When employers are looking to provide a unique benefit offering to employees, the conversation of “total rewards” is reviewed.
Total rewards recognizes that employee motivation and satisfaction are derived from a range of diverse needs and can be best supported by bundles of different reward components.
Total rewards can be classified as the following:
Cash compensation (base pay, short and long term incentives)
Employee benefits – help protect employees from the financial risks inherent in daily life
Relational returns – psychological returns employees believe they receive in the workplace (recognition, status, security, challenging work, learning opportunities, team with great co-workers)
Benefits come in all forms of products, variances, and coverage. Often when the driver is flexibility for the employee and cost considerations for the employer, the conversation of a Health Care Spending Account (HSA) comes up.
Cost – The employer decides on an allotment per employee for the calendar year. This amount is reviewed annually. As it’s a set amount, the employer knows the financial risk to the company and can budget accordingly.
Employees have the flexibility to use the funds for whatever is needed most for them and their family. Some prefer extra dental benefits, others prefer more massages. There are very few restrictions, unlike traditional plans which have cost sharing or maximums.
How Do Health Care Spending Accounts Work?
Health Care Spending Accounts can be added to a traditional benefit plan or used as stand alone benefits. We recommend that an HSA be added to a traditional employee benefits plan in order to ensure that catastrophic coverage is in place for death, disability, out of country claims, and unexpected health costs.
The feedback from both employers and employees on the implementation of an HSA has been positive and as a result, they are gaining popularity.
Flexibility provides the diverse coverage needed for each employee.
The Bonus: When employers allocate a per employee budget, they have the option to provide employees with a Wellness Spending Account in addition to the Health Care Spending Account.
What is a Wellness Spending Account?
A Wellness Spending Account is similar to a Health Care Spending Account in that an annual amount is allocated to be spent as the employee desires. However, the type of expenses which can be reimbursed relate to personal wellness items such as:
Hobby and general interest classes, tuition, books, musical instruments
Nutritional counselling, vitamins, health assessments, weight loss program
Legal services, financial services, premiums on individual insurance
Employers who wish to offer both types of plans may offer a set annual budget for each account or a set total budget for both, allowing the employee to fix the percentage for each type on an annual basis.
Unlike HSA's, which provide a tax-free benefit to employees and a tax-deductible expense to the employer, Wellness Spending Accounts are a taxable benefit to employees although they remain a tax-deductible expense to employers.
In conclusion, as the generational composition of the workforce evolves, combining the HSA and the WSP allows employees greater flexibility and choice. This provides higher levels of satisfaction and helps to attract and retain your firm's most important asset.
But in order to get the most out of these programs, it’s important to ensure you have an advisor that can fluently speak to the various factors, including taxation, and the positive and negative aspects prior to implementation.
Ready to learn more about the benefits of an employee wellness program?
Employee Wellness 101: How Healthy Employees Lead to Healthy Returns
Discover how you can improve the well-being of your employees and improve your company's bottom line with a wellness program.