Health Care Spending Account

Self-funded health & dental benefit plans

A healthy choice for your employees

The road to wellness is paved with many expenses. From prescription drugs to emergency dental procedures, the costs can add up quickly. Thankfully, there is a solution available, and it can easily be added to an employee benefits package.

A group health care spending account is a cost-effective way to provide medical and dental benefits to your employees. The plan benefits both employees and employers, as the employees receive the benefits tax-free while the company can claim them as a tax-deductible expense. Employees also have the flexibility to choose how, where and when they use the allowance for their benefits.

Best of all, the benefits received by the employees through the plan are free of additional fees, such as co-pays, deductibles, premiums and claims processing fees.

What is a Health Care Spending Account in Canada?

According to Wikipedia,

A Health Care Spending Account (or Health Spending Account or Healthcare Spending Account) is a type of flexible employee benefits program in Canada that aims to provide more flexibility than a traditional health plan. As a supplemental program, it covers items that are not normally part of the traditional plan.

It is an individual employee account that provides reimbursement for eligible health care expenses or other benefits that are not covered under provincial health insurance plans or other benefit plans sponsored by the employer. A Health Spending Account can be implemented on a stand-alone basis within a traditional benefits plan or part of a flexible benefits plan.

Generally, these plans include a fixed amount per employee available to be claimed, which makes budgeting for them easier for employers. Expenses that can be claimed against an HCSA are regulated by the Canada Revenue Agency.

Why should I get Health Care Spending Account for my employees?

First, let’s answer the pressing question: are you required to offer disability benefits to your employees? Technically speaking, no, you’re not legally obligated to offer disability insurance.

So, should you offer disability benefits to your employees?

First, it depends on how many employees you have. If you have less than ten, a group plan may be too expensive to be worth the trouble.

If you have more than ten, then it may be worth investigating your options for coverage.

Health Care Spending Account Advantages

There are a variety of advantages to group disability coverage if you choose to go that route. Such as flexible plan options, lower than individual rates and much more user-friendly premiums.

Providing your employees with disability insurance helps them stay afloat while they are unable to work for an extended period of time. Group disability insurance replaces up to 70% of their regular income and helps to cover the sometimes hefty expenses associated with treatment, equipment and recovery from their ailment(s).

Lastly, offering disability coverage as a benefit for employees makes you more attractive as a workplace. You’ll be able to attract better employees in the future.

How does a Health Care Spending Account work?

An HCSA work by providing your staff with compensation for various eligible medical expenses. These include, but are not limited to:

  • Cosmetic surgical procedures
  • At-home care (when required)
  • Over-the-counter prescription drugs
  • Modifications to your home for medical purposes

Your employees can also use their group HCSA benefits to cover other medical-related expenses and services that either exceed the maximum amount of coverage provided or are not offered by certain plans. Examples include:

  • Prescription drugs
  • Prescription glasses and contact lenses
  • Paramedical services, such as massage therapy or physiotherapy
  • Dental services and expenses not included in traditional dental plans, such as bridges and crowns

How the number of employees impact how the plan functions?

In a business with at least one paid employee, the group HCSA is often included as part of an employee benefits package. While the employees determine how they use their health care allowance, the employer determines the amount of the allowance and who is eligible to receive it.

Smaller businesses with no additional employees are also eligible for HCSA, albeit with a different structure. In a one-person operation, the owner can withdraw funds from their business’s account to cover their own medical costs. Doing so helps to avoid paying income tax on the money withdrawn.

Where can I get a HCSA benefits for my employees?

A licensed insurance broker can provide you with a Group HCSA for your business and answer any questions about how it functions. A free quote from us can help you determine which provider offers the most cost-effective plan for your business before you make a purchase.