Quikcard says Canadian SMBs can lower benefits costs with spending accounts

Quikcard has published a guide arguing that Canadian small and mid-sized businesses can get broader employee coverage by pairing spending accounts with group insurance instead of treating them as competing choices. The guide says the mix can improve tax efficiency, help control rising benefits costs and better match coverage to workforce size and needs.

Why it matters: - Canadian SMBs face rising health and dental claims, especially for specialty and high-cost drugs. - Quikcard says many employers are missing a lower-cost way to deliver benefits that can improve employee coverage and retention. - A $2,000 spending account can reach an employee tax-free, while the same amount delivered as pay is reduced by income tax.

What happened: - Quikcard published a guide titled "Group Benefits in Canada: Beyond Insurance." - The guide argues that group insurance and account-based benefits should be used together, not treated as an either-or choice. - The resource focuses on Canadian small and mid-sized businesses and the pressure they face from higher benefits costs and demand for flexible coverage. - The full guide is available here.

The details: - Quikcard is a Canadian administrator of health spending accounts, wellness spending accounts and employee assistance programs. - The guide says a $1 hourly pay raise costs an employer about $2,080 a year per full-time employee. - The employee would take home about $1,456 after tax from that raise. - A $2,000 health spending account allocation costs the same or less, is fully tax-deductible under Canada Revenue Agency guidelines, and reaches the employee tax-free. - The guide distinguishes between traditional group insurance and tax-advantaged spending accounts. - Group insurance covers defined risks such as disability, life insurance and catastrophic drug events through pooled premiums. - A health spending account lets employers reimburse eligible medical expenses directly as a deductible business expense. - For employers with five to 20 employees, the guide says a health spending account can serve as the primary benefits vehicle. - For employers above 20 employees, the guide says combining group insurance with a health spending account or wellness spending account can extend coverage beyond standard insurance limits. - Quikcard says clients use about 75% of their annual health spending account allocation on average after the first year. - Unused funds either roll over or return to the business. - The guide also treats a wellness spending account as a separate retention tool for fitness, mental health support and professional development expenses. - The comparison framework in the guide maps health spending accounts, wellness spending accounts and group insurance by cost structure, tax treatment, eligible expenses and ideal employer profile.

Between the lines: - The guide is a sales tool, but the core message reflects a broader shift in employee benefits: employers want more flexibility and more predictable costs. - The tiered framework suggests Quikcard sees smaller firms as better fits for spending accounts alone, while larger employers may need a blended model to cover more types of claims. - The emphasis on tax treatment is central because it changes the value equation for both employers and employees. - Chris Biddeson, Quikcard's vice president of business development, said employers often underestimate how much more value a spending account can deliver than a cash raise of the same cost.

What's next: - Quikcard expects more employers to compare spending accounts, wellness accounts and insurance side by side as benefits costs keep rising. - The guide is likely to push more SMBs to review whether their current benefits mix is optimized for tax efficiency and coverage breadth. - Quikcard says its team walks employers through the options with live support rather than automated systems.

The bottom line: - For Canadian SMBs, the guide argues that the smartest benefits strategy is usually not insurance or spending accounts, but a structured combination of both.