What is a Health Spending Account (HSA)?

A health spending account, also known as a health care spending account (HCSA)  is a non-taxable employee benefit.  A health spending account provides flexibility in covering specific, CRA defined health services, like dental, ambulance, crutches, optometry, medications, health devices, and more. A full comprehensive list of services covered can be found here. A health spending account normally covers the same types of health products and services that can be covered by traditional health coverage in your group benefits plan. The scope of a health spending account can be wider than traditional coverage.  

Company can use HSAs in one of two ways; they either add them as a supplement to traditional group health benefits, or replace traditional health benefits completely. 

Why do employees like Health Spending Accounts?

It comes down to Flexibility. This is the main feature of health spending accounts.  With health spending accounts, employers can plan to allocate and distribute the same amount of funds towards employee health benefits as in a traditional plan. The employees can reap more rewards from this type of benefit. This is done by covering their co-payment, or choosing to use their benefits on the things they want and need most.  

Providing staff with the flexibility of a Health Spending Account leads to happy, empowered employees who are able to use their benefits how they want. In terms of employee attraction and retention, these perks are beneficial to have in your employment plan!

Health spending accounts are easier to manage when it comes to the costs associated with benefit plans. Traditional health and benefit plans have maximum spending amounts across various categories. This means you face checks and balances in place to control employer costs. This can result in a high spending maximum by employees. Employers could be caught off guard the following year with big rate increases if their employee usage exceeds expectations. 

Employers have the ability to define exactly how much employees will have available each year in their HSA. Employees then choose annually how much of the total cost should be in each separate account.  When the year is over, employers can decide whether amounts can be rolled over to following years, or if they expire at year end.

All plans will include only list that the CRA defines as eligible benefits. For HSAs, CRA defines a list of non-taxable health benefits which could be covered.

Benefits providers may also work with employers to tailor their HSA, to cover specific benefit that fit with a company’s culture and/or priorities for employee support.

Other benefits to having a Health Spending Account?

When your company provides a health spending account, you’re providing a benefit that empowers your staff through a sense of responsibility and ownership. As we mentioned, it also gives them flexibility. The combination of both flexibility and empowerment is an incentive for your staff to really learn about their benefits in order get the most out of them. Their proactivity can help them prevent health issues, and can manage their health and happiness better. Employers can see results such as reduced absenteeism and increased employee productivity and engagement.

Providing staff with options for fitness and other healthy lifestyle choices can also lower your employees’ risks of developing more serious or complicated health issues. This can reduce health expenses or disability claims that could otherwise impact any group benefits plans in place.

Lastly, these attractive benefits make your company more competitive for job seekers.  Being able to attract and retain high-performing employees can be invaluable for your business growth and success.  

Do you want to know how to integrate a health spending account into your group benefits plan?  Do you want to have security by implementing a health spending account? Contact us today to explore your options!