You or your employees may have very different demands in terms of your benefits. Some may want to top-up their medical coverage while others may want to improve their lifestyles. With a Healthcare Spending Account funds can be used to pay for medical expenses, as defined by CRA they may have, while a Personal Spending Account (or Taxable Spending Account) can be used to fund lifestyle expenses, such as gym memberships or vitamins. If this sounds like the right type of plan for your employees, we can help create a program that will meet the needs of all your staff.
What Is a Healthcare Spending Account?
A Healthcare Spending Account, HSA, is used to pay for medical and dental expenses not paid for by insurance, such as deductibles, copayments, and coinsurance for the employee's health plan. A HSA is a special type of account that allows the account owner to have certain tax advantages. They are set up by business owners and allows employees to contribute a portion of their earnings for qualified expenses not subjected to tax, which is the main advantage of using a FSA. Contributions to the flexible spending account will be deducted from the employee's earnings, and are not subject to income and payroll taxes. You, as the employer, can also make contributions to a FSA. Distributions from that account must then be used to reimburse employees for qualified expenses related to medical or dental services. The funds in this account must be used within a year. The employer can extend a two and a half month "grace period", giving employees a little bit more time to use their funds, but after this time, any balance remaining in the account will be lost.