There is an employer health benefits shift occurring in Canada moving from traditional group benefits to the much more flexible health benefits that Health Spending Accounts (HSA) and Wellness Spending Accounts (WSA) provide.
Both HSAs and WSAs are becoming much more popular in the Canadian workplace with inclusion as a supplement to existing traditional group plans or as a replacement of them, according to 2020 Sanofi report. According to the report, HSA’s are the single largest benefits incentive for an employee to stay with an employer. In fact, 78% of employees consider having an HSA as is what makes their benefit plan excellent improving satisfaction with their benefits by 38%.
What Is an HSA?
An HSA is a 100% tax-free benefit for both corporations and employees set aside for medical, dental and vision expenses. There are no limits on HSA funds and all employees can have one. What makes them a flexible health benefit is their individualized use capabilities and their employer defined spend limits. The employee can choose what and where to spend their allocated benefit amount. You as the employer can decide which employee class gets how much and what limitations (if any) they have on that spend. In addition, you can decide what to do with unspent funds, whether to top-up all at once, quarterly or monthly and so much more.
HSAs are a more personal and flexible health benefit than regular insurance and will save your company AND employees money in the long run.
As an Employer, Why Should You Offer HSAs?
While the shift from traditional plans to consistent and to the flexible health benefits an HSA offers is happening across all industries in Canada, you care specifically about your business. The Sanofi report suggests, you could save as much as $1,500 annually per employee compared to traditional plans. This amount is a combination of:
- Tax savings. HSAs are 100% tax deductible, so the money used for healthcare spending is pre-taxed money. In addition, you can deduct the contributions and fees related to the HSA as a business expense.
- Flexibility of spend assignment. You can offer different spend amounts to different employment classes. Unlike a traditional group plan where everyone gets the same, you can have unlimited classes or even set up spend amounts for each individual employee.
- Recoup Unused Funds. On average, employees only use 62% of their allocated health benefits. Through an HSA, you can return unused benefits back into the company or roll it over to the next year. The unused benefits dollars are never lost.
Flexible Health Benefits of an HSA
As said above, HSA coverage is a broader and more flexible health benefit than a traditional benefits plan. There are fewer restrictions and limitations. Individually, if one of your employees wanted use their full allocation on dental expenses, they could. With a traditional plan, there would be maximums set out. Or only covering $50 of a $85 massage visit. With an HSA, you can use your flexible health benefit to cover the entire amount. With an HSA, there’s no set percentage of coverage or dollar limit for certain services. There’s also no deductibles that need to be reached before eligible expenses are reimbursed. The only limit to the amount reimbursable for eligible expenses is the amount of funds available in the HSA as et out by you.
| Traditional Benefits | HSA Group HSA Solution | |
| Combined benefit amount is unknown | ✔ | Benefit amount is fixed and determined by Employer |
| Future premium increases are based on total plan usage by group members, which is unknown | ✔ | Employer budget is fixed and does not increase unless you choose to increase |
| No refunds for unused benefits | ✔ | Refunds are provided if benefits are not used |
HSAs work spectacularly as a standalone flexible health benefit but also work as a complementary benefit when combined with a regular benefit plan. When used in conjunction of a traditional plan, the HSA can cover portions of health spend not covered by the group plan.
How Do HSAs Work?
They are extremely simple actually. These flexible health benefits are as easy as 1-2-3.
- As an employer, you make regular contributions on behalf of one or more of the employees (including yourself as this is a very popular way to save business owner money in their household as well).
- Your employee chooses what health and wellness spend to use their individual benefits on
- The HSA funds get reduced by that amount.
At HSA Group, we offer both prepaid and post-pay options to reduce or eliminate any out-of-pocket stresses on your employee.
Your Health and Wellness Insights
The HSA Group utilizes a fully customizable healthcare technology solution. We provide flexible pre and post pay options. Fast digital onboarding, robust real-time reporting and automated adjudication for 100% of claims are table stakes to us.
We believe healthcare is stressful enough. Paying for it shouldn’t be. If you’re curious how The HSA Group’s HSA and WSA health and wellness solutions can help save you up to $1,500 per year per employee, contact us today.
