“What happens when someone gets really sick?” It’s the number one question we get once we start talking about how Health Spending Accounts (HSAs) can take care of life’s expected medical expenses.
We’re the first to admit, HSAs are not designed to cover the high costs that come with serious diseases. But, then again, neither are premium-based health and dental plans. If you don’t want to take it from us, take it from the folks at Canada Life:
“I don’t think any employer envisioned a drug that costs hundreds of thousands of dollars annually on a recurring basis. Our benefit plans were not designed for that.”
Thankfully (spoiler alert) there are solutions!
How premium-based plans don’t work for high costs
Let’s draw up a quick example. Say someone has $20,000 worth of medical expenses this year. They’re happy to have a premium-based plan to help them out. Too bad it’s only set up to cover 80% of the costs (plans rarely cover 100%). That means they’re still paying $4,000 out of their own pocket!
To add a rotten cherry on top, higher claims make the premiums the employer pays for the benefits plan skyrocket. If the Plan Sponsor is a big fan of employees having “skin in the game” then it means everyone is going to be paying way more, or the plan could become unsustainable.
Well, what are the solutions?
First up, the Blendable solution to this conundrum. Our Excess Medical is a feature designed specifically to take care of unexpectedly high medical expenses. It’s insured coverage which means you pay (very affordable) premiums now to protect against something catastrophic happening in the future.
If a serious medical condition does strike, Excess Medical will pay up to $125,000 annually for things like drugs, hospital stays, or nursing (all the details are online).
But wait, there’s more! Excess Medical also includes a travel insurance component, so your team is covered whether they’re here at home, trotting the globe or even just heading over the border for the day.
What about Provincial support?
Each province has an obligation to cover drugs for those who don’t have access to a drug plan. These programs are paid for through our taxes and cover us for major needs related to cancer, diabetes, and more. Believe it or not, they’re better than you think!
In Ontario, for example, we have the Trillium Drug Program (TDP). It's available to all residents of Ontario who don’t have a private plan and kicks in to cover expenses after you pay a deductible. The deductible you pay is about 4% of your net after-tax household income. So it’s a sliding scale based on the ability to pay – what you have to pay depends on your income, not on how much the treatment costs.
To illustrate how these programs work, let's consider an example with our numbers from before. Suppose a household earns $50,000 after-tax per year and requires $20,000 worth of medical treatment. If they had a premium-based plan that covered 80% of costs, they would be responsible for paying a whopping $4,000 out of pocket. However, through the TDP they would only need to pay a fraction of that amount.
Under the TDP, they’ll pay 4% of their after-tax household income. So, using the same numbers as above, they’d pay a total of $2,000 split into quarters. That’s $500 per quarter, which they can budget for instead of paying $4,000 upfront.
Stay informed and ask questions!
Getting sick can be a stressful and financially draining experience. No one wants that for their team! But an expensive premium-based health and dental plan isn’t the answer. By being informed about the solutions you can do what’s best for your company and your team.
We know understanding group benefits can cause headaches, but it doesn’t have to! We pride ourselves on serving up the most digestible benefits content around so head on over to our Resource Centre to get all your questions answered. Still, itching to learn? Get in touch with our Growth Team or check out our Twitter, Facebook, Instagram, or LinkedIn!
