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[Report] Utilization of Health Care Spending Accounts (HCSA), 2020

By: Benefits by Design | Tuesday September 15, 2020

Updated : Tuesday September 29, 2020

Health Care Spending Accounts (HCSA)s are quickly becoming a popular benefit program among Canadian employers due to their cost-containment, flexibility, and simplicity. 

We wanted to understand what was driving this uptake. So, we took a closer look at our business block and made some startling conclusions. All of which we outline in our 2020 Report: The State of Health Care Spending Accounts.

Download the 2020 Report: The State of Health Care Spending Accounts

Among the most significant findings is a simple truth (confirmed by the 2020 Sanofi Canada Health Care Survey): HCSAs are underutilized.

Health Care Spending Accounts — Not Fully Utilized?

Based on the findings from our own block of business and the results of the 2020 Sanofi Canada Health Care Survey, we determined that employees use between 30% – 60% of their total HCSAs allotments. Employees are quite literally leaving 40% or more of their money on the table.

But why? 

There are a few key considerations here. Most important of which is this: employees lack awareness about the product, how it works, and what’s covered.

#1. Benefits Communication

Benefits communication is a key factor in utilization. If employees don’t know how to use the benefit or what is covered, they simply won’t use it to its fullest potential.

HCSAs often get a back-burner status when it comes to benefits communication. They are easy to miss or gloss over when employers talk about their benefits plan at onboarding or renewal. Communication tends to focus on other benefits, such as Extended Health Care (EHC), Dental Insurance, or drug coverage, while HCSAs don’t exactly make it to the forefront of the benefits communication plan.

#2. Auto-Coordination

Auto-coordination between an EHC benefit and an HCSA makes using the HCSA easier by automatically covering eligible expenses not covered by a traditional plan (such as a co-pay). 

However, that automatic process takes place behind the scenes, putting additional separation between the employee and their HCSA. As a result, it’s much easier to forget how much you have left in your account or forget it’s there entirely. Furthermore, it means that HCSAs are more likely to be accessed only when someone uses their EHC benefit. That hurts utilization even more.

Auto-coordination does make for a smoother experience for employees, so we’re not suggesting it should be disabled or removed. However, this automatic process offers less opportunity to profile your HCSA, since it operates behind-the-scenes. Employers should consider increasing benefits communication when it comes to the value their HCSA is providing to employees.

#3. “Top-up Benefit” Stigma

Many employers and Advisors alike still consider HCSAs a “top-up” benefit — something supplemental to a traditionally insured plan, rather than an option on their own. While this has historically been the case, HCSAs and benefits offerings have evolved. As a result, many employers are replacing traditional insurance with HCSAs entirely

The idea that HCSAs are only an added “nice-to-have” benefit or a top-up to existing plans has proven hard to shake. That stigma can give HCSAs an automatic back-burner status with employers and employees both.

#4. Lack of Knowledge of Eligible Expenses

Another thing hurting the utilization of HCSAs is a relatively simple one: plan members don’t know what’s eligible. Part of this circles back to #1 (benefits communication), while the other may be due to a confusion of eligibility of expenses between an EHC benefit and an HCSA.

Furthermore, the list of eligible expenses is extensive. Although this is a good thing (because it offers lots of coverage), it can be overwhelming.

Download the full report to learn more about the state of Health Care Spending Accounts in 2020!

The State of Health Care Spending Accounts