Group Benefits can be a confusing industry. When talking to an advisor, making sense of insurance company marketing, or even just reading about it, there is so much jargon used that honestly, it’s hard to wrap your head around it.
Even if you become bilingual in the language of benefits, there's still the matter of understanding the different options, how they work, when they can be used, the list goes on. For instance, what exactly is cost-plus? Isn’t it just another name for a Health Spending Account (HSA)? (Spoiler: not always!)
What is a Health Spending Account?
HSAs are a simple way for an organization to help plan members support their health.
In an HSA, plan sponsors contribute funds to members’ accounts, those members submit claims, and your benefits provider (which is obviously going to be Blendable) reimburses those claims using the funds provided. As long as the claim is for an expense that’s eligible for the CRA Medical Expense Tax Credit it can be reimbursed using an HSA.
Easy peasy.
There are no monthly premiums, no hidden costs, and you don’t pay for what your members don’t use. There’s a reason why we have an undying love for HSAs!
What is Cost-plus?
Cost-plus is just one type of HSA. In this model, plan sponsors only pay the cost of claims plus fees and taxes. Like all HSAs, you don’t end up paying for the coverage your members don’t use and there are no pesky premiums. Here at Blendable, we call this type of HSA our “HSA Rollback”.
So... What’s the difference?
We get it, you’re probably thinking “well Blendable, those sound like the same thing!” and you’d be right... sort of. As we mentioned, cost-plus is just one type of HSA. Let’s look at the differences.
Cost-plus – Blendable HSA Rollback
With cost-plus, the plan sponsor company contributes the funds and they’re used as needed, however, at the end of the benefit period (up to two years), any unused funds are credited back to the company. This allows the company to fully take advantage of the cost control/cost savings aspect of an HSA.
To put it simply, although a provider like Blendable hangs on to the funds so we can reimburse claims, the funds, until used, belong to the company, not the member.
Blendable HSA Classic
Let’s contrast that with the HSA Classic that we offer. In an HSA Classic, contributed funds are held in a formal trust for each member. That means the contributed funds belong to the plan members. At the end of the benefit period instead of the funds rolling back to the company, the plan members get to keep them for future use. This allows members to save up their benefit funds for emergency reasons, big upcoming bills, you name it!
So, the big difference is that with an HSA Classic, members have “ownership” of the contributed funds, while with a cost-plus-styled HSA like our HSA Rollback the company has “ownership”.
So why choose one over the other?
Which is the right fit? That depends.
There are tons of benefits, most that apply to both an HSA Classic and a cost-plus style HSA like our HSA Rollback. Some include cost control, flexibility, and personalization.
The right fit ultimately depends on what your goals are for your group benefits plan. If you want to provide the most value you possibly can give to your team and give them complete long-term autonomy, then an HSA Classic may be the best bet. It treats HSA funds more like part of the compensation package (but this compensation is tax-free for your members!)
Alternatively, if you’d prefer the absolute highest level of cost control/cost saving, where every dollar you put out either is used or gets returned, the HSA Rollback may be more your style. It shows you’re supporting health and wellness and expecting members to use their funds consistently.
We know this was a long one, so if you have any questions don’t be afraid to give our Growth team a shout! We’re always happy to discuss HSA options, other benefit solutions, or even just talk about the weather!
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