Every year, more and more employers are adopting Health Spending Accounts (HSAs) to their overall benefits package. The debate over which is better – HSAs vs traditional group benefits – is widespread. According to The Sanofi Healthcare Survey January 2020 HSAs are the single largest incentive for an employee to stay with an employer. For that reason, an employer might look to add an HSA to their traditional group benefits package or replace the traditional plan altogether.
There are many other benefits that health spending accounts provide to employers starting with cost certainty; an employer decides the exact amount added to each employee’s account and that amount is a fixed cost. The only way it will change is if the employer decides to change it. Another benefit is that an HSA is a tax-deductible business expense. The decision between HSAs vs traditional becomes more clear with its overall flexibility.
Traditional group benefit plan employer rates change from year to year depending on previous years usage by plan members so employers are always dealing with a variable expense. With traditional plans there are no refunds for any unused benefits, with HSAs any unused benefits are returned to the employer.
HSAs vs Traditional
The following chart outlines many of the advantages HSA Easy Pay Ltd. HSAs provide over traditional group benefits for employers.
|Traditional Benefits Packages||HSA Easy Pay Ltd. Prepaid Mastercard solution|
|Combined benefit amount is unknown||Benefit amount is fixed; determined by the Employer|
|Future premium increases are based on total plan usage by group members, which is unknown||Employer budget is fixed; does not increase unless Employer opts to increase or decrease it|
|No refunds for unused benefits||Refunds (rollovers) are provided if benefits are not used (rollover options are varied and flexible)|
|Limited set of benefits covered||Comprehensive list of CRA approved benefits covered|
|Potential deductibles||No deductibles|
|Stringent structure||Flexible platform; including ability to add Wellness expenses at Employer choice|
There are many reasons that employers are adding to, or replacing traditional group benefits with health spending accounts; but the cost certainty it provides is the most impactful one. Small businesses can provide their employees with the health care they want while at the same time have the peace of mind that their expense costs are fixed.
HSAs vs Traditional – What is best for your Employees from their point of view?
From an employee standpoint, if you have a choice, you want to do what is best for your individual household’s best interest. Your employer may offer traditional benefits package, an HSA, or both. But you also need to weigh out HSAs vs traditional for your household. Employers generally subsidize a majority of the cost so the premium you pay via payroll deduction isn’t even close to the full amount. While HSAs are attractive in terms of costs and in terms of taxes, they may not be for everyone. Here’s what you need to know about HSAs so you can decide if they are right for you.
If you never – or rarely – need to see the doctor, then you can take your employer’s contribution and use it as part of your wellness regime (mental and physical). And, if you do get sick despite being on average quite healthy, you pay for what you use – not what you don’t use. HSAs might not make sense is if you have some type of chronic medical condition. In that case, you’re probably better served by traditional health plans. HSAs might also not be a good idea if you know you will be needing expensive medical care in the near future.
Your Health and Wellness Insights
Typically, an employer does not make the HSAs vs traditional benefits platform decision in isolation. Generally, they poll their staff and determine what is best for as many parties as possible. HSAs provide the most flexibility to cross off as many boxes as possible for their team. The finest Employee HSA provider for your company is chosen by the demands of your company. Prepaid options, such as what HSA Easy Pay provides, are a great way to ensure your team is never out-of-pocket for health expenses. Knowing how an HSA vs traditional plan will benefit your company allows you and your providers to design a plan that is as unique as you are. To learn more about the advantages of having an employee health spending account plan, visit HSA Easy Pay today!