What if you had an accident and couldn’t work for a while?

A health spending account (HSA) is a type of employer-funded benefit plan that allows employees to use allocated funds for eligible healthcare expenses. It is designed to provide flexibility and choice in healthcare spending, allowing employees to personalize their healthcare needs. Here's how a health spending account works:

1. Funding: Employers allocate a specified amount of money toward each employee's health spending account. The allocated funds can vary based on factors such as employee classification, job position, or years of service. These funds are typically provided on an annual basis and may roll over from year to year, depending on the plan design. Typically there are no up front expenses for the employer, the employer is only required to pay for employee claims when they are submitted by each of the employees.

2. Eligible Expenses: Health spending accounts cover a wide range of eligible healthcare expenses. These may include prescription medications, dental care, vision care, paramedical services (such as physiotherapy, chiropractic care, and massage therapy), medical equipment, and other health-related products or services. The eligible expenses are typically defined by the plan and may be subject to certain limits or exclusions.

3. Flexibility: Unlike traditional insurance plans with predefined coverage and limits, health spending accounts offer flexibility and choice. Employees have the freedom to allocate the funds according to their individual healthcare needs. They can decide how much to spend on specific healthcare services, treatments, or products, based on their personal circumstances.

4. Tax Advantages: Health spending accounts provide tax advantages for both employers and employees. Employer contributions to health spending accounts are typically tax-deductible as a business expense. For employees, the funds allocated to the health spending account are not subject to income tax, as long as they are used for eligible healthcare expenses.

5. Employee Empowerment: Health spending accounts empower employees to make informed decisions about their healthcare. They can choose the healthcare services or products that best meet their needs, rather than being restricted to predetermined coverage. This promotes personal responsibility and engagement in healthcare decisions.

It's important to note that the specific details and rules of a health spending account can vary depending on the plan and employer. It's advisable to review the plan documents and guidelines provided by your employer to fully understand how the health spending account works and the specific eligible expenses covered.

Health spending accounts can be a valuable benefit option that provides employees with flexibility, choice, and tax advantages for their healthcare spending. Contact Aurora to determine if a health spending account is suitable for your specific situation.

It is understandable to be concerned about the rising cost of group benefits in Canada. Several factors contribute to the increasing costs of group benefits, including rising healthcare expenses, increased utilization of healthcare services, evolving insurance regulations, and demographic shifts. Here are some factors to consider and potential strategies to manage the rising costs:

1. Analyze Plan Design: Review your group benefits plan design to ensure it aligns with the needs of your organization and employees. Consider adjusting coverage levels, co-pays, deductibles, or maximum limits to balance cost and coverage. Working with a benefits consultant can help you evaluate your plan design and identify areas for cost optimization.

2. Employee Wellness Programs: Implementing employee wellness programs can help promote a healthier workforce, reducing the utilization of healthcare services and related costs. Encourage healthy lifestyle choices, provide wellness resources, and offer incentives for employees to participate in wellness activities.

3. Shop Around for Competitive Rates: We regularly review and compare quotes from different insurance providers to ensure you are getting the best value for your group benefits plan. 

4. Consider Self-Insurance or Alternative Funding Options: Depending on the size and stability of your organization, self-insurance or alternative funding arrangements (such as level-funded or partially self-insured plans) could be worth exploring. These options provide more control over plan costs, allowing you to pay for claims directly rather than through traditional insurance premiums.

5. Employee Education and Communication: Communicate the value of group benefits to your employees and help them understand the costs associated with providing comprehensive coverage. Educate employees on the responsible use of healthcare services, the importance of preventive care, and ways to maximize their benefits. This can help reduce unnecessary healthcare expenses and mitigate cost increases.

6. Data Analysis and Predictive Modeling: Use data analytics and predictive modeling to identify trends, patterns, and high-cost areas within your group benefits plan. By understanding utilization patterns, you can make informed decisions on plan design adjustments, wellness initiatives, and targeted interventions to address specific health issues proactively.

7. Government Programs and Tax Credits: Stay informed about government programs, incentives, and tax credits related to group benefits. For example, the Canadian government offers tax incentives for employers providing certain types of group benefits. Understanding these programs can help offset some of the costs associated with providing group benefits.

Managing the rising costs of group benefits requires a proactive approach that considers plan design, employee wellness, market comparison, and data-driven decision-making. It is advisable to consult our advisors who specialize in group benefits to navigate the complexities and identify cost-saving opportunities specific to your organization.