A Healthcare Spending Account (HCSA) is a type of benefit that employers can arrange for employee dental coverage and medical expenses.

Pre-determined funds are allocated for each employee to the health spending account through an employee benefits provider. Traditionally, these allocated funds are applied at the beginning of the year for eligible expenses.

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Benefits of Healthcare Spending Account

A health spending account for Alberta businesses can be an attractive benefit for attracting and keeping potential top-notch employees. From an employer’s perspective, healthy employees are more productive and happier, are more consistent in attendance, and greatly contribute to overall cost savings.

HCSAs are becoming a very popular replacement for, or adjunct to, traditional employee benefits plans. They provide flexibility, practicality, and a cost-effective way to keep up with diversifying trends in employee health and dental coverage.

An HCSA is also a non-taxable benefit for employees so the claims, administrative fees, and expenses associated with HCSAs are 100% deductible for employers.

How A Healthcare Spending Account Works

Bona fide employees (not shareholders or unincorporated business owners) are the only ones who can receive this type of benefit. Eligible dependents can also be covered under an HCSA claim, even if those family members are not covered under any dental or health benefits plans the employee might currently have.

  • Some companies prepay their Healthcare Spending Account on the employees’ behalf.
  • Other companies make payments as expenses are submitted to them by the benefits provider. Claims are put forward in much the same way as current health and dental plans.

In both instances, the company reimburses employee claims, which are paid out up to the maximum amount available in their employee Healthcare Spending Account.

In some instances, an unused portion of an HCSA may even be carried over to the following year. Commonly there is a grace period within which the amount carried over can be used.

What Does A Healthcare Spending Account Cover?

Guidelines developed by Canada Revenue Agency regarding medical expenses and claims cover most of the medical practitioners listed below.

NOTE: Be sure to ask your healthcare benefits provider which of these medical services are covered under the Healthcare Spending Account you are considering for your employees.

  • Acupuncturist
  • Audiologist
  • Chiropractor
  • Dental Hygienist
  • Dental Mechanic
  • Dental Technician or Technologist
  • Dentist
  • Denturologist
  • Dietician
  • Emergency Medical Technician
  • Hearing Aid Practitioner
  • Licensed or Registered Practical Nurse
  • Medical Doctor
  • Medical Laboratory Technologist
  • Medical Radiation Technologist
  • Naturopath
  • Nurse (or full-time practical nurse)
  • Occupational Therapist
  • Optician
  • Optometrist
  • Pharmacist (dispensing fees/cognitive services)
  • Physician
  • Physiotherapist or Physical Therapist
  • Podiatrist
  • Psychologist
  • Registered Nurse (including nurse practitioner)
  • Registered Nutritionist
  • Registered Psychiatric Nurse
  • Respiratory Therapist
  • Social Worker
  • Speech Language Pathologist
  • Surgeon

Instead of being restricted to the individual and financial limitations of mainstream employee benefits plans, employees who have a healthcare spending account can utilize the funds for areas perhaps not covered by existing company health benefits plans.

Coverage may include prescriptions by a doctor for medical devices, equipment for individuals with impaired vision, and costs related to hearing or sight impairments. Even cosmetic surgery could be included depending on the circumstances. Some other examples might include:

  • Artificial Limbs
  • Attendant Care
  • Crutch Rentals
  • Eye Glasses
  • Guide Dog Expenses
  • Hearing Aids
  • Medical Equipment
  • Medical Services out of Country
  • Medication Prescriptions
  • Optical Scanners
  • Organ Transplants / Bone Marrow Transplants
  • Prescription Glasses

Have More Questions About A Healthcare Spending Account?

Daryl Smith (CLU, ChFC, TEP, and CFP) at Benefit Strategies Inc. is a highly skilled employee benefits planner and works with clients throughout Alberta, Western Canada, and the Norwest Territories.

Daryl would be happy to answer your questions and discuss all the benefits of a Healthcare Spending Account for your business or organization. Contact Daryl Smith at Benefit Strategies Inc. today at 1-780-306-0806 or send him an email.