A health spending account is a valuable tool for any incorporated business owner or employer. Health Spending Accounts, which are also referred to as HSAs or Private Health Spending Plans (PHSPs), provide a way to pay for medical, dental, and vision expenses that is tax-effective and simple.
HSAs allow account holders to receive a tax-free reimbursement on their health and dental expenses. The Canada Revenue Agency has a list of eligible expenses for HSAs: from services traditionally covered by benefits plans such as appointments with medical professionals, hospital services, and medications, to ones that may not always be covered, such as dental services, vision care, prescribed medical devices, and rehabilitative therapy.
How Health Spending Accounts Work
The HSA holder pays for their medical, dental, and vision expenses initially with their own personal account or credit card. In Canada, HSAs are set up through third-party administrators, to whom these expenses will be submitted, along with some description of the claim. Once approved, the HSA holder will receive a full reimbursement for their expense.
Incorporated Business Owners: If you have active business income in your corporation, an HSA can be used to withdraw money from your corporation tax-free.
The expenses you incur and then claim through your HSA become 100% deductible by your business.
Incorporated business owners can take advantage of the tax benefits of HSAs not only for themselves, but also for their employees.
HSAs can be used to compliment an insured health and dental program, which likely does not cover 100% of every expense.
Employers: Employers who feel comfortable with changes in monthly cash flow may also wish to use an HSA to top-up or enhance their employee benefits program. This includes:
Employers who can’t obtain group coverage due to industry.
Employers who want to offer employees flexibility to pay for expenses that are infrequently used or are too costly to insure such as orthodontics or vision.
Employers who want to define and budget for the amount of benefits coverage they want to offer staff each year.
At Vital Partners Inc. we offer myHSA, which makes it easy for you to submit your claims and receive your reimbursement within 3-5 business days.
Individual health plans and group benefit plans rarely cover 100% of every cost incurred by plan members throughout the year. Business owners have turned to setting up a health spending account (HSAs) to cover expenses that would normally be paid out of pocket.
If you qualify, why wouldn’t you have it?
Contact us for more information if you’re interested in how a health spending account could work for you. There is no set up fee, no annual fee, and if you never use it, it costs you nothing. Plus, your eligible medical, dental, and vision expenses become a 100% deduction for your company; you and your employees receive a tax-free reimbursement.