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Recent studies by Statistics Canada indicate that more than 1.7 million Canadians ages 45 to 64 provide care to approximately 2.3 million seniors with long-term disabilities or physical limitations. Seven out of 10 of these caregivers are employed full-time. With baby-boomers being forced to balance the needs of their elderly parents and their careers, the outflow of skilled workers into early retirement to focus on their families may speed up the looming labour crunch. While most HR professionals are focused on the approaching mass retirement of baby-boomers across Canada, eldercare responsibilities are proving to be a burden for the employee and an opportunity for the employer.
An opportunity for employers? Did he say that correctly? Yes, in fact. Providing care services for a parent can be an immense financial burden for employees. While some can pay for basic care services, many opt to manage the care themselves due to the overwhelming costs. The opportunity for the employer is that the introduction of a Health and Welfare Trust to the benefits program could help to relieve this burden for the employee. The result is a reduction in stress amongst employees with elderly parents and a desire to stay with their current employer long-term, perhaps well into their expected retirement years.
The Health and Welfare Trust provides the employee with pre-tax dollars to use towards health care costs. Since Canada Revenue Agency (CRA) allows a dependent to be an elderly parent, as long as they are financially reliant on the employee, the costs associated with their care is considered an eligible expense. This means that the HWT can actually serve as a formal financing vehicle for the employee’s elder care needs. As an employer, you can choose to provide the HWT as a top-up to the existing benefit plan, as an alternative matching for a DC pension plan, or even through a salary amendment agreement with the employees. The key benefit for the employee is that the original costs paid with after-tax dollars can now be paid using pre-tax dollars. In some cases this amount can be a substantial financial benefit for the employee.
As an employer you stand to benefit, as your baby-boomer employees opt to stay longer knowing they have access to a financial vehicle to care for their parents. You also have the opportunity to establish yourselves as an employer of choice within your industry by offering an innovative employee-focused benefits solution.
Some more help on finding the right HSA for you in my series on items you should look for when choosing an HSA provider…
Portability
Health Spending Accounts are portable, meaning you can take them with you. OK, they may not be the same as the picture of your family or cat on your desk but when it comes to changing employers your HSA belongs to you and you can take it wherever you go. That is, provided it is a Health and Welfare Trust OR a dedicated Private Health Services Plan account (i.e. not notional credits). As a small business owner, you may also choose a different HSA provider or administrator and move your funds accordingly. In recent weeks, I have been hearing stories about HSA providers refusing to allow clients to move their HSA funds. As always, when I hear it, I report it.
Let’s look at both scenarios…
As an employee, you may have been issued a Health and Welfare Trust from your employer. Let’s assume you received $100/month over a three year period and you left the company. Next, let’s assume that you never really used the funds and had saved up $2,500.00 over the past 3 years. While your employer may not be providing you with any more deposits upon departure, you can still use the funds in the account for future eligible expenses. If you have a Health & Welfare Trust or a Private Health Servcies Plan not linked to a flex benefits program (i.e. using notional credits), the funds can go where you go.
For the employer, you may decide at one point or another to move your HSA program to a different provider. There can be many reasons for the move - it is not really important. However, you do have the right to move the funds over to another administrator at any time. Your current HSA provider cannot limit you from moving the funds, however, they may charge you a fee for the transfer. Either way, you should never accept a response from an administrator that the funds cannot be moved. If you decide to move your group HSA and you are challenged by the provider, you need to get tough with them.
If you currently have an HSA program and you want to move it to a new provider, you should speak with your broker/advisor, consultant, or incumbent carriers. Each of these parties should be able to help you with the transition. If your current HSA provider refuses to cooperate….buyer beware!!
