Frequently Asked Questions

Health Spending Accounts (H.S.A.)

  • Q.  What is a Health Spending Account?
    A.  A Health Spending Account is similar to a bank savings account.  Funds in the account can be used by employees to pay for Dental and Health Care costs not covered by your regular health insurance plan.
  • Q.  What is the tax-advantage of a Health Spending Account?
    A.  Employees can receive benefits tax free.  For your business it is a 100% tax deductible expense.
  • Q.  What happens to the money if I don’t use it in the year?
    A.  All unused funds can be carried over to the following year.
  • Q.  Can employers contribute different amounts for different employees?
    A.  Yes, contribution levels can be based upon different classes if the business is a corporation.
  • Q.  What medical expenses are eligible under the H.S.A.?
    A.  You can claim any item or service allowed under the Income Tax Act as a medical expense.  Examples include; prescription drugs, fertility drugs, vision care, adult orthodontics, optometrist, physiotherapist, massage therapist.  Also eligible are balances not reimbursed on your regular employee benefit plan such as deductibles, coinsurances and expenses in excess of maximum coverage amounts. 
    For more information, please refer to http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/ampp-eng.html
  • Q.  Why are credits forfeited if not used during the two plan year period?
    A.  This is a Canada Revenue Agency guideline.
  • Q.  What happens to H.S.A. upon termination of employment?
    A.  A terminated employee has access to the H.S.A. for a pre-determined run-off period.
  • Q.  How many companies offer a Health Spending Account?
    A.  More than half of all organizations in Canada offer a Health Spending

 

Service Area: For over 20 years PGI Financial has been helping clients in the Greater Toronto Area including: Milton, Guelph, Hamilton, Mississauga, Vaughan, Markham and downtown Toronto.