When I was at Mount Royal College in the insurance program, one of the first things I learned was the definition of insurance, which in a nutshell, was to pay into a pool in exchange for financial protection in the case of fortuitous losses.
In the group benefits industry, many coverages are a form of insurance, such as large drug claims, Critical Illness, Life, AD&D, and other coverage for fortuitous losses. The one question I have always had – is routine health, dental, and vision actually insurance? If these are known costs, does it really make sense to pay an insurance company defined premiums for them? It could be said, although these costs are inevitable, you don't know how much they'll be, and that's why you pay an insurance company to help. It's guaranteed that if an insurance company has paid for it, you WILL be paying them back. This is financing your risk, and for the most part, it works.
As a result of COVID, reoccurring questions concern what you are paying compared to what is paid out, as far as your benefits plans, and whether your plan is doing what it is supposed to do. When essential health services were shut down for a good portion of the pandemic, did your premiums shut down as well? If you have been paying premiums for your health, dental, and vision, did they also stop? I mean, technically they should have – if you aren’t using your benefits, you shouldn’t be paying for them. If not, then surely your costs should be going down next year. When talking to advisors, it seems that there is no straightforward answer to what an insurance company is doing in this situation, from “premium holiday,” to basing next year's premiums on “if COVID never happened.” There is no clear answer since it is everyone’s first Pandemic, but what has been loud and clear from our advisor's perspective – and their clients' – is the necessity for companies, large and small, to be able to budget their costs.
At myHSA, we have always been supportive of insurance, advisors, and what they do. Our offer is not to replace what you do, but to build the perfect benefits plan by the inclusion of a defined contribution spending account, a wellness plan, or our amazing add-on products with the digital component to help your client through times like these.
Tim Kane
CEO, myHSA
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