A common question everyone wants the answer to, is how employee benefits have shifted over the pandemic with an increasingly remote workforce?
Being a purely digital platform for spending accounts and collecting data across our network—3,500 advisors, 13,500 companies and over 90,000 employees across Canada—even we don’t have all the answers; however, we have a better idea now of where spending accounts fit into the employee benefits offering.
In the past, spending accounts encountered one-of-two problems: big tech disruptors trying to fight a losing battle against advisors or siloed spending account providers trying to steer clients away from insurance providers. The positioning of spending accounts as an alternative to buying insurance for benefits is, in our opinion, far from the truth. Spending accounts are not meant to replace an insurance policy; they are meant to replace portions of the plan where insurance is not required, the parts with little to no risk of catastrophic costs.
A simple way to think about whether something is transactional, or a risk to be insured, is to ask, what are the chances of this happening in the next 12 months? If the chances are 100%, such as someone in the company going to the dentist for a cleaning, it is likely not something you need to insure. If it is the case of someone getting diagnosed with a chronic condition, and the chances are unknown, then in most cases, insurance is a good idea.
Spending accounts were offered but often regarded by many advisors—and definitely by insurance companies—as a bucket of money added to a traditional insured plan to use as a top-up. It was not considered as integral to benefit plans but as something to put extra benefits spending. March 2020, aside from being the start of a global pandemic, was a scary time for myHSA.
Being a transactional revenue, when the world stopped spending, we stopped making money. We wondered how long this would go on for and how little did we know, a “short” closure of services would restructure the benefits industry as we even knew it—permanently. Things were beginning to change, and our early entry into a market that was not ready for us began to turn around. As things started to open up, the remote workforce brought change. Companies were looking to start opening, but rather than opening with a traditional spending account (top-up to an insured plan), employers were looking for new and innovative offerings for their employees while being cognizant of the spend constraints.
Many were starting to look for innovative offerings. Innovation like this was not feasible under an insured plan, as the contract is sometimes based on multi-year terms. To have an insurance company shift their policy to the changing needs of the company and the employees is not something that can happen. Yet, this is something that could only happen inside the spending accounts. Our business model, which is counterintuitive to many spending account providers, is to work with insurance providers and not against them.
Our positioning power is the ability to allow a company to adapt to any circumstances and quickly. The spending accounts that we provide are dynamic and can be adapted and customized based on what was working for the employer at the time and what may change in the future.
I won’t focus too much on taxable vs non-taxable here; however, we can do both on the platform, and I have compiled some examples of plan additions that advisors set up with clients during and post-pandemic to help them create the perfect benefits plan:
- Ergonomic plans desk/heat pads
- Online music lessons
- Peloton and other types of exercise equipment
- Personal development funds
- Work from home expenses
- Childcare/Pet care
Some of the innovative and unique offerings that were instated:
- Gender affirmation/transition allowance
- PPE allowance
- Alternative transportation
- Home office
- Technology
- Student loan repayment program
- Vacation funds allowance
- Work courses
The industry has shifted its view on spending accounts—from a plan top-up to a core benefit—adapting and changing based on the current situation. It is the adaptable portion of the plan for innovative offerings, but it also gives the employers with their advisors the opportunity to carve out portions of the insured plan that do not make sense to pay premiums for. As for circumstances of catastrophic nature and potential financial ruin? Don’t worry, that is what your insurance advisor is for.
Tim Kane
Founder & CEO
myHSA