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Health Care Spending Accounts (HSA/HCSA)

More and more often, employers are now offering Health Care Spending Accounts (referred to as an HSA or an HCSA) to their employees to supplement the coverage provided by their benefits plan.

And yet, an HSA remains one of the best kept secrets.

In a nutshell, an HSA works like a savings account. The employer deposits an amount for each employee into the HSA, and the employee in turn makes claims from the HSA.

From an employer’s point of view, an HSA is favourable as it’s a fixed cost, and not subject to inflation, or even an employee benefits renewal. And, any HSA deposits not used by an employee within a two year period are refunded to the employer.

From an employee’s standpoint, an HSA offers more flexibility than a traditional employee benefits plan. Not only can an HSA cover the costs of items traditionally covered by a benefits plan (such as over the counter drugs, dental claims, and paramedical claims), but it can also be used for other items such as orthodontics, vaccines, or even trained animals to assist the blind, deaf, or otherwise handicapped (there are many other eligible items). Not everything can be put through an HSA – the Canada Revenue Agency has specific guidelines as to what qualifies and what doesn’t.

An HSA can be used two different ways. It can be used on a standalone basis, to replace an employee benefits plan. Or, it can be used in conjunction with a benefits plan. For example, an employer might introduce an HSA plan, and at the same time, decrease the co-insurance on their Extended Health Care coverage and Dental coverage. The HSA can then be used to either pay for other items not covered under the benefits plan, or for the 20% co-insurance no longer covered by the benefits plan.

If you would like more information, please don’t hesitate in letting Chris Gory know at either 416-754-3910/1-800-773-8638, or at chris @