Understanding Hybrid Plans: Combining Insured Benefits with Cost Control
A hybrid plan is a balance between an Insured benefits plan and Health Care Spending Account (HCSA).
Insured Benefits Plan is as follows:
- Conventional benefits plan Premium rates are set annually in advance by the insurer, as Percentage of reimbursement / based on TLR (Total Loss Ratios), eligible and ineligible expenses, and annual and lifetime maximums, are all defined.Typically includes Life, AD&D, Long Term Disability, Extended Healthcare, and Dental Care.
- Insurer controls costs
HCSA (Health Care Spending Account)
- Contribution amount per employee defined annually in advance by plan sponsor
- Employees can claim from their HCSA as they incur; Canada Revenue Agency defines the eligible expenses.
- Employer controls costs
How does the Hybrid Plan Works ?
A Hybrid Plan combines the advantages of both the conventional Insured benefits plans and HCSAs, which results in a very flexible and cost-effective solution.
Example of a Hybrid Benefits Plan – 10 Employee Group
Directors & Shareholders
Insured Benefits Plan with 90% coinsurance on prescription drug plan; conventional pooled benefits (Life, AD&D, Long Term Disability, $5000 Stop Loss, Out of Canada Emergency Medical Coverage). HCSA $5,000 per year and Cost Plus $10,000 per year.
Management
Insured Benefits Plan with 80% coverage on prescription drugs, Dental $2,000 Basic Coverage at 80%, conventional pooled benefits (Life, AD&D, Long Term Disability, $5000 Stop Loss, Out of Canada Emergency Medical Coverage) and HCSA $2,500 per year.
All Employees
Keep the conventional pooled benefits (Life, AD&D, Long Term Disability, $5000 Stop Loss, Out of Canada mergency Medical Coverage). This provides essential insurance protection in case of catastrophic event occurs. In addition, Insured Benefits Plan with 80% coverage on prescription drugs, Dental $1,500 Basic Coverage at 80% and HCSA – $250 per year of service and capped at $2,000 per year.
This continues the convenience and familiarity of the drug card, and adds an HCSA targeted at rewarding employees for longer service with the company.For the employer, overall compensation costs for this group of employees are reduced.
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