Are you an incorporated business owner looking to provide medical benefits to your employees,
including yourself, but are concerned about costs, inflation and complexity?
A Health Care Spending Account (HCSA) may be your answer!
A HCSA qualfies as a Private Health Services Plan (PHSP) under the Income Tax Act (ITA).
Payments to beneficiaries are:
• not taxable to the employee; and
• deductible to the corporation.
Eligible expenses include:
• prescription drugs
• dentists
• paramedical practitioners
• vision care
How it works:
• a notional account is established for each covered employee
• the annual credit is declared, and allocated periodically – eg monthly/quarterly/annually
• eligible claims are reimbursed, to the available balance in the HCSA
In order to meet the requirements of a PHSP, the Plan must include an element of risk. At the end of the plan year, either:
• claims unpaid; or
• HCSA balances may be carried forward to the next plan year.
BUT NOT BOTH.
Benefits:
Supports “total rewards” compensation model:
• tax-efficient
• flexibility to differentiate awards by class of employees
Increased employee satisfaction & engagement
Cost management:
• employer costs capped – only pay for utilization
• can manage inflationary pressures in medical care expenses, typically >10% annually
What we do:
• Plan setup and employee enrolment
• Claims adjudication
• Financial reporting