Medavie Blue Cross – Cost Plus or Health Care Spending Account?

September 15, 2015

Medavie Blue Cross recently enhanced its cost-plus service to meet the needs of employers wanting to offer flexibility within their group benefits programs. The enhancements to the cost-plus service take effect on October 1, 2015.

Plan Sponsors can use the recently enhanced cost-plus service or a health care spending account to provide flexibility and control on a tax-effective basis.

 

Flexibility vs. Control

Promoting the addition of a health care spending account for some or all of a group’s plan members is a simple, turn-key approach to strengthening the benefit offering. Because health care spending accounts assign a set amount of dollars to each participant, they allow the plan sponsor to predict and control cost of the offering. Medavie’s health care spending account options allow for reporting so that sponsors can strategically analyze how these extra dollars are spent.

A Cost Plus approach, meanwhile, transfers control and responsibility to the plan sponsor. Most often offered only to key employees, each Cost Plus claim is assessed, and approved by the plan before the member is reimbursed by Medavie Blue Cross. As such, the plan sponsor must determine that the claim is for CRA-approved health spending. It is also advisable that they be able to show that Cost Plus is made available to a range of employees, not just the principle or principles of the business, to ensure the payments are not deemed inadmissible by CRA.

This table provides a quick snapshot of how the offerings stack up to each other:

 

Consideration Cost Plus HCSA Commentary
Private Health Services Plan Both plans must follow CRA rules governing a private health services plan
Tax Deductible Expense for Employer Employer contributions are a tax deductible business expense
Benefit is Non-Taxable to Employee
Expenses must be medical and meet CRA Guidelines With both plans, the expenses must be reasonable and medically necessary
Claims paid are not applied to the group’s experience
Annual Maximum With an HSA, employers must decide at the beginning of the year, the amount available to each employee.

Cost Plus claim amounts may vary widely; no maximums are applied

Focused on key employees, executives and owners While a Cost Plus program is usually set up for key executives, a Health Spending Account is offered to all employees or a class or section of employees. (A Cost Plus plan that is solely for the benefit of shareholders/owners may not qualify as a private health services plan)
Sign-off required by a designated authority
Mobile and web claims
System automation The HSA system has automation capabilities - out of pocket amounts are automatically applied against HSA balance

-scheduled deposits

-scheduled cleanup

Direct deposit Reimbursement by direct deposit is available for HSA only.
Member statements Member statements available for HSA only
Group Statements Group statements available for HSA only
EOB EOB displays HSA claims paid and remaining balance information
Minimum Fee Applied he minimum admin fee for a Cost Plus claim is $25. HSA fees are the same as the groups’ standard admin fee

 

Category: Insurance Insights, Underwriting/Admin