A Unique Solution for your Unique Healthcare Needs
Health Spending Accounts (HSAs) are tax-free savings accounts for your family's healthcare.
It's has been more than 25 years since the Canadian federal government made provisions in legislation that would allow Canadian employers to set aside pre-tax dollars for the express purpose of Health Care spending. Most Canadian taxpayers have never heard of a Health Spending Account... have you?
How does it work?
Health Spending Accounts are an effective alternative to traditional insurance plans and insurance products. The best part about these accounts is their flexibility. You can choose to contribute a fixed amount on a monthly, quarterly, semi annual or annual basis. This known as prefunded plan or with some providers you can do a "Pay as You Go" Plan.
All unused funds rollover to the following year. You will be able to tailor your accounts to meet both the financial capabilities of your business and your employee's needs.
What services are included?
Most times alternative therapies will have an annual maximum on claims or not be covered at all by your traditional group insurance plan. These include massage, acupuncture, chiropractic procedures, and naturopath services. Other items can include contact lenses, laser eye surgery, prescription sunglasses. A comprehensive list includes many other services.
Can my spouse and/or children be on the plan?
Yes they can. A child, spouse, or even parent can be listed as a dependant on your HSA as long as they connected blood relationship, marriage or adoption, and are financially dependent upon you at some point in the year. (Dependants must also be a Canadian resident, having resided in Canada for a minimum of 6 months out of the year) Note: Not applicable to dependent children or grandchildren.
Who qualifies for a Health Spending Account?
- *Employees of corporations, starting with a few as one employee*
- **Employees of unincorporated companies such as non-profit organizations. **
**Not available to unincorporated owners, as it could be taxable income.
What about you?
Is it time that you look at the alternatives of Health Spending Accounts for your family and your employees?
*As an independent Life Insurance Broker I always recommend you speak to your accountant before opening a Health Spending Account. I am not a Tax specialist in order to assist for your convenience the CRA website provides information on taxation issues.
For specific information related to Health Spending Accounts the Canada Revenue Agency has produced the following bulletins:
A copy of these bulletins can be requested from the Canada Revenue Agency by visiting its website: http://www.cra-arc.gc.ca for your convenience I have put a quick reference guide.
Income Tax Interpretation Bulletins from Canada Revenue Agency