When it comes to benefits, the smallbiz owner certainly has a lot more choice on how to set one up than he/she may think. It’s somewhat surprising that the majority of smallbiz owners still default to Chamber of Commerce, Association, and “in the box” products offered by the larger group insurance carriers simply because their broker tells them too. Most of these products are good and will work but they tend to lack the flexibility that some smallbiz owners are looking for.
In fact, there are quite a number of carriers that offer group insurance/employee benefit packages like Health Care Spending Accounts (HCSA), Traditional Group Insurance (Traditional), Administrative Services Only (ASO), and Flex Benefits (Flex). Each of these are customize-able within the context of the parameters as determined by the Actuaries and Marketing folks of the carriers. If the smallbiz owner works with a group insurance specialist to select the right plan design for the right cost, then they will enjoy having developed their own benefits plan.
But…what if, during the initial discussion about what’s best for the smallbiz owner, it is determined that what they really want is a “best of both worlds” scenario? For example, the smallbiz owner likes the sounds of the Health Care Spending Account because he/she dictates what is going to happen at Renewal time but doesn’t like the fact that there isn’t any “what if…” coverage. Well in this instance, the smallbiz owner may feel better with the addition of Catastrophic coverage to the Health Care Spending Account…and a Hybrid plan is born.
Let’s take a look at a few other Hybrid solutions:
- Tradtional and ASO – this Hybrid tends to work well where the Dental is set up on an ASO-basis and the rest of the benefits are Traditional. Dental works well on ASO because it is fairly easy to anticipate what the claims are going to be, especially if you have a “Basic” only plan. The big win here is that the “higher appetite for risk” smallbiz owner, is on a “pay as you play” basis for Dental and will never find themselves saying, “that damn insurance company made a lot money on our Dental plan last year.”
- Traditional and HCSA – this is a great way to offer benefits in a way that either a) allows additional flexibility within Health & Drugs and Dental coverage or, b) is a a great cost-containment mechanism to keep such costs as paramedical, vision care, semi-private hospital, and major dental in check.
- ASO and HCSA – this is something that many smallbiz owners are starting to take into consideration because they have a limited budget and just want Prescription Drugs and Dental covered. This Hybrid allows for some personal cost-savings because they are no longer paying for their personal claims out-of-pocket but are channeling them as a business expense. In addition, there are some savings in the carrier expense line compared to a Traditional plan. Plus, they have enhanced the Compensation of their employees by introducing the HCSA for them.
- Flex and HCSA – another way to offer benefits in a cost-effective manner is by introducing a Flex plan that allows for the choice of benefits including HCSA. This is actually typically built into a Flex plan so that unused “Flex credits” are just rolled into an HCSA. This Hybrid tends to work well where the workforce demographics have more of the “young and indestructible” type employee.
- Wellness Programs and HCSA– one of the more recent additions to the Employee Benefits landscape are Wellness Programs. Typical Wellness Programs include gym memberships, personal training, vitamins, etc…added to the flexibility of an HCSA and you have a powerful 1, 2 benefits punch!
Located in Cambridge, ON Sharkey Group Insurance provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.