It’s one of the best kept tax secrets for small businesses, Health Spending Accounts. For companies that are looking to provide employees with health and dental benefits, but trying to avoid a costly traditional insurance plan, this could be the solution for you. This episode explains what a Health Spending Account is, how it is funded, how employees can make claims, if any employee contributions are required, and the tax benefits it provides for both employees and businesses.
Daniel Gillis is a benefits and insurance specialist based in Calgary, Alberta. He is founder and president of Westshield Financial Solutions Inc. and a partner with Olympia Benefits Inc.
Daniel began his career as a personal banker with RBC Bank in 1990, working at branches in Manitoba, British Columbia and Alberta. In 1999, he became an agent with RBC Insurance. He continued his career as an independent insurance and benefits advisor after forming Westshield Financial Solutions Inc. in 2003.
As an independent insurance advisor, Daniel connects with life and disability insurance providers to develop tailor-made insurance solutions for his clients. As a partner with Olympia Benefits Inc., Daniel also helps incorporated business owners save money by setting up Health Spending Accounts for themselves and providing benefits for their employees.
Daniel graduated with a diploma in Business Administration from Red River Community College in Winnipeg, in 1990. He received his designation as a certified financial planner, having completed the CFP Program in 1997. He has also completed the Canadian Securities course and maintains his life and accident & sickness licenses in BC, AB, SK, MB, ON and NS.
A Winnipeg native, Daniel currently lives in Alberta with his wife, three kids and a brown lab named Dixie. Outside of the office, he enjoys camping with his family, snow skiing in the Rocky Mountains, spin class and daily walks with Dixie.
Morgan Berna is the host of Olympia Benefits’ podcast, The Small Business Mastermind. Her background is in marketing, journalism, and broadcasting. Passionate about small business, she aims to create content that inspires and educates listeners.
Daniel Gillis: The Health Spending Account encompasses all health and dental bills for the employees. It is a better way to set a plan and run a plan because it deals specifically with the employee as an individual
Morgan Berna: You are listening to The Small Business Mastermind, a podcast created to help small businesses juggle business, finance, health and wellness. I’m your host, Morgan Berna. To subscribe to the podcast, visit olympiabenefits.com/podcast.
The Small Business Mastermind is brought to you by Olympia Benefits. To learn how you can save on your health and dental cost, visit olympiabenefits.com.
Morgan: Hello and welcome back to The Small Business Mastermind. On today's episode, we are bringing back Daniel Gillis to explain Health Spending Accounts from the perspective of a business with employees. If you do not have employees, episode twenty-one has information on Health Spending Accounts specific for incorporated professionals.
Before we go any further, yes, Olympia Benefits is a Health Spending Account provider, but our goal with this podcast is always to be transparent and educational. I would not bring on someone that I did not feel could meet those values.
This time around, we have Dan explaining what a Health Spending Account is, how it compares to a traditional health insurance plan, the tax benefits this type of plan has for employees and employers, how claims are made and funded, if there are any downsides for this type of plan and more. It is a complete overview of this type of plan. But if you do still have questions after listening, please jump over to olympiabenefits.com and send us a question there through our chat feature. We will be happy to help.
This is also our last episode of 2020. We will be back in January with our regular schedule, but I did want to take a moment to wish you a happy holiday season and a Happy New Year. And even if it looks a little bit different this year, I hope you are still able to enjoy it. All right. With that, let us jump right into this interview. I will be talking to you again at the end of the episode.
Morgan: Welcome back, Dan. Thank you so much for joining us again for our Health Spending Account episode. Today, we are going to be talking about group plans.
Daniel: Thank you so much. I am excited.
Morgan: Daniel Gillis is a benefits and insurance specialist based in Calgary, Alberta. He is the founder and president of Westshield Financial Solutions and a partner with Olympia Benefits. Daniel began his career as a personal banker with RBC Bank in 1990, working at branches in Manitoba, British Columbia and Alberta. In 1999, he became an agent with RBC Insurance. He continued his career as an independent insurance and benefits advisor after forming Westshield Financial Solutions in 2003. As an independent insurance advisor, Daniel connects with life and disability insurance providers to develop tailor-made insurance solutions for his clients. As a partner with Olympia Benefits, Daniel also helps incorporated business owners save money by setting up Health Spending Accounts for themselves and providing benefits for their employees.
You have a bit of experience yourself with using both traditional insurance models for groups and Health Spending Accounts. Do you want to just quickly talk about some of the differences you have noticed personally?
Daniel: Yes, for sure. In my past life, I was a banker with RBC Bank. For that, about ten years in the 90s, I was part of that group plan that was provided by the employer which was RBC at that time. That was a traditional plan. It was administered by Sun Life. As people are probably quite familiar with that kind of program, they may have been done one in the past themselves or are today. You get a schedule of benefits. You open that booklet and you can take a peek through and it is maybe eighty-nine pages long or something. You see, for example, vision a hundred percent or something like that. You think this is fantastic. Where you go and you can go to the dentist or you buy your glasses or you do the things that you do for health and dental services, those things that you need and that you make appointments for, you file your claim eventually and you get reimbursed back. It looks like insurance. It is called insurance. Call it health and dental insurance. We have a health and dental insurance plan. It was provided by Sun Life.
So guess what? I think it is insurance and why would I not? Anyways, I get that reimbursement back according to that schedule of benefits. Sometimes, I get reimbursed quite well, most of the claim. Sometimes, not very well at all. Maybe vision is a good example where I saw a hundred percent, but I bought those glasses. I spent five hundred dollars and I maybe got a hundred dollars back or something. That is because the vision, under the plan, because the employer comes together with the insurer - in my case, Sun Life - and they put together a schedule of benefits. What is going to be paid out, what is not, to what amounts and so on. It can be a bit deceiving. It is an employer-paid benefit. It is tax free to the employees. It flows through the insurer and often the employees. There is a schedule benefits that lays out what can be claimed and there will be limits because again, it is an employer-paid benefit. The employer, of course, is going to have to limit, sooner or later, how much can we pay, how much do we want to pay, what is affordable and what is competitive.
I like to use that vision example because it comes up often in other situations where I am assuming I have got a hundred percent coverage for everything. But in reality, these are tax-free employer-paid benefits flowing through the insurer out to the employee and there is a schedule that says what you can claim and what you cannot, and then what percentage of things. Under that vision of a hundred percent, what they are referring to there is the eye examination, and then the frames and lenses and other hardware you will buy is going to be part of that limit, but it will be capped. Maybe a hundred or a couple hundred dollars or something like that. These are very much employer-sponsored, tax-free health and dental benefit plans. The insurance plans work that way and so do the Health Spending Accounts that we are talking about today. They were virtually the same way. It is just how they are set up, how they are administered, and how money flows out to the employees.
Morgan: Absolutely. We are going to dive more into the Health Spending Accounts. I did want to say, too, I have used both types of plans, and with Olympia, this was my first time with the Health Spending Account. I have just found it to be so freeing as an employee to not have to worry about what I am going to owe on my healthcare because I would go to the dentist before and I still owe money at the end. It would be sometimes really hard to make that payment. Say I injured myself and I needed to go to physio ten times and you can only go five times. I have just found this to be really flexible and really great. I am excited to be talking about it today for everyone listening who has employees or any employees listening.
Let us start off quite simply. What is a Health Spending Account and what does it cover?
Daniel: To answer that question, I touched on it a bit just in my explanation on that plan that I was on in the past, that traditional plan. A Health Spending Account is really an arrangement between an employer and an employee that allows that employer to reimburse the employees for their health and dental bills. That reimbursement is tax-free in the hands of the employees. There is more than one way to set up a plan, really, when you look at how these plans operate.
The reason they are tax-free is because of the Income Tax Act which I think we are going to come to in another question here shortly. But in that arrangement setup, the employer decides how many dollars they are going to be able to afford or want to afford and pay to the employee. They set that limit. They, then, enroll the employee and the employee has that annual limit like you were talking about. Morgan, do you have an annual Health Spending Account limit? You know that is your bucket of money, if you will. You can use that anywhere you like, directing those dollars where and when you need them. They are timed perfectly. If you do not have to go and have a dental service or you are not buying the evasion or you are not going to the physiotherapist at the moment, well, you do not have a need. But when you do, you know that you can pay that bill. You can turn around, file that claim and you will be reimbursed back for the whole amount of what you just used. It addresses your needs uniquely, which is a great way to run a benefit plan. Your unique needs, of course, are going to be different than mine. The Spending Account is going to address that just about perfectly when and where you need it.
Morgan: Absolutely. For me, personally, something I had always wanted to do was get braces and it was just never covered even a little bit under my traditional plans I have been part of, so it was something I was saving up for. When I got this plan I was able to cover it and that was so great to just have that weight off my shoulders, be able to do something that improved my teeth, improve my health, and then to not have to owe as well. That has been really great.
You did touch a bit on how this compares to traditional insurance but can an HSA work in conjunction or can it compliment a traditional insurance plan?
Daniel: It can, yes. In two ways I suppose, the employer can set up a plan like this and the employees can access their health dollars through that Health Spending Account plan. Maybe the employee has a spouse that has a traditional plan with their employer and they will be able to claim under that plan through their spouse and also claim under this plan. When you look at those plans, I suppose a plan being an insurance plan, so back to my example, the plan that I had when I was an employee. There is dollars being paid there and so the employee or that spouse that has that insurance plan will want to claim off that plan first. If they do not claim, money is being paid out to that insurer each month in a premium, but if you do not claim no benefits. Really, there is a cost to the employer but there is not a claim from the employee per se. That is a waste of dollar. You always want to claim there first.
In conjunction with the Health Spending Account, the plan that the employer set up with the Health Spending Account for the other spouse is second payer because it is like that flexible benefit to set bucket of money that I mentioned. The employee has to use anywhere they like. It is money not going out the door until the employee actually claims. Whereas the traditional plan, money goes out the door in the premium, the employee needs to claim or money is lost. It is not used. It is gone in a premium, so to speak. In conjunction, they can work quite nicely. In that example, the spouse will claim first, whatever they are reimbursed, then the balance or the co-payments of the non-covered items come back to this plan under the Health Spending Account and the employee claims the difference. In that case, they all complement each other quite nicely. One paying part of it, the other paying the balance.
Morgan: It can complement, but there are lots of companies that will just use Health Spending Accounts, right?
Daniel: Yes, and that is usually the case where the employer looks at the plans. The Health Spending Account encompasses all health and dental bills for the employees. It is a better way to set a plan and run a plan because it deals specifically with the employees as an individual. Like we talked about with you, Morgan, where you needed a specific physiotherapy bill or you wanted orthodontic works done, well, you can choose how to allocate the dollars. Usually, you will go one plan or the other.
A lot of employers will look at that insured plan and figure out, "It is not as efficient. I am not getting all the dollars to the employee. I have to fit into that template and so many dollars or certain things. What I want to do is provide all of the dollars I have available to the employees when and where they need it." It is usually one or the other. It is not often in conjunction, a hybrid of the two. I have seen it happen, but in most cases, it is either go to the traditional or do the Health Spending Account plan. With the Health Spending Account plan, you have get full accountability. The dollars are moving to the employees when they need them. If there is no claims, there is no money moved. That is going to save the employer dollars and it is also going to be better for the employee because if the employer does not have to put the dollar out of the bit of wasted dollars, it is available for other things, either increased benefits or maybe it can be put into other resources that benefit both the employee and the employer.
Morgan: Absolutely. I know. I have personally felt it has been quite stress-free and just kind of freeing being able to cater to my own health needs and not need to fit into a certain box and say, "Okay. I can do this much of this and this much of this." It has been nice to be like, "Well, these are my health needs and it is nice that my employer sees that and is letting me manage it myself in a way."
Daniel: Yes, and that flex, you mentioned flex. People who have heard that word flexible benefits or flex benefits, they are really talking about a Spending Account. It makes perfect sense when you think about it. Flex, flexible for the employee. The employee can choose where, when and how. You get that benefit of managing those dollars. You are in the best place or the best position to decide and know where and when you need to use your dollars.
Morgan: We have talked a bit about the benefits we have seen. You work with tons of companies, so what do you believe are the best benefits a Health Spending Account has for employees, and then also, the benefits it has for the business?
Daniel: The benefit of a Health Spending Account for the employees is flexibility, total control on how to spend their dollars and how to direct their dollars. They can use it for the services that they feel are most important. If they have, let us say, kids who have an orthodontic bill as an example. That is what they choose to do. They can allocate the dollars there. Maybe they have Lasik eye surgery they have been wanting to do for a long time. They can allocate the dollars there. They are not limited to certain dollars for certain benefits. They can use them as they need to. That flexibility gives the employee the freedom to choose. That is going to be best for the employee. It is going to give them the most value of most benefit. Probably, a happy employee, because they are not having to come out of pocket for those eyeglasses. Maybe in that instance, what they really need is a pair of glasses that can be expensive and that eye examination. That dollar rewards them, really, and goes to where they need it.
For the employer, for the business, it is also equally as good because they know when a dollar is gone out the door, that whole dollar went to the employee. In the traditional plan example where a dollar went out the door, the employee spent four hundred dollars on vision as an example, but they only got two hundred. Meanwhile, the employer sent the whole dollar out the door. It gets margined down. Only a fraction of the dollar reaches the employee. In a Spending Account for the employer, they know - a dollar went out, that was an expense, a deduction, but the employee got the whole dollar. It benefits both sides of the equation. Employees get to use that whole dollar. The employer knows when they have expense the dollar. It has been entirely used up where it was intended, in the hands of the employee to respond to their health and dental needs, and it is completely tax-free.
Morgan: Yes. Can you touch a bit more on the tax component of it? I know there is tax benefits for both the employee and the business.
Daniel: Yes. The employee receives those dollars in their hands tax-free. That is the beautiful part about the Income Tax Act that deals with these plans. That is what makes this possible, which is coming up in another question here. But that dollar flows to the employees outside of payroll. There is no payroll taxes on it. It is a completely tax-free dollar direct deposited into their account. If they have spent three hundred dollars at the dentist, they pay that out of their personal account, of course. They file the claim. They get the whole three hundred dollars back in their account and there is no payroll tax. It is not coming out less CPP and income tax and the other payroll deductions. It is coming out one hundred percent in their hands without tax. That is worth a lot more to it than a dollar. For the employer, it is a deduction, a hundred percent expense for the corporation. The employers deducting that cost of that dollar for the health and dental bill. There is no payroll tax for the employer. That is going to save the employer money as well. There are no taxes for the employees. There are savings on both sides and a huge benefit for the employee as well without having that payroll tax.
Morgan: Okay. You have hinted at this one twice now, so let us address it. What makes these plans legal? What governs these? What do employers need to know?
Daniel: The employers just need to know that yes, they can do this, which is totally awesome. By using an administrator like Olympia, they are setting the plan up. It is structured properly. It is compliant. It is the Income Tax Act that makes this tax-free. There is a part of that Income Tax Act that deals with these plans. Technically, they are called Private Health Services Plans or a PHSP. That is the legislation that governs all health and dental plans or let us call them employer-sponsored health and dental plans in Canada, whether it is that traditional plan that the employer is sponsoring through the insurer or Health Spending Account. What we are talking about is a private health services plan. The Health Spending Account plan moves money out tax-free to the employees at the time the employee pays a bill and files the claim. It is Income Tax Act that says the employer can set up and structure a plan. They set that limit. It is up to the employer what their limit is going to be. They, then, reimburse the employee for paid health and dental bills. The employee goes out, pays that health or dental bill, files the claim. That is the trigger for the money to move out to the employee to reimburse them up to their Spending Account limit, tax-free in their hands and a deduction for the employer.
Morgan: Can a Health Spending Account be used in any province?
Daniel: It can, except for the province of Quebec. In Quebec, these plans are taxed. There is really no benefit for the employee. It is no different than payroll coming out to them after tax.
Morgan: If a company is listening to this and they are curious about trying this, is there certain qualifying factors that they would need to meet?
Daniel: Qualifiers for the business? Not really. It is just a matter of, I guess, do they want to provide benefits for their employees. Qualifying is they have the ability to pay the bills, to set up the Health Spending Account plan. For the employees, are they actually employees, not contractors? That is important. I get those calls where they may have subcontractors or contractors that work for them. The dollars flow out tax-free to an employee and that employee, to define them, they really have to be someone that is being paid by the employer and earning T4 income. The qualifiers are they have a business, they are incorporated. If they are not incorporated, they cannot set up a plan. They must be incorporated and they must have those employees that earn T4 income. Those are pretty much the qualifiers from there. It is a matter of just plan parameters, dollar amounts and what they want to afford.
Morgan: Okay. I know, at Olympia, kind of our specialty is small businesses. I mean, that is a big part of starting this podcast, starting the blog we have, to just provide value for small business. What size company is ideal for Health Spending Account and does it matter how many employees a company has?
Daniel: Good question. It does not matter. Minimum size, one employee. These plans start at one employee. That is a really good question because I get that question all the time. "We only have one employees," or I hear a lot of small businesses saying, "You know, we are really small. We only have two employees. We do not have three employees." It is a great question. I love that one because one employee is all it takes. These plans address a single employee. It can be scaled up to as many employees as the employer has or will have in the future. The beautiful part of the plans, yes, you can do this. You can have one employee, set up the plan and way you go. That is all you ever have, the plan works as good with one employee as it does with one hundred employees or the number of employees that you have.
Morgan: Yes, so large companies can use this as well?
Daniel: Yes, exactly. It makes no difference on that size. It is just a matter of do you have that employee and you can plug the plan and way you go.
Morgan: That is great. A thing that I know that comes up a lot with traditional insurance is pre-existing medical conditions. Does that come into play at all here? Does that disqualify employees or change costs?
Daniel: It does not. That is also one of the benefits of the Health Spending Account. It is that money is flowing to the employees to reimburse them for their paid health and dental bills. There is no pre-existing condition clause. You may have a pre-existing condition or the employee may, what is going to change is that they are going to be able to claim those dollars for those pre-existing conditions the way they would for any health or dental bill. If the employee already has a prescription drug that they are taking on a regular basis, the employer sets up a plan, sets up the Health Spending Account, gives that employee X number of dollars a year. The employee can turn around and claim those future prescription drug claims, for example, or prescription drug bills that they pay under the Health Spending Account. So, no, pre-existing conditions never come into play regarding Health Spending Account.
Morgan: Fantastic. What about age limits? Does it matter how old or young employees are?
Daniel: No. I always like to ask people how young they are just for fun. I get those calls, "We have an employee who is seventy-five years old or have someone in the family working for me and a parent or something like that." It does not matter. Age does not come into play in respect of the Health Spending Account. The only thing that matters is does that person work for you? Are they an employee? Yes? Beautiful. You can set them on the plan and assign them same annual limit as anyone else or a special limit if that is what you come up with. That is the beautiful part about these plans. It is flexible for the employee, but it is also flexible for the employer to address those employees regardless of their age.
Morgan: What about if the employee has dependents? Say they have a couple of kids, a spouse, can the coverage extend to them? I think you touched a bit on this with the first question.
Daniel: Yes, and so like any benefit plan, that employee is enrolled on the plan. They are then able to add their dependents, that is spouse and kids. They can claim for themselves and their dependents and they get to, again, have that flexible benefit to allocate the dollars where and when they need. They are sprinkling the dollars amongst their family. I know, as most families, you got a kid going to the dentist or yourself or your spouse, then you are going to pay that bill. You are going to claim it. It really works first in, first out ,or your family as the bills are incurred. Dependents up to age twenty-one, if they are full-time students, they can be included up to age twenty-five.
Morgan: Fantastic. What about a company? They have got a few different employees, maybe a couple are full-time, maybe a couple are part-time. In that sort of situation, would the company have to cover every employee?
Daniel: Good question. No, they do not have to cover every employee. I think what I find, in day-to-day working with small business owners and businesses with employees, is that they typically want to cover all employees, mostly full-time employees. Some will include part-time. They do not have to do that. You do not have to do, for that matter, include all of the employees if they did not want to for one reason or another. They could select a group of employees, include them on the plan and not include another group of employees. There are not any rules on having to have everybody included. It could be a problem, of course. Optics within the business, so they might want to look at that from that angle, but from the perspective of having to provide the Health Spending Account for all employees, no, it is a choice the employer can make. They can, again, do different limits for different classes of employees. They could have a class of employee. For example, family with kids, they might have a higher limit. They might have lower limit or they might have just full-time employees the same for everybody regardless of dependents.
Morgan: So once we have set this up as the business owner, we have chosen everyone getting funded. How then are the claims funded by the business?
Daniel: Funding of claims is going to relate back to number of employees and annual limits. Really, it is a simple process. Again, let us just use an example. Let us say you had twelve employees at a thousand dollars, but they used easy math. You have got these twelve employees. You have enrolled them on the plan, you know that all twelve of them, and that was pretty easy math. It is twelve thousand dollar. That is a thousand dollars an employee. When are they going to claim? How much? Of course, no one knows. We know there is likely to be claims. How do you fund the plan? We recommend you fund the plan at one-twelfth of the employee limits. Easy math again. Twelve thousand divided by twelve is a thousand dollars a month. That is what we call our recommended monthly funding amount. The employer is totally free to design that monthly funding amount. Minimums is a hundred dollars, some cash flow each month. Maximum is whatever they want to set it at.
What actually is funded is up to the employer and the one-twelfth rule works quite well. It is simply a multiplication of number of employees times annual Spending Account limits equals x divide that by twelve. That is a great way to set up a plan and fund it and that can be adjusted at any time. If for whatever reason funding is running ahead of claims more than the employer would like and the funding account is accumulating, they can slow it down. They can go in and adjust that monthly funding and reduce. If they are getting tight to that budget and they are finding that five days before the end of the month, they ran out of money. Well, what they will do is do an EFT, electronic funds transfer, move more money into that account to top it up, so that claims can be paid. And then maybe adjust the funding drawn the first of the next months. Increase it a bit to give a little bit more money for the next month. They have that flexibility to adjust that funding on the fly, manage the plan and just make changes to make your life easy.
Morgan: Are there limits with both minimums and maximums for how much employees can be funded?
Daniel: Yes. Technically, there are not restrictions under that and that is speaking under the income tax rules. You get the exact rules and so on, but for purposes of this plan, the minimum limit is two hundred and fifty dollars. Maximum is fifteen thousand dollars. An employer is free to set that limit between those minimum and maximum ranges. Whatever they want to set up, they can make adjustments to that limit annually and they can, again, have different limits by different classifications. They can treat employees differently as they see fit and of course, themselves. Most importantly or as important for the employer who is going to use the plan themselves, they can set a high limit. A high limit really just means they will be able to claim everything that they need to for their health and dental bills.
Morgan: Is there a limit on what the employer can give themselves compared to employees?
Daniel: Yes. We follow a rule that the employers limit should not be more or greater than ten times that full-time employee limit. That keeps the plan on side from a tax perspective. What we do not want to have is a hugely lopsided arrangement where the employer has this massive limit and the employee has a very small limit. That could be called out as a taxable shareholder benefit just because it is so unbalanced. We want to be careful when we set these plans up. It should be reasonable. Limit should be reasonable in relationship to what that owner or that shareholder limit is in relationship to what that full-time employee limit.
Morgan: Awesome. So let us talk about, now, the employee is actually making a claim. Say an employee has gone to the dentist, what happens next?
Daniel: That is a great question. The employee will be able to claim immediately actually when they come out of the dental office. I talked to a lot of business owners with employees about that, that they should use the claim app. We have an app that can be downloaded for Apple and Android. They can also go online, of course. Log in to their plan later on that day or whatever they like and add the claim online. The claim app is best because it allows a quick return of that reimbursement to the employee right at the time that they filed the claim, or sorry, that they have incurred that bill. If they are at the dental office, they pay a dental bill. They get that receipt. They are sitting in their car. They can open up the app. They can punch in the claim. Take a snapshot of that receipt. They have uploaded it, and they are done. Really within minutes of having paid that health or dental bill they have already entered their claim and submitted it. They will have that reimbursement back within two business days to their personal account. That claim app really sets the speed in which they are going to get reimbursed back and that is the best option. If they are not in a hurry and they are going to go to get their money back and they do not want to do it right at that moment, they can do the app later on or they can claim online when they are at their computer later on that day at work or at home.
Morgan: Yes, it is so great with the app. I have done it just like you said at the dental office afterwards. Just immediately take the picture of the receipt, put it in there, then it is out of mind and you just wait till you get refunded.
Daniel: That is right. The out of mind thing is probably as important as wanting to get reimbursed quickly. I know I have done it and I do not have to worry about it later on. Who wants to kick that can down the road?
Morgan: And there is not a lot of paperwork which I love. You just put in a few fields there are so it is really quick. Let us talk about the company's money again. They funded the account. Like you said ,say we are doing twelve employees at a thousand dollars each. Over the year, they have put in twelve thousand dollars, then there is money left unclaimed at the end of the year. Maybe a few employees made very little claims or no claims at all, what happens with this money?
Daniel: That money is still sitting in that employer's, let us call it a claims bank account. That employer's money is sitting in their plan and it is there to be used for the following year’s claims. It is still there, the dollars. It is going to roll over and fund next year's claims unless the employer requests the money. It is refunded back and they have that control as well. Completely transparent plan.
Anytime they are logged in as that plan administrator, they are going to see the balance of their claims bank account or that claims funding account. At the end of the year, as you said, Morgan, if all the employees have not claimed all of their dollars they are going to have a surplus. Again, that speaks back to what we had talked about earlier, that money that is not used is still in the hands of the employer. That is good for the employee and good for the employer. It just means we are not wasting dollars. If the employer does nothing, the money rolls forward. Next year's claims, they have already got a fund or that claims bank account prime to begin paying next year's claims. They can adjust their monthly funding. They can leave it as it is. Let that surplus roll or they can withdraw part or all of the funds at any time.
Morgan: Awesome. The next one we have is about how much employees can claim. We have touched on that, but something we have touched on is do employees contribute to this plan at all?
Daniel: Good question. No, I get that question, too, you know, because I think it comes from those traditional plans where the employee is paying part of the premium. Well, if we think about this plan, it is not necessary at all for the employee to pay any part of this plan. It would not make any sense. It is the employer, again, is coming forward saying "I am going to provide a benefit," well, a benefit is something paid by somebody else and it is there to encourage the employees to help them out and to be able to attract and retain the people that the employer wants to. The employer puts their dollar in, the employees will claim that dollar as they need to and when they need to if they need to. The employee's participation is guaranteed eventually anyways. If they spend all of the employer's dollars, once they have hit that limit, for their next dental visit, they are going to pay for it. That is going to come out of their pockets. Best to leave their dollars with them that they have earned after tax in their pocket. Provide them that tax-free benefit. When the employee uses up the dollars if they do, they will, then, pay for their next dental. That is their contribution. So, no, dollars are never put into this plan by the employee. It does not make any sense to do that. We are going to take that employers dollar they want to provide and that is going to form the bases of the plan in that annual Health Spending Account with employees.
Morgan: Can the company then control at all what employees are claiming?
Daniel: No, that goes back to that traditional plan and the complications with that traditional premium type plan where we are trying to control costs. Well, the control of the costs in the Spending Account is the employer deciding how many dollars they want to afford. That makes the Health Spending Account so much better for everybody because it gives that employee that total flexibility. Instead of saying to the employee, "Look, basic dental services, you can claim up to five hundred dollars at a hundred percent and major at fifty percent and no orthodontist bill." Instead of doing that, what we do is we put that on its head and say here is what we have available as the employers budget for dollars. Let the employees decide where to spend that money and that control comes in with the annual limit. Essentially, the employee is free to have those flexible benefits, spend it where and when they need it and the control is they can only, of course, claim up to that limit set by the employer. In that simple example, we use of a thousand dollars per employee. There is twelve of them, it will be a thousand dollars. The employer, of course, can set that limit at whatever level they want and they can also make an adjustment to the limit during the year if they, for one reason or another, decided they wanted to help someone out or give them a little bit of extra money, they can do.
Morgan: Yes, that was something I had sort of mentioned earlier as well. Being able to really have some autonomy over your own health and know your own needs. It is quite nice for that.
Now, let us talk a little bit about the admin side of Olympia Benefits in specific. These are going to be questions specific to Olympia Benefits. For anyone listening, I will link down some resources so you can take a look at some more information about this on the website, but then I always encourage you to do a bit of your own research as well and make sure that it is the best plan for you. Although, of course, Dan, I am sure you would say it is.
Daniel: I would.
Morgan: First of all, are there fees associated with claims or any annual fees that a company should be aware of with Olympia?
Daniel: Yes. First of all, it is fully transparent. What you see in an instant or in a glimpse is full disclosure. The fees associated with claims under the group plan are an administration fee, eight percent. There is a one-time setup fee and there is an annual fee. The plan ongoing costs are the administration fee, which is that eight percent of claims. Again, that is going to be a great way to run a plan because if the employees not filing any claims, there are not claim to pay and there is no administration fees. There is no cost until that employee claims. When they do claim, then the cost of the plan is that receipt that is being reimbursed plus the administration fee of eight percent. There is an annual fee, a renewal fee of ninety-nine dollars each year on their annual renewal date. If you set the plan up today, that ninety-nine dollar renewal fee will come to twelve months from now on your renewal date and you, of course, get a thirty-day renewal notice and I think a fifteen-day renewal notice letting you know plans coming up for renewal and that ninety-nine-dollar fee is going to be charged. There are one-time setup fee. It is three hundred and thirty-five dollars. The three and thirty five dollars is the setup fee for the whole group to set that plan up, set the parameters, get that plan established and running, and then each employee that you enroll is a one-time forty-dollar fee.
Morgan: Awesome. Are there any downsides that you see to Olympia's Health Spending Account?
Daniel: The only downside to... I have to think about this one because it comes up and what are the downsides to Health Spending Account? The only thing that I can think of that would be a downside to the Health Spending Account is that there is not that Pay Direct Card where the employee has that ability to pull that card and is paid directly. To get around that or reduce that irritation, if you want to call it that, is using that claim application. The fastest way to get reimbursed is pay that bill, pull up the app, fill in your claim, take a picture, upload and you are done. Two business days, money back in your bank account. I cannot think of anything else on a Spending Account that is a downside other than that simple inability to have that Pay Direct Card. It does not come up very often as a negative. Once in a while, I hear that.
Morgan: So the employee needs to have, essentially, the room on their credit card for their expense upfront.
Daniel: That is right.
Morgan: That is a good point to make. Olympia does have additional benefits employers can add to the group Health Spending Accounts. Can you touch a little bit on this?
Daniel: Yes, so we have some add-on programs. One is a Wellness Spending Account. The employer wants to provide benefits for let us say a gym membership or running shoes or golf clubs or some activity that relates to health for the employee. They can add a Wellness Spending Account plan on.
Morgan: It was great this year during lock down to get some home gym weights and things.
Daniel: Right? We have great time to have that wellness plan in place. You cannot go to the gym for a period of time, so you got to go to the store and pick up some weights and bring them home. That would be a taxable benefit, the Wellness Spending Account, unlike the Health Spending Account. Now, we are talking about a taxable benefit, but it pretty much works the same way. The employer sets he limit, adds the plan on and the employees can claim for their wellness benefits. They will be reimbursed back as an after-tax benefit.
Morgan: Are there other add-ons?
Daniel: The Virtual Healthcare, which is telemedicine and there is also some insurance. The Virtual Healthcare, to deal with that first, is like a virtual doctor or virtual healthcare service, telemedicine, doctor in your back pocket. Awesome program. Essentially, about seventy percent of primary care can be handled through that Virtual Healthcare. Maybe the employee or business owner does not have that luxury to get out the door and get to see a doc or it is an interruption or they do not have time. In addition, it is not convenient. Geography, how far do I have to travel and I have to wait. Maybe I cannot get in to see my doc for a week or two. Now, especially during COVID times, it has made that worse. It has kind of exasperated it. I heard a lot of those stories coming up. Whereas the Virtual Healthcare is an app on your phone. You open it up. You are having a conversation almost immediately. It includes mental healthcare, which I find awesome. One of those things is what do you do if you have a mental healthcare issue as an example. I thought that in the past. What if someone in the family has that or you have a friend who does not know who to talk to or how to get in touch, you can pick up that app. Open it up. You have instant access. That is an awesome service.
Morgan: It is so great. It has been really helpful. I would say this year, too, with so many people, you do not want to necessarily go to a walk-in clinic if you cannot find the time to see your doctor and schedules have been so busy. I have used it a couple times where I will hop on and you can usually start in a chat where you kind of let them know what you need, and then they will assign you a doctor to talk to and you can do that while you are on your break at work and schedule the talk later. I found it really, really flexible and great. And then when you do talk to the doctor or nurse practitioner, it will sometimes be both, to me, I felt like they have given me a lot more attention than I have ever gotten at a walk-in clinic.
Daniel: That is really interesting, is it not? I have heard that same feedback as well. It really makes you stop and think about how best can I access these services and how personal is that.
Morgan: And they follow up which is great too. I am a huge fan of that service. We actually did a whole episode about it if anyone listening wants to learn more about that specific feature, I know that has become a lot more popular this year, too. Let us keep going with add-ons then. What else do we have, Dan?
Daniel: The third piece is insurance. We have insurance being true insurance. We have Medical Travel Insurance. Another one called Emergency Medical Insurance and Catastrophic Drug Coverage. These are insurances that can be added directly to the plan. The Medical Travel Insurance is a travel insurance plan covering the employer and employees and their family members outside of Canada. Sorry, outside of their home province, so in Canada and outside of Canada. It also, by the way, includes coverage for COVID-19, which is awesome. It is up to forty-five days per trip. That can be added onto the plan. That is real insurance. That is, of course, people generally understand that if you are... Let us pick on the United States. You travel down to the US for either you are crossing the border you live close by or you may be going down somewhere where it is warm. You did have that travel insurance. If you have an accident or a suddenly ill, cost can be astronomical, that is what that insurance does. It pays for those unplanned accidents or sudden illnesses.
Emergency Medical is another add-on insurance. Emergency Medical is going to cover those things that you do not plan to do at home when you are not traveling and there is six items specifically. There is ground ambulance, semi-private hospital, ambulatory devices, accidental dental, private duty nursing and convalescent care, which are all disclosed on the website by the way. You can take a look at that. But those six items, when you think about them, they are, obviously only things that are going to happen if I am suddenly ill or I have had an accident, so I can insure them. That can be added onto the plan as an insurance to cover off those unplanned health and dental bills. By the way, it saves the Spending account. One of my kids had an ambulance ride, three hundred dollar bill. In that case, rather than having the employee to claim it at their Spending Account, they are going to be reimbursed under the insurance plan because they have that ambulance and they are not going to go to the Spending Account, spend their dollars and reduce what is available for their day-to-day plan events, like going to the dentist or buying glasses.
Third piece is Catastrophic Drug Coverage. Catastrophic Drug Coverage is designed to pay for future unknown prescription drugs for serious medical conditions. Probably, the best way I think people have generally have an idea what would look like, I got a call from a person who had questions about a cancer drug that was ten thousand dollars a month. These could be expensive drug bills and generally speaking, the province is doing a very good job of covering off, specifically, that you know cancer care cancer drugs, but once in a while, there are drugs that fall in between the cracks and I might be responsible for that or I might find that I need that drug and it is not approved. Catastrophic Drug Coverage would help pay for those drugs.
Morgan: And like you said, it is true insurance. I mean, your kid needing an ambulance ride was never something you could have planned at the start of the year. Whereas, going to the dentist I know I am going to do that every nine months or whatever. My eyes, I know I do that every year or two. These are easy things to plan and budget with the Health Spending Account.
Morgan: Let us talk about Olympia Benefits compared to other providers. There is quite a lot out there, but I would like to hear what you think makes Olympia the best choice.
Daniel: Olympia is a great choice for a whole bunch of good reasons. One, we have been around for the better part of twenty-five years. We have got great depths of experience. You get to talk to people like me who have been around for a long time. I spend my life doing this. I love what I do. I have a passion for this. I spend my days helping business owners set up plans walking through how best to do that, how to address employees, all the things we have been talking about the administration fee that we charge is eight percent. That is very competitively priced. That is about twenty percent lower than the average cost, the average industry fee or more.
Our pricing is completely transparent. I mentioned that earlier. You are on our website, you are looking at it. It is there. It is right in front of you. There is nothing hidden. I get that question all the time by the way. "Do you know I was looking at the website. I was looking at your plans. I saw how things are priced. Are there any hidden fees or anything I should know? Anything else?" It comes up a lot. I got to really appreciate that question because I think people are used to more traditional plans and boy, they get frustrated with them. Lots of costs, lots of things they did not anticipate. They could not claim. That is not the way this works. It is totally transparent. What you see is what you get. It is responsive, it is flexible and it is low-cost plan. As I said transparent and easily viewable online. There should be no questions.
Everything, in fact, we went over today. There is not anything else. There are no other charges for the plans. It is just simply what we have talked about and in the pricing structure.
In addition, if you are on our website, looking at our Google reviews, we have over a hundred and forty reviews. Our rating is for 4.7, so the highest in the industry. Check out our reviews for proof of our professionalism, our service and our quality, responsiveness, real-time help,
live chat, top-of-the-line customer service. You talk to real people and that live chat feature is awesome. I know when I am on someone else's website, I always look for it. How do you get in touch with people? That is an awesome way to get in touch. Just click that live chat feature down the right hand corner. It pops up, have a chat. You phone in, you get people live. We pride ourselves on picking the phone up answering the calls. I get a lot of that feedback. Where, "Wow! You answered the phone." That is funny. But the more you hear that, the more it encourages you to do that. And why would you not? I would rather deal with it right on the spot, then have some call back or leave a message.
History and experience which I touched on a bit. We have been around for twenty- three or twenty-four years. We were a public company completely transparent. I think that pretty much sets us apart from the industry and those other competitors that are out there.
Morgan: We have got such a good customer service team. Shout out to them. They sit outside of my office and they are always on calls and always responding to chat.
Daniel: They are awesome.
Morgan: It is great, yes. Folks like you, Dan.
Daniel: Oh, thanks, Morgan. I appreciate that.
Morgan: Yes, so let us do the last one here. For anybody who has listened, if they are interested in signing up, what do they do?
Daniel: Sign up is simple. Essentially, you are on the website. You are looking at the information. If you look, there is a sign-up button up the top. If you are scrolling through the pages, sign up now. It is done online. You click that button. It takes you to the web page. It asks you for some real basic information: first and last name, email address, you select the plan from the drop down menu and you tick the box to agree to the terms and conditions, which you read and are straightforward, again, fully transparent and nothing hidden. Way you go. Five minutes later, plan is open. You get your welcome email and you are off to the races. You can claim the same day. No waiting period, no pre-existing conditions. Employees can claim same day as well. The whole process is done literally in five minutes online.
Morgan: So great. I mentioned this on part one of this episode for incorporated professionals, but this podcast is intended to be educational. We do this to provide the best that we can find for small businesses, and I would not bring someone on if I did not feel they could accurately describe these plans. Thank you so much for answering all those questions, Dan, and doing these two episodes. For anyone listening, if you do have questions, like you mentioned, you can hop on the website there and jump right into a chat.
Daniel: You are welcome. Thank you as well.
Morgan: Thank you so much for tuning in to this episode of The Small Business Mastermind. A big thank you to our guest, Daniel Gillis, for joining us for two episodes and answering all of the FAQs I had about Health Spending Accounts. If you would like to learn more about Health Spending Accounts, you can visit olympiabenefits.com to learn about Olympia Benefits' specific plans, or you can check out the podcast description for some more resources there as well.
For anyone who is listening on Apple podcasts or Spotify, please consider taking a moment to rate, review or follow this podcast if you have been enjoying it. It really helps us grow the show and allows us to bring on great guests like Dan. Once again, thank you so much for listening and I will be talking to you again very soon.