How to offer competitive group benefits with costs in mind
What is a Health Spending Account?
An HSA is an arrangement through which an employer reimburses eligible health expenses for employees under the plan’s terms. For an incorporated professional, the corporation may be the employer and the professional may be an employee.
How does an HSA work?
A qualifying arrangement may allow a corporation to fund eligible medical expenses as part of employee benefits. Under applicable private health services plan rules, benefits may be non-taxable to the employee and the employer may be able to deduct eligible costs. The plan’s structure and the employment relationship matter; an HSA label alone does not establish that tax treatment.
Do I qualify?
Discuss your incorporated business, compensation and employment status with the plan administrator and your accountant. T4 employment income, other compensation arrangements and whether a benefit is received as an employee or shareholder all need to be considered. A T4A slip or an accountant’s approval alone does not establish that every reimbursement qualifies.
Benefits and features to compare
- Enrolment and setup: ask whether fees apply.
- Premium structure: compare a claims-funded account with a plan charging recurring insurance premiums.
- Administration costs: confirm the current fee schedule, any percentage charged on claims and applicable taxes.
- Eligible expenses and limits: check what medical and dental expenses qualify, annual allocations and carry-forward rules.
- Customization: compare available plan types and employee classes.
- Budget control: review how the employer sets its commitment and manages costs.
- Tax treatment: confirm which payments meet the applicable deduction and employee-benefit rules.
- Digital claims: ask about individual employee accounts and the claims process.
- Support: confirm online access, support hours and any live-chat service.
The original article described a particular offering’s pricing and features. Fees, limits and services must be confirmed against the current plan; they are not universal HSA benefits.
Review CRA guidance on medical expenses and private health services plans (opens in a new tab) ↗
Contact our team to discuss how employee health benefits relate to your business’s needs and budget.