If you want to set up a benefits plan for your employees but want to avoid annual price increases, Healthcare Spending Accounts (HCSA) is a growing trend for Canadian companies and may be a great option for your business.
How does Healthcare Spending Accounts work?
- With an HCSA, a pre-determined amount of money is provided to employees each benefit year for coverage of their medical and dental expenses.
- It can be as large or as small a part of your group benefits plan as you choose.
- The plan will cover Canada Revenue Agency approved health and dental expenses, reimbursed at 100% up to the total dollar amount available in the HCSA.
- It is a “defined contribution plan”, where the employer’s cost for that benefit is fixed.
- HCSA plans can be set up for groups as small as one business owner.
The benefits of HCSAs:
- Control your costs (eliminates budgetary surprises!)
- You define how to compensate within your group It’s a fully tax-deductible expense to the company
- The benefits received by employees are tax-free
- The plan allows for complete claim flexibility for the employee, with no internal maximums or deductibles HCSA can be used to reward seniority, encourage higher sales revenues, or retain key employees
What Expenses Are Eligible for Coverage?
Any item that qualifies for the Medical Tax Credit is eligible for HCSA coverage – a broader definition than that of any conventional employee benefits plan. For example:
- Prescription drugs Paramedical services (massage therapy, physiotherapy, etc.)
- Eyeglasses or laser eye surgery
- Medical appliances
- Major dental including dental implants
- Orthodontics for children or adults
What Happens to Unspent Funds?
Most employers choose to carry the balance forward, meaning excess funds simply roll over into the following year. However, if you still have unspent funds from year one at the end of year two, the remaining carry-forward amount is returned to the company.
This is an advantage over traditional insurance plans, where unspent funds go into the pocket of the insurance company.
An HCSA allows you to have complete control over your costs while allowing your employees to have the best possible flexibility.
Please reach out to us to learn more about setting up an HCSA for your business:
mhamilton@easyinsure.ca 1-800-679-2640