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As Canadians, we are fortunate to have a health care system that doesn’t force us to pay for some services. For those services that we do have to pay for, there are options for coverage to help mitigate the cost.
We are all aware of traditional health insurance, it’s limitations and it’s benefits. What some Canadians are not aware of, are the alternatives to insurance (like a Private Health Services Plan – PHSP – or Health Spending Account – HSA).
Traditional health insurance comes with a gamut of fees, limits, and frustrations; all imposed by the insurance company itself. There is no control over how much you pay (to the insurance company), how much you can claim, and how you can claim. That’s where a PHSP can come in.
Under traditional health insurance, participants are subjected to premiums, deductibles, co-payments, co-insurance, exclusions, coverage limits, out-of-pocket maximums, capitation, prior authorizations, and many more. Let’s dive a bit deeper into these categories.
Premiums are the amount the policy-holder (or sponsor) pays to the health plan to “purchase” coverage. Premiums are never fixed and always rise (very rarely do they decrease) year after year. The average single person may pay $250/month for premiums on basic insurance. That works out to be $3000/year. In a basic plan, it only covers things like prescriptions, optometry, and some dentistry; the catch? It’s all limited by dollar or percentage. You may only get 80% coverage up to a maximum of $500 for each service – that works out to be $1500.00 per year in actual coverage.
But wait, you paid $3000.00 for that coverage and only received $1500.00 back? Where did the other $1500.00 go….
Deductibles… Deductibles are the amounts you must pay before your insurance kicks in. Some insurance companies will charge a high deductible in the hopes that you don’t make a claim or that your claim doesn’t actually come out of the pool of profit for them.
Co-payments are the amount you pay at the doctors office (or pharmacy, etc). These can be in the form of a dollar amount or a percentage (also called co-insurance).
Traditional health insurance loves to put in exclusions for services that they don’t wish to cover which means you have to bear the full amount of the service. If the service doesn’t fall exactly in the insurance’s approved list of services, then there won’t be any coverage for that expense.
Coverage limits are common with insurance policies. Sure, a policy may cover you, but only up to a maximum (for example, $500 in prescription drugs). Anything above that limit, you are forced to either forego the service or pay out of pocket.
For other items that you may be covered for, you may be required to get prior-authorization from the insurance before they will cover it. Often, dental procedures fall within this clause because the cost can be quite high.
Now let’s take a look at how a PHSP/HSA stacks up against traditional health insurance:
A PHSP/HSA with Accountable Value Financial Services, have no premiums, no deductibles, no co-payments or co-insurance*, no exclusions*, no coverage limits*, and no prior authorizations.
What does this mean? This means that more of your hard earned dollar stays with you and your company, not someone else’s company. As a member, you can choose to set limits for your employees (or not have limits). You get to decide what your potential annual bill would be for health benefits; not some other company. We do not charge a premium which allows the full amount you designate, to go to where it matters the most – your health care costs and your pocket. If you give an employee $3000.00 for the year, they get to decide where to spend that $3000.00; not an insurance company. They may have high prescription costs that would normally be capped by a traditional insurance policy or they may decide to spend more on massage therapy or physio which wouldn’t be typically covered under a health insurance policy.
A PHSP/HSA has far more flexibility when it comes to offering it to your staff. All you have to do is set a limit and walk away. Your company is only charged when a claim is made; there is no need to pay for a service monthly if it’s not being used. This frees up capital to allow you to spend your money on your company; not have it tied up in some other company’s bank account.
Of course, if you are looking for something a bit more restrictive, a PHSP/HSA with Accountable Value can be tailored to suit your needs. We have the ability to limit certain expenses (for example, if you already provide free glasses to your employees, you can choose to exclude optometry from the list of eligible expenses). You can also indicate that you want to only cover a certain percentage of the expense instead of the full amount.
The best part of a PHSP/HSA is that you get to decide what the parameters are for your plan, not someone else.
For further details on Accountable Value Financial Services’ PHSP/HSA accounts, please visit our website.
If you have any questions about a PHSP/HSA, we would love to hear from you!
37 Cranberry Avenue SE