sponsor an employee health benefits plan, then you’re already on the right track to supporting your employees. Unfortunately, many plan sponsors overlook one element of employee benefits that can really complete your benefits offering: a health spending account (HSA).
Health Spending Account (HSA)
A health spending account functions similar to a bank account. You (the plan sponsor) decide how much is going to be available in the health spending account. Your employees can then claim eligible health and dental expenses to be covered by the health spending account. Each time a claim is made, the balance in the account decreases. When the value reaches zero, the account is depleted, and no additional funds are available until the next benefit year. It is completely up to you how much you will make available in a health spending account; common amounts include $500 or $750.
A health spending account differs from the traditional types of benefits in your plan because it allows for a finite amount of money to be spent on eligible health and dental expenses at the discretion of the employee. With traditional benefits, your premiums may change at the end of the year based on claims made; with a health spending account, even if the set amount is depleted, it doesn’t result in a cost increase the following year (unless you as the employer decided to increase the amount allocated).
Using a Health Spending Account
There are several different ways that employees can utilize a health spending account.
1. Unpaid portions of benefits
If your benefits plan requires employees to pay a deductible, or if your plan does not provide 100% coverage, a health spending account can help bridge the gap. For example, if your plan requires employees to pay a $25 deductible for prescription drug claims, then your employee could make a claim to the health spending account to be reimbursed for the $25 deductible fee.Or if your plan provides 80% coverage for dental services, the 20% fee that your employee paid out of pocket can be claimed from the health spending account. If used in this way, your employee will essentially have full coverage (until the health spending account is depleted).
2. Products and services not covered as part of the traditional plan
The breadth of products and services that can be claimed from the health spending account is very broad. It is based on the Canada Revenue Agency’s list of eligible health expenses (items or services that can be claimed on an individual’s tax return). This really expands coverage beyond items and services that are covered under a traditional benefits plan.
3. Benefits where the maximum has already been reached
Sometimes your employee will reach the maximum for a covered benefit and still want to visit that provider. For example, imagine that the maximum for physiotherapy was $750 and the employee had already been covered for $750. The employee could continue going to physiotherapy despite having reached the maximum and instead claim the expense from the health spending account.
Keep your employees healthy
One of the main goals behind providing employee benefits is to prevent illness and keep your employees in good health. Including a health spending account in addition to a traditional plan can help support this goal. It increases the breadth of coverage. It also decreases out of pocket costs that may discourage an employee from accessing services or support.
For example, if the benefits plan provides 80% coverage for counselling, an employee who is struggling with their mental health may choose NOT to access the counselling services because they must pay for 20% of the cost of the service. With a health spending account, employees are more likely to access services and support because they will not be out of pocket. As a result, it is an additional tool that can help support the health of your employees.
Everyone Wants a Health Spending Account
Health spending accounts have become a common feature of many benefit plans, and employees place a high value on having access to one. From a recruitment and retention standpoint, this is important. If you don’t complete your employee benefits offering with a health spending account, one of your competitors likely will. Employees value flexibility and a health spending account is just another way to offer employees flexibility in how their benefit dollars are spent.
Because you choose the value of the health spending account, you can choose an amount that fits within your budget. You don’t have to worry about the cost increasing (unless you want to offer more) and it’s a tax-deductible business expense for your company. It just makes sense.
Good Advice is Key
A health spending account is the perfect way to complete your benefits offering. It gives employees flexibility in how their benefit dollars are spent and can help you compete for the best employees. Review your options with one of our licensed advisors on the phone, or contact us for a comparison quote.
Whether you’re looking for extended health and dental coverage, disability coverage, or life and critical illness coverage, GroupHEALTH has affordable benefits packages that work as hard as you do.