Maybe you see through the lowballing tactics of traditional health and dental coverage, but there are other ways big insurers take you for a ride! They call them flex benefit programs, but as you’ll see they really aren’t all that flexible or different from traditional benefits.
What is a flex benefit program?
Typically, a flex plan involves some form of choice for plan members. This means that their group benefits aren’t quite one-size-fits-all. Unfortunately, even though they provide some choice, it’s more like “pick small or large” instead of “do what’s best for you”. Not everyone fits that mold!
Let’s look at variations on the format.
The first is a choice between pre-defined plans with varying levels of protection. For example, plan members may choose extra dental coverage or an increased paramedical budget. Plans like this sometimes have a budget set by the plan sponsor, and plan members are responsible to pay any additional costs for the extra coverage they choose. We’ll talk about why asking members to get some “skin in the game” is a terrible idea in an upcoming post. For now, just know that it’s poor value!
Another type of flex plan is where plan members are assigned dollars or credits to allocate to different benefits. There are likely a few choices for each benefit and a corresponding cost for each. Any remaining credits can be contributed to a Health Spending Account.
Both options are presented by insurance companies as flexible options. Let's dive deeper into the nuts and bolts of it all.
Traditional benefits with a new hairstyle
We won’t sit here and argue that flex plans aren’t a step in the right direction. They give more freedom to your team compared to a traditional plan. However, they’re only one small step – the minimum amount of flexibility you can provide your team.
These flex programs are good at giving the illusion of flexibility. They aren’t a fit for everyone, and they still have category limits and maximums that restrict your team. Ultimately, plan members are not free to use their benefits the way they want.
The same old song and dance
From a plan sponsor perspective, flex plans are the same old insurance song and dance. The plan is still premium based and the more your plan members claim, the more you’ll be spending each year on the plan.
Some flex plans offer 2-year renewals, giving you a sense of premium stability. But you still don’t have transparency or control over your costs come renewal time.
You may be providing your team with options, but financially, you’re still getting hosed.
In walks the Health Spending Account
Yeah, you knew we’d bring it right back to our bread and butter. The pinnacle of flexibility, the master of employee autonomy, it’s the always reliable Health Spending Account (HSA).
With no premiums, no category limits or maximums, and total flexibility, an HSA gives your team control over their benefits. The only limitation they have is the funds allocated to their accounts. Your team will be able to make claims on eligible expenses laid out by the CRA (the list is quite extensive).
This means you’re providing benefits your team actually wants, and you’re in complete control of your costs.
There are also different breeds of HSAs. Unused funds after a benefit period can stay with the member, be returned to the plan sponsor, or be contributed to a Group RRSP. Tons of options providing even more value to plan sponsors and plan members.
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