A Health Spending Account (HSA) provides reimbursement for medical and dental expenses that qualify under the Income Tax Act, and that are not covered elsewhere.
While a Cost Plus program is usually only set up for business owners or key executives, a Health Spending Account can deliver benefits in a tax-effective manner for all employees.
In order to be a tax-effective program, an HSA must comply with regulations set out by the Canada Revenue Agency, and it must be fully funded by employer contributions.
An HSA works essentially like a bank account. A credit amount is allocated to each employee. The employees use the credited amount to cover an extensive range of medical and dental costs incurred for themselves or their dependents.
Advantages of a Health Spending Account
- Credit amounts are non-taxable (except in Quebec).
- Covers a broad scope of health and dental services not reimbursable under group plan.
- Gives the employee more control to spend their credits on what they need.
- Offers an expanded definition of dependent.
- Employer paid credits are deductible.
- Effective cost containment strategy since benefit spending is limited to a defined contribution amount.
- Can be coordinated with the group plan, or offered on a stand alone basis.
Contact us for more information on our flexible Health Spending Account Program.