Health-care spending accounts (HSAs) are gradually gaining popularity in Canada. A 2018 survey found that 33% of employers are offering this unique group benefit option to their employees, compared to 31% in 2017. Some employers are unsure of the difference between this account and a traditional group benefits plan. Here are some of the basics of a health-care spending account and how it can benefit your business.
Health-care spending accounts provide employees with flexibility on where they choose to spend their benefit dollars. This allows employees to take advantage of preventative services, whereas a traditional plan tends to focus on solutions for existing conditions. While a traditional health care plan still offers many great options for your employees, nothing is more personalized than a health-care spending account.
The simplest way to explain an HSA is to imagine you’re are given a savings account with $5000 (for example) in it at the beginning of every year. That money is yours to spend whether you use all of it or not. However, you can only spend that money on health care services that are approved by CRA as eligible medical expenses. Each employee has the flexibility to choose which services are right for them in that point in their lives (or their dependants). For example, one employee may want to focus on massage therapy and counseling to get over a bad car accident, another may want to use their money for fertility services.
HSAs are becoming popular because it allows employers to budget group benefit expenses for any given year, and these expenses are tax deductible! Employees like these types of plans because they’re easy to use and offer them control over what services they really need. There is also an expansive list of unique medical services covered under the income tax act that may not be available in a traditional group health-care plan. Some of these options include:
- Medical marijuana
- Construction expenses for people with mobility issues
- Gluten-free products for people that have celiac disease (about 1% of the population)
- Costs associated with disabled children
It is important for you as the employer to communicate which expenses are eligible, this information will be provided to you by your benefits advisor.
Now that you know the basics of a health-care spending account, you can decide if this option is right for your business. Keep in mind that employees are attracted to businesses that offer them flexibility in every aspect of their lives, everything from work hours to how they maintain their personal health. If you are interested in the basics of a health-care spending account, contact the employee health-care experts at DENT Benefits today!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.