A health spending account is a private health service plan that offers the reimbursement of a wide range of qualifying medical expenses provided by a medical practitioner or pharmacist. The account is flexible, as it can be set up as a stand-alone plan or it can supplement an existing group or personal health insurance plan. The flexibility of the account and the ability to take personal expenses and make them into a corporate deduction makes an HSA an attractive benefit for business owners.
- HSAs cover medical expenses, including some conditions that may not be available under a traditional group insurance plan such as orthodontics, laser eye surgeries, etc. If the condition is approved by the CRA as an eligible expense, it is covered.
- HSAs provide 100% coverage with no deductibles and no co-insurance unlike some group plans that only cover 80% of the expense or less.
- HSAs offer flexibility to employees and their dependents, as they can choose how to spend the money provided in the account for their desired health expenses.
- HSAs provide guaranteed coverage with no medical underwriting and no pre-existing conditions.
- HSAs provide tax free benefits to the employee.
- The major benefit to employers is that HSAs are 100% tax deductible to the company.
- HSAs do not have any premiums, as such, they are cost effective to the employer.
- HSAs provide employers with a fixed budget.
- Employers can set a pre-determined limit and categorize their employees into different classes.
- Unused funds in the HSA can be rolled over to the following year.
How does it work?
For example, an employee goes to see a dentist and incurs a bill of $300, which he or she pays out of pocket. The employee submits the receipt for reimbursement from the HSA set up by the company. The company pays the bill plus any applicable admin fees and taxes. The employee is then reimbursed the bill from the visit to the dentist, while the company claims the expense of the bill plus admin fees plus taxes as a business expense.
If you are an incorporated business owner or in a limited partnership and would like to set up an HSA, please contact us at 416 222 1311 or email email@example.com.
Efe Dada is an Advisor at Levine Financial Group in Toronto
We Save Physicians Money on their Insurance
416-222-1311 I firstname.lastname@example.org