Splitting benefits offerings into mind and body buckets may reduce downstream claims, says People Corp’s Jeffrey Stinchcombe
After years of sitting on the sidelines of employee benefits packages, flexible spending is finally making its way into the center of benefit design conversations for 2026, with employers increasingly splitting budgets between traditional HSAs and taxable wellness or lifestyle accounts.
According to several consultants, this suggests a fundamental rethink of who should decide what employees need.
"There's a huge, seismic shift into flexible spending accounts," Jeffrey Stinchcombe, partner at People Corporation, said. "We’re now seeing employers take more leadership in allowing employees to have wellness spending accounts or lifestyle accounts that are taxable.”
The shift, he explained, isn't just about HSAs themselves but a split into two distinct streams: healthcare spending and wellness spending. According to Stinchcombe, the old approach to flex benefits failed in stages.
"The first one was flex credits, which was an administrative nightmare. It was created by consulting firms to benefit consulting firms, and it forced employees to make a decision of what they were going to do for 365 days," he said, underscoring the next version, which had better, tiered plans, introduced the same flaw as employees locked in choices before knowing what financial challenges the year would bring.
Yet he believes HSAs solve that problem.
"The employee can make flexible spending decisions every day for 365 days," Stinchcombe added. "Now, the employee defines the benefit."
That's what he and Jamil Jamal, principal and senior benefits consultant at People Corporation, call "the new flex,” noting that it has since “grown two legs” as HSAs are governed by the CRA, while wellness spending accounts defined by employers.
“The healthcare spending account is a write-off for the organization. A wellness program is a taxable benefit, which means it shows up on the employee's T-forms. It's not a bad thing. It's a huge perk because you're giving an employee X amount of dollars to spend. And they get to spend it on a lot of really cool things,” said Jamal, adding that under a wellness account, an employee could buy a bike, a gym membership, or even a spa treatment if the employer allows it.
"All of a sudden, we're addressing the things that a traditional benefit plan once again doesn't cover," he added.
Stinchcombe believes that most employers aren’t chasing raw cost cuts. Rather, they want predictability and smarter use of money they’re already spending.
"What we find with our employers is that they're not so much interested in saving a dollar as they are in reallocating a found money,” said Stinchcombe. "Cost continuity, no surprise, is the hallmark of a CFO in the Canadian benefits world."
As a result, he and Jamal focus on pulling “wasted” dollars out of the existing supply chain and redirecting them back into the plan. Instead of a small, flat annual maximum that barely moves the needle, he prefers to carve out separate, much larger “mind” and “body” buckets.
For example, physical services like chiropractic, physiotherapy, and massage fall under the body side, while the mental health side is expanded with more practitioner types and a national virtual network so employees in any city can reach the broader Canadian mental health community.
The paramedical redesign itself isn't positioned as a cost-saving mechanism. It's positioned as a reallocation strategy. He frames it as taking a stagnant $500-per-year paramedical benefit and replacing it with $2,500 mind and $2,500 body buckets, funded by recovered dollars. The savings come upstream from extracting waste whereas the split is where those savings get spent.
But the real skill, Stinchcombe suggests, is structuring this in a way that satisfies finance, supports HR objectives, and delivers tangible benefit to employees at the same time.
While Jamal agrees, he argues that there’s a second, equally important skill. One that’s about pushing the system from reactive to proactive health. According to Jamal, traditional benefits just step in where provincial healthcare stops. For example, after someone is already injured, sick, or dealing with obesity.
He’s concerned that the system focuses on treating conditions with drugs and rehab instead of tackling why people end up there. That’s where he sees paramedical care and access to mental health specialists, physiotherapy, and physical activity as critical tools to intervene earlier, particularly for younger generations facing rising obesity and vision issues.
While he accepts that it’s positive to cover diabetes and anti-obesity medications, he also sees that as still reacting too late. His priority is building programs that constantly nudge and reward healthier behavior, using tools like Best Life Rewarded to create behavioural incentives so fewer people ever need to rely on those medications.
That prevention-first approach, he argues, is where the real health impact and long-term cost savings sit.
“We can only do so much with paramedical benefits but by splitting them apart and saying, ‘Here are a couple more dollars to go speak to a psychoanalyst’ or ‘Here are a couple more dollars to go to a physiotherapist’. It’s the little things that make life just a little bit better. And all of a sudden, you’re touching on a point with an employee that perhaps 98 per cent of organizations just don't. And that's called retention and loyalty and that saves companies money,” said Jamal.
