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The Secret to Effective Small Business Health Benefits

Posted by K. F. on February 15, 2017


Finding an optimal solution for group benefits can be a challange.

Many employers choose to provide a Health Spending Account (HSA) for their employees. An HSA provides employees the flexibility to design and customize a benefits program that fits their individual needs, while permitting business owners to achieve cost-certainty.

What is an HSA?

An HSA is a self-insured, private health spending plan (PHSP) that can be used as stand-alone coverage for employee health or dental expenses or to supplement a traditional employee benefits plan. There’s no maximum number of employees, and the minimum number is just one employee (the business owner themself).

Moreover, an HSA offers access to a wide range of eligible health and dental expenses without co-payments or deductibles.

How does an HSA work?

A business owner desginate an amount per employee to the HSA, from which their employees can be reimbursed tax-free for a wide array of health-related expenses. The business owner determines how much their employees have access to, and only pays for the expenses their employees actually claim.

HSAs vs. Traditional Employee Benefits Plans

Let’s look at traditional employee benefits plans in more detail. In this case, a business owner will pay a fixed premium every month, regardless of usage. Chances are, they are paying for benefits that are rarely, if ever, claimed. Each year at renewal time, these premiums go up an average of 10-15%.

With an HSA, business owners pay only for the benefits their employees use, up to a maximum value pre-determined by the business owner. Employees can use that benefit for the health expenses they require, such as orthodontics, paramedical, prescriptions or vision care. They can even use their Health Spending Account to purchase a personal insured health and dental plan. The choice is theirs.

What kinds of expenses can be claimed?

An HSA offers the flexibility of a wide range of eligible expenses, including:

• All prescription drugs
• All dental – includes orthodontics
• All optical – includes laser eye surgery
• Paramedical – includes massage therapy, physiotherapy, chiropractic, naturopath
• Premiums – health and dental premiums for spousal group plans, individual travel insurance
• Other Expenses – MRI, CPAP machines for sleep apnea, diabetic supplies
HSAs also provide employers with additional savings when an employee is covered under a spousal plan. As an HSA falls outside the coordination of benefits rules, all expenses for employees and their dependents would be submitted under a spousal plan first. Any remaining balance can then be submitted through an HSA.

Related Reading: Health Spending Account for Small Business (Short Video)

Are you an incorporated business owner with arm's-length employees? Learn how the Olympia Health Spending Account can provide significant value for your employee benefit program. Download our free guide: The Beginner's Guide to Health Spending Accounts.

The Beginner's Guide to Health Spending Accounts