Health and wellness spending account wisdom

Traditional Group Benefits vs Health Spending Accounts

Traditional Group Benefits versus Health Spending Accounts is a question that is being asked by more and more employers every year.  According to The Sanofi Healthcare Survey January 2020 health spending accounts are the single largest incentive for an employee to stay with an employer.  That is one of many reasons why an employer might look to add a health spending account to their traditional group benefits package or even replace the traditional plan altogether.  There are many other benefits that health spending accounts provide to employers starting with cost certainty; an employer decides the exact amount added to each employee’s account and that amount is a fixed cost, the only way it will change is if the employer decides to change it.  Another benefit is that a health spending account is a tax-deductible business expense. 

Traditional group benefit plans rates change from year to year depending on previous years usage by plan members so employers are always dealing with a variable expense.  With traditional plans there are no refunds for any unused benefits, with health spending accounts any unused benefits are returned to the employer.

The following chart outlines many of the advantages Aya health spending accounts provide over traditional group benefits for both employers and employees.

Traditional BenefitsAya
Combined benefit amount is unknownBenefit amount is fixed and determined by Employer
Future premium increases are based on total plan usage by group members, which is unknownEmployer budget is fixed and does not increase unless you choose to increase
No refunds for unused benefitsRefunds are provided if benefits are not used
Limited set of benefits coveredComprehensive List of benefits covered
Potential deductiblesNo deductibles
Stringent structureFlexible Structure

There are many reasons that employers are adding to, or replacing traditional group benefits with health spending accounts; but the cost certainty it provides is the most impactful one.  Small businesses can provide their employees with the health care they want while at the same time have the peace of mind that their expense costs are fixed.

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