Why a Health Care Spending Account is Better than Adding Specific Benefits to a Traditional Group Plan

Many businesses already have a traditional group benefits plan that offers specific benefits. The problem is you are paying for benefits that not all group members will use; some employees may also want benefits that are not covered under the plan. A Health Care Spending Account is better than adding specific benefits to a traditional group plan because it gives flexibility and cost-control.

First, we should discuss the difference between a traditional group plan and a health care spending account (HSA):

Traditional Plan

  • Gives specific limits for each health care item (prescription drugs, dental, etc.)
  • Some items can trigger different premiums or deductibles
  • Most of the plan often gets unused, but is still paid for

Health Care Spending Account

HSA’s are an excellent replacement for a traditional plan, as they will provide an easy and affordable way to cover all basic health needs. However, if you have a traditional plan, an HSA is a far superior “top-up” to that plan, compared to just adding specific benefits to that plan. The idea is to keep a bare minimum traditional plan that offers basic health and dental coverage, then if you want to offer extended benefits such as physiotherapy or vision care, you use an HSA.

To illustrate why Health Care Spending Account is better than adding specific benefits to a traditional group plan, here is an example of adding vision care to a traditional plan vs having an HSA.

Adding Vision Care to a Traditional Plan

  • Not all staff will use the benefit
  • The company still pays the premium for all staff regardless of usage
  • Often only a portion of the cost is covered, $200 for eyeglasses for example when they often cost more

Adding an HSA with a Traditional Group Plan

  • The HSA can be used for any eligible benefit, some staff may want vision care whereas others may want to spend their HSA dollars on diapers or childcare
  • If an employee needs new eyeglasses, they can use their HSA to cover the full cost, instead of being restricted to a predetermined benefit amount

A Health Care Spending Account is better than adding specific benefits to a traditional plan because it allows your employees personalize their benefits package without any extra work or money from the employer.

If you are looking for ways to offer more flexibility and attract top employees to your business, contact DENT Benefits to discuss how HSA’s can revolutionize your compensation package.

The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.

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