Canada offers a publicly funded healthcare system that has a high approval rating throughout the country- 92% of Canadians say they prefer the Canadian public healthcare system over the healthcare system in the US. However, gaps in the public health system lead to about 30% of healthcare costs falling on the shoulders of private insurance or paid out-of-pocket. Unfortunately, in some ways, people who don’t have the means to cover expenses outside of the public system have no choice but to live with untreated medical issues.
A glaring instance of this is mental health support. Due to budget cuts within publicly funded facilities, mental health spending has sharply transitioned to the private healthcare sector. Getting adequate medical care for mental health is limited to those who can afford their own mental health spending or those who have additional insurance, either self-funded or provided by an employer, that covers mental health spending.
For this reason, it is more important than ever for employers to provide supplemental health insurance for their employees, which unfortunately adds to their overhead labor costs. Rising costs for traditional insurance plans is one of the biggest issues that Canadian small business owners face. In fact, 72% of small business owners are worried about the cost per employee for health care plans.
As private healthcare costs rise both for patients and small businesses who provide health insurance to their employees, Health Spending Accounts (HSA) are becoming more popular. An HSA essentially reimburses the employee for any healthcare expenses they have to pay, up to a predetermined amount each year. As with any health insurance option, HSA plans come with a list of pros and cons:
- Pro: No Co-Pays or Additional Expenses, Up to the HSA Limit
The biggest attraction to an HSA is that it covers all healthcare costs incurred by employee. Unlike traditional insurance, an HSA has no co-pays, deductibles, or uncovered expenses.
- Pro: Flexibility
Unlike traditional insurance, which specifies the type of medical expenses it covers, an HSA will covers any type of medical expense, up to the annual limit (often around $2000). For instance, an employee who has lap band surgery costs or dental implants costs would most likely have to pay out-of-pocket with traditional insurance, but would be eligible for reimbursement if they had an HSA.
- Pro: Pre-Existing Illnesses Are Covered
Employees with pre-existing conditions have a hard time finding traditional insurance that will cover them; an HSA plan covers all expenses, including expenses from pre-existing conditions.
- Con: Does Not Cover Expensive Health Issues
An HSA plan is designed for preventative care and health maintenance. The annual reimbursement limit of an HSA is not intended to cover a catastrophe.
- Con: An HSA Has Additional Administration Fees
The Canadian Health Act of 1984 stipulates that an HSA has to be implemented by a third party. For this reason, additional setup fees and a percentage of the HSA claim is added on top of the medical expenses. On the plus side, this is covered by the employer and is 100% tax deductible.
Does your employer offer a Health Spending Account? Does it meet your healthcare needs? Is it difficult to file a claim and to be reimbursed? We want to know all the details! Please leave a comment and let us know!