How Healthcare Spending Accounts Fit Into Your Benefits Plan

Karen Taylor Smith is the Senior Manager, Group Benefits at The Benefits Trust. She has worked with The Benefits Trust since 1997, using her deep knowledge of employee benefit plans to customize the right solutions for businesses. Karen speaks, blogs, and contributes regularly to various media outlets on group benefits and compensation topics.

How Healthcare Spending Accounts Fit Into Your Benefits Plan

health care A benefits plan is a promise that an employer makes to their employees. This promise can be defined in a variety of ways. A Health Care Spending Account (HCSA) is one type of benefit that can be included in this promise. An HCSA is a pre-determined amount of money made available to employees at the start of every benefit year for them to draw from to cover various health care and dental care expenses. It is becoming a popular addition to many health care plans due to its practicality, flexibility and cost control capabilities.

At The Benefits Trust, we believe one of the most important questions surrounding Health Care Spending Accounts is “How will this fit in our benefits plan?”

The answer is quite simple: however you would like it to.

Rather than simply choosing between a conventional benefits plan and an HCSA, many employers are including Health Care Spending Accounts strategically in their benefits plans, in different combinations, to achieve specific compensation goals. Health Care Spending Accounts provide flexibility for employees while at the same time providing cost control for employers. How is this possible?

HCSA’s, when added to your basic core benefits plan, allow for employees to choose which Canada Revenue Agency (CRA) approved health care expenses they spend their money on. Unlike conventional plans that allow only specific maximums for expenses in pre-selected categories (such as prescription drugs, dental and vision care), adding an HCSA broadens those categories to cover additional expenses such as laser-eye surgery, orthodontics, dental implants and even veterinary bills for service animals.

For a complete listing of CRA-approved health care expenses, please visit their website.

By adding an HCSA, employers can potentially reduce the cost of their core benefits plan while still providing flexibility in the type of expenses covered for employees. A Health Care Spending Account also provides employers with greater control over their contributions, knowing the cost of benefits for each employee from the start. HCSA’s are not susceptible to premium inflation or affected by the number of claims submitted.

How do you determine the HCSA amount for your employees? The Benefits Trust works with your professional advisor to help determine which method suits your company.

HCSA benefit amounts can be determined based on:

  • A flat amount per employee, defined by benefit class,
  • Single, couple, or family status,
  • Years of employment, or
  • A percentage of earnings.

These methods allow for complete control of the structure of Health Care Spending Accounts for your company, and this flexibility in plan design is a specialty of The Benefits Trust.

If you are interested in learning more about Health Care Spending Accounts please contact us. We would be glad to help you find the best way to introduce an HCSA into your benefits plan.

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