Health Spending Accounts (HSA), or Health Care Spending Accounts (HCSA) are structured tax vehicles that allow for flexible spending on extended health and dental costs. The HSA is a defined contribution that each individual can elect to use or lose each year. The purpose of the funds are exclusively for CRA-approved health care spending and/or dental costs for employees.
Health Spending Accounts are administered by an insurance company or trust and can be a great tool to meet compensation objectives. There are a variety of ways an HSA can be implemented, depending on the nature of your company and structure. Each program must adhere to taxation requirements as well as identify the financial risk and liabilities to be managed. With the right implementation, HSAs can be a great enhancement and a flexible component of your existing benefit package.