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Can I have a unique benefits program that is a combination of a Health Care Spending Account and a traditional plan?

Posted Nov 1st, 2016 in Build a better plan, Employer FAQs

Yes! Our Revolution Combination Plan for employee benefits challenges the industry and redefines the century-old definition of a group benefits plan.

Think about it in terms of car insurance.

Would you buy car insurance to cover minor scratches, paint chip-offs and dents? Not likely.

Why not? Because buying insurance for such predictable, but high-frequency, low-cost and low-severity events is very expensive! Typically, such costs are covered or 'self-insured or self-funded' by the driver using personal savings. 

In the same way, providing insurance coverage for predictable and frequent costs such as regular medical, dental and vision care is very expensive (as evidenced by the annual inflation trend of ~11% in the industry) – and often unsustainable for small- and medium-sized firms with not-so-deep pockets.

Instead, we recommend using a Health Care Spending Account (HCSA) – which is both tax-efficient and budget-friendly to the employer – as a self-insuring strategy for these high-frequency, but low-cost medical expenses.

On the other hand, high-cost, low-frequency occurrences such as death, disability and emergency medical needs are akin to severe or catastrophic car accidents. They don't happen often, but when they do, they can be very expensive. Buying comprehensive coverage for these types of events is always advisable. Putting a high need plan in place, which is paid for through premiums, will ensure your employees are protected for these high medical costs.

With a Revolution Combination Plan, you pay for the small expenses and your insurance pays for the larger ones.

There are 2 sides to our combination plan coin – the HCSA and the insured benefits.

On the HCSA side, the employer decides on the combined maximum amount – called 'HCSA Limit' – that is applied to the total pool of expenses for the year for each employee. HCSAs are driven by employer funding – or self-insurance – where the employer picks the limits and determines future increases. The costs are borne by the employer and can be budgeted with ease – no surprise at renewal time.

Then, employees are free to use the amount provided to them as per their own needs without being subject to categorical caps and limits.

On the insured benefits side, the Revolution Benefits team has negotiated a block arrangement with preferred insurers to provide an optimized plan design that works perfect with the HCSA, while insuring unpredictable, infrequent events that can have a devastating impact on an employee’s financial and physical well-being.

This design allows employers to provide for “full insurance” for employee life, dependent life, long-term disability and critical illness. Catastrophic needs are also covered by a high need plan which provides 100% coverage for hospital, private-duty nursing, very expensive prescription drugs and out-of-country emergency medical needs.

Your Revolution Benefit team will be happy to come in and show you how we can make this unique solution improve your bottom line. 

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