Health care spending accounts, part 2: Flexible and predictable | Small Biz Advisor

So, what makes an HCSA such a valuable addition to a benefits plan from both the employer and employee perspective?

Two words: Flexible and predictable.

Flexible:

As employers face changing workplace demographics, it is becoming more difficult to design cost-effective benefit plans that meet the needs of all employees. Simply put, a 25-year-old single employee has different health and benefit needs than a 46-year-old parent of three. This difference is often more prevalent in smaller places of employment where demographics and expectations can be impacted by one or two hires.

An HCSA allows employers to change the way money is allocated to benefits without necessarily changing the total amount invested in their benefits program. This allows organizations to offer innovative and flexible benefit packages that can attract new employees and help retain current staff.

From an employer perspective, an HCSA is an invaluable tool that can either replace or augment certain traditional benefits or can be positioned as an enhancement on top of already comprehensive coverage.

Many of the things that make HCSAs attractive to employers also translate directly into employee advantages. HCSAs not only provide employers with a great cost control, but they can be popular with employees who feel that they now have ‘control’ over a personalized benefit based on the eligible expenses they choose to submit for reimbursement.

Predictable:

Because HCSAs have fixed dollar amounts available to each employee per benefit period, HCSAs can help reduce claims uncertainty which ultimately impacts future plan costs. Because of the way HCSAs are set up on an individual employee basis, employees often think of submitting claims to their HCSA as if as they were withdrawing money from their own bank account.

This consumer-centric approach is not always present when employees utilize traditional benefits. That is because employees rarely understand the costs associated with the provision of these benefits. With an HCSA, employees can actually understand and witness how much they are spending with each claim and how much they have left to spend.