Health Care Spending Account (HCSA)
Enrich a plan, add flexibility, or control costs. One tool, many applications.
People at different ages and life stages have different health needs and priorities—and they value different benefits as a result. Creating a plan that satisfies everyone can be a challenge—now more than ever. Rising costs make the challenge more acute. As our workforce ages and new, more expensive drugs hit the market, business owners may find it increasingly difficult to provide a comprehensive traditional benefits plan.
A HCSA can help. By its nature, a HCSA brings cost containment. Business owners decide how much to allocate to employees and can rest assured they will not exceed that amount. That’s unlike insured benefits, where the premiums may rise every year in line with rising costs and utilization rates.
A HCSA is also an easy way to make benefit plans more relevant to today’s more diverse workforce. With an overall maximum, employees have the flexibility to use their credits according to their needs. A HCSA can be a great supplement to a traditional benefits plan—or even an alternative to some forms of coverage. Enrich a plan, add flexibility, or control costs. One tool, many applications.
Is a HCSA for you?
A HCSA may be the best solution for you if:
- You have a diverse workforce and want to add flexibility and choice to employees’ health benefits.
- You are a small to medium-sized business looking for innovative cost containment features in your employee benefits plan.
- You’re facing stiff competition for talented employees and want to add to your plan to make it more attractive.
The table below sets out examples of the different ways to use a HCSA:
|Attract talented employees||Add a HCSA||
According to the sanofi aventis 2011 Healthcare Survey:
|Retain younger employees to build bench strength||Choose a balance carry-forward plan||
Excellent tool for younger workforce:
Source: Sanofi-aventis 2011 Healthcare Survey
|Address employee engagement||Add a HCSA||Overall yearly maximum gives employees the freedom to take care of their health care priorities|
|Address work life issues||Add a HCSA||Covers expenses that qualify for the Medical Expense Tax Credit (METC) under the Income Tax Act (Canada), which is more inclusive than most standard employee benefits plans|
|Reward specific employee classes||Add HSCA to specific classes||Flexibility to add a HCSA to one class and not another|
|Stablilize plan costs||Strong: Replace paramedical with HCSA
Stronger: Replace paramedical and vision with HCSA
Strongest: Replace paramedical, vision and dental with HCSA
|N.B.: While replacing some benefits with a HCSA is an excellent way to achieve cost containment, replacing key benefits with HCSA may risk exposing employees to potentially catastrophic costs|
|Add basic benefits to a small company with no benefits||Add no carry-forward HCSA as part of a basic benefit solution||An ideal way to determine employees' health care priorities and grow your benefits plan in synch with employees' needs|
How HCSA works
Business owners decide how much to allocate to employees and can rest assured they will not exceed that amount. They also choose the allocation timetable, and plan type (balance carry- forward or no-carry forward). It’s a tax deductible, self-insured benefit, which means it is cost-effective. Monthly billings account for claims received. Employees get to spend their allocation on items that qualify for the Medical Expense Tax Credit (METC) under the Income Tax Act (Canada), which is more inclusive than most standard employee benefits plans.
Key features and benefits
For business owners:
- Maximum cost per year is easily understood
- Brings cost stability and predictability to benefit plan
- Flexible benefit that can be structured to align with benefits philosophy and people strategy
- Gives employees choice
- Meets diverse needs
- Simple to understand
- Non-taxable to employees (except in Quebec)
Our HCSA is available to customers with two or more insured lives (must be incorporated). Not all carriers offer ASO benefits for companies with as few as two lives. We do! Just one more way in which we excel at adapting products to the needs of small businesses.
Get Empire Life HCSA working for you
To learn more about how HCSA can help you build a healthier business, please contact your group benefits advisor.