It isn't easy to please all employees with one benefits plan. Plan members are at various stages in their life and career. Some see great value in orthodontic coverage while others want more coverage for vision care.
With four generations in the workforce, an influx of costly biologic drugs and increasing economic pressures, plan sponsors don't have it easy. How could there be one plan design that fits all? There isn't a silver bullet to offer a quick solution, but there are options available with the introduction of a Health Care Spending Account (HCSA).
Basically a HCSA offers plan sponsors the ability to allocate a budgeted amount to each plan member. Plan sponsors know the allocation is limited and that it won't be exceed. For example, each plan member could be allocated $300.00 toward his or her HCSA. It is tax deductible and cost-effective. Employees can spend their allotted HCSA using pre-federal tax dollars on health-related products and services that are eligible to be claimed as per the Medical Expense Tax Credit (METC) under the Canadian Income Tax Act.
Once a plan sponsor selects a balance carry-forward or no-carry forward option, the next steps involve communicating how employees can use their HCSA. Introducing a HCSA as part of a traditional benefits plan is a helpful way to add flexibility to the changing needs of a diverse employee base. Plan sponsors have more control over their costs with the knowledge that claims experience doesn't impact the budget assigned to a plan member's HCSA amount.
These days it is increasingly more challenging to attract top talent. An HCSA brings flexibility and choice to employees. It helps a traditional plan become more attractive. For plan sponsors, it offers predictability and stability. If well communicated, HCSAs are simple to understand and use. They work like a bank account and plan members can use their HCSA to pay for health-related services and products that might not be covered in a traditional plan such as dental braces or prescription glasses. An HCSA can be used to pay for deductibles and benefit top ups.
For questions about ways to maximize the effectiveness of a benefits plan design, please contact us. We're here to help so you can focus on doing what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.