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Health Spending Account vs. Traditional Group Benefits Plan

See how much your business could save, while also providing group benefits your employees will actually use.

Group benefits or Health Spending Account?

Traditional group benefits plans and Health Spending Accounts offer different advantages. Which one you choose will depend on your objectives. Do you favour unlimited benefits with an increasing cost structure, or do you prefer set benefit limits with a fixed predictable expense?

We can help you make sense of it all. Contact us to discuss your situation and customize a solution.

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Traditional Group Benefits Plan

  • Combined benefit amount can be unlimited
  • Claims processing fees are determined by the insurance company and are not guaranteed
  • Future premium increases are based on total plan usage by group members, which is unknown
  • No refunds for unused benefits

Health Spending Account:

  • Combined benefit amount is fixed and determined by you.
  • Claims processing fees are guaranteed and fully disclosed
  • Your budget is fixed and does not increase unless you choose to increase the group benefit limit.
  • Refunds are provided if any employees do not use all of the benefits available to them.
  • You can choose to only make payments when claims are made

Sample scenario, assuming 20 employees:

BenefitGroup Benefits PlanHealth Spending Account
Dental Coverage
Preventative and Basic Services including: Cleanings, Scaling, X-Rays, Fluoride Treatment, Endodontic and Periodontal Treatment. Coverage %80%100%
Major Restorative Services including: Crowns, Bridges, Dentures, Inlays Coverage %50%100%
Combined Maximum Annual Dental Benefit Amount$1,500$2,500
Orthodontics Coverage %50%100%
Orthodontics Maximum Benefit Amount$1,500 (Lifetime)$2,500 (Annual)
BenefitGroup Benefits PlanHealth Spending Account
Medical Coverage
Prescriptions80% (Unlimited)100%
Hospitalization (Private/Semi-Private Room)100% (Unlimited)100%
Travel Insurance100% ($1,000,000)100% ($1,000,000)
Paramedical Services (Chiropractic, Massage etc.)80% ($300 each)100%
Vision Care80% ($200/24 Months)100%
Premium/Benefit Payment Calculations
Assumed Number of Employees2020
Assumed Yearly Premiums / Annual Budget$50,000$50,000
Premium/Benefit Payment Guarantee PeriodDetermined by Insurance CompanyDetermined by Employer
Combined Benefits Limit (per employee)Unlimited$2,500
Assumed Claims$37,500 (75%)$37,500 (75%)
Insurance Company Claims Processing Expenses & Profit Margin / Admin Fee for HSA$12,500$3,750 (Guaranteed 10% of Claims)
Refund to Employer$0$8,750

It’s generally expected that, due to the increasing age of the work force and the rising cost of health care, the cost of a traditional group benefits plan will increase at a rate of approximately 15% a year. If that comes to pass, then the cost of the group benefits plan above will double over a 5-year period to $100,000/year.

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