Does your Business offer a Healthcare Spending Account (HSA)?
If not, it most likely should…
A Healthcare Spending Account (HSA), sometimes referred to as a Private Health Services Plan (PHSP), is a Canada Revenue Agency approved method of providing Medical, Dental, and Visioncare benefits to you and your employees in a tax-efficient manner. Your Corporation can write off 100% of the costs related to its HSA, and all expenses are reimbursed tax-free to you and your employees.
Who should have an HSA? Answer: every business owner…
Any business owner who has an incorporated company should have an HSA. Even if there are very few Health / Dental / Visioncare expenses, there is generally no cost to set-up an HSA; it is easily administered, and it can be used as necessary.
MyHSA is an easy to use, mobile-friendly system for employers to customize their compensation offering. Image courtesy of MyHSA.
An employer can create a custom plan for their employees and arrange different classes if required (i.e. Executives, and/or All Other Employees, etc…). In addition, the employer has complete control over which employees are covered under the HSA, and what amount they are allocated per year to spend.
What expenses may be covered?
The list of expenses that can be covered by an HSA may include many items that are not typically allowed under a traditional ‘insured’ benefits plan. Below is a summarized list - courtesy of MyHSA:
An alternative to a traditional insured group benefits plan?
You bet. Sometimes an employer offers one or the other, or both together, to provide the most comprehensive compensation package for their employees. Sometimes, an employer will choose a traditional insured plan as a ‘catastrophic’ plan to cover extremely expensive items (such as high-cost pharmaceutical drugs, or Long-Term Disability income replacement), and then supplement that with an HSA for day-to-day expenses such as dental or chiro/massage/physio, etc.
Sometimes, a business may not qualify for an insured plan (such as new businesses with no history, or high-risk / seasonal / high employee turnover businesses). In this case, an HSA with a fixed amount offered to employees can go a long way to supplement the compensation offering.
Finally, an HSA can be used to ‘carve out’ specific Health spending items such as Orthodontics or Vision, where these may not be included in the insured plan.
Is an HSA a fit for your company?
As stated above, it could be argued that every business should have one. However, there are many factors that influence the decision to offer employee benefits, and subsequently, how the plan is designed. Some of the questions to answer and points to consider include:
The cost of an insured plan versus your available cash flow, and number of employees.
Increasing costs of insured plans on an annual basis may make it hard to budget.
Customization of an HSA makes it the most flexible option.
Cost control: with an HSA, you know the maximum amount that will be spent.
For more information and a discussion on whether or not this is a good fit for your business, or for a custom proposal designed for your business, don’t hesitate to give me a shout on (250) 668 6387 or visit https://davidmccallum.myhsaaccess.com/Home