Health Spending Accounts – HSA’s
A health spending account functions much like a bank account. The plan sponsor allocates a pre-determined amount of benefit credits (i.e. $500) to each plan member.
In turn, the member can then use these credits to pay medical and dental expenses that are not covered by provincial or employee benefit s plans. The money held in and spent from this account is entirely tax free to the member, with the only exception being in the province of Quebec.
There are three basic ways to structure a health spending account:
1. No accumulation of credits – all unused credits are forfeited at the end of the year
2. Rolling credits – any unused credits can be rolled over to the following year, but are forfeited after 24 months
3. Rolling expenses – unclaimed expenses can be rolled over to the following year, but are forfeited after 24 months
• Health expenses are paid in pre-tax dollars
• HSAs are a tax-deductable expense for employers
• When combined with reduced coverage for other benefits in the extended health care plan, money is saved for the employer and allows employees more flexibility and choice.
• Helps educate employees about the value of the benefits being provided by the employer
Would an HSA work for your organization?
Ask yourself the following questions:
1. Are you seeking to control costs or enhance your employee benefits program?
2. Are your employees looking for more flexibility in their benefits plan, or do they want you to take care of their health care coverage and choices?
3. How much money is available for your HSA? Where will it come from?
4. How will you budget for HSA funds for this year and years following?
5. What are the logistics of the HSA program (i.e. cost, claims submission, reporting system, etc)?
6. How will the new HSA be communicated to your employees?
We would be happy to discuss the benefits of a Health Spending Account (HSA) for your organization if you do not already have one. Please contact one the Silverberg offices for more information.