Health Spending Accounts

A cost-effective way for businesses to pay for health and dental expenses for employees and business owners alike.
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What is health spending account?

A Health Spending Account (HSA) is a unique and innovative program available to incorporated business owners across Canada providing a tax efficient structure to fund health and dental expenses for both employees and business owners alike.

It can work together with your existing insurance plan to pay for expenses not reimbursed (or partially reimbursed). Alternatively, it can be a stand-alone solution.

In any case, a HSA provides favorable flexibility and tax advantages (i.e., you can use it to pay for eligible medical, dental, and vision care expenses that aren’t covered by your health insurance plan, and it allows these expenses to be treated as a ‘business expense’ to your corporation).

An HSA is a good fit for:

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A self-employed individual who needs to provide health benefits for themselves and/or their employees

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A business that wants to manage health and dental expenses in a tax advantageous way

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A business that wants to keep their family and/or employees healthy and productive

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A business that wants to offer employees a health and dental benefit that is flexible and adaptable to their needs

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A business that may be too small to warrant a 'traditional' group benefits plan, but still wants a cost-effective way to offer health benefits to employees

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What types of expenses can a health spending account (HSA) be used for?

Health spending accounts can be used for a wide range of health and dental expenses.

  • Prescription drugs
  • Dental care
  • Paramedical & wellness services
  • Vision care
  • Family care
  • Maternity health
  • Hospital & medical services
  • Emergency travel medical
  • Medical equipment, devices, and supplies
  • Premiums for private health insurance plans

How does a health spending account work?

In short, an HSA enables personal health and dental expenses to be treated as legitimate business expenses. There are essentially three steps to make this happen:

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  1. You (the business owner) or an employee incurs a health or dental expense.
  2. The individual who incurred the expense electronically submits the claim to your HSA provider for processing. Your HSA provider requests the required funding from the business owner as needed and processes the claim to ensure it is compliant with CRA guidelines.
  3. Upon approval of the claim, your HSA provider deposits the funds into the claimant’s personal bank account free of tax, i.e., Claims are paid with before-tax corporate dollars and become deductible as a business expense.

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