Health Spending Accounts are also referred to as Private Health Services Plans (PHSP) and are arranged by employers. HSA is also becoming quickly known as flexible spending accounts, due to the variety of services included HSA’s are multipurpose and can be used by employees to supplement insured plan services or be used in place of traditional group benefit plans.
Many business owners think that traditional group benefit plans are the only option when it comes to offering employee health benefits. That is simply not the case! Health Spending Accounts (HSA) provide an affordable and flexible spending account coverage for small businesses and their staff.
Small business owners fund a HSA up to a maximum annual allocation so that employees can pay their medical bills for services and expenses not covered by private or provincial medicare programs. Expenses can be claimed for things like prescription drugs, dental eyeglasses, or physiotherapy.
The Canada Revenue Agency* has outlined who is eligible for HSA and who is not. If a business is incorporated, the owner and employees are eligible for Health Spending Accounts. Shareholders can be eligible for HSA only if they are also a bonafide employee who is drawing a salary from the business.
The cost of offering HSA is the sum total of the maximum annual benefit offered, the transaction fee, and the initial setup fee charged by the third party administrator.
HSA’s are beneficial for the employees and the organization! Many employees appreciate the flexibility of Health Spending Accounts since they can use the funds to meet their specific needs without worrying about deductibles or annual limits on particular services or expenses. This is where the term Flexible Spending Accounts started to get momentum.