Just in case you are wondering, A Health Spending Account (HSA) is a Canada Revenue Agency approved method that allows personal qualifying medical expenses (e.g. health, dental, vision, massage, chiro) to be paid for in a tax-efficient manner. Your corporation can write off 100% of ALL qualifying medical expenses. Qualifying medical expenses incurred by an employee and their family can be reimbursed TAX FREE!
One can choose to self-administer or use a Third Party to administer these claims. Here are some of my notes on why self-administrating a Health Spending Account may not be the best option.
- Privacy. Companies need to be careful here. This could cause an issue due to privacy laws (employers are not entitled to know the details of their employee’s condition or treatment). If self-administrating, the employer will have access to this information, which may lead to a complaint. With a 3rd party administrating these claims, we can ensure that an employer is not privy of this information.
- Tax Requirements. One is required to remit proper taxes themselves. With a 3rd party, this can be done automatically.
- Claims Adjudication. When self-managed, there is not an adjudicator to help ensure that all claims submitted are qualified. With a 3rd party, claims will be adjudicated to ensure only eligible expenses are reimbursed.
So what happens if tax isn’t being properly remitted or if a company reimburses claims that are not eligible? It can get messy. Years of back taxes could be owed in addition to fees associated to incorrect filings. Also, those medical expenses that the employee was reimbursed for (without being taxed on) could be disallowed.
While it’s up to you to decide to self-administer or use a third party when it comes to Health Spending Accounts, I personally believe that it’s not worth the time or risk to try to self-administer these types of plans. Not only can you avoid the above issues by using a good 3rd party administrator, it is also much easier for employee’s to submit claims, see their balances and overall, have a positive experience utilizing their Health Spending Accounts.
We have done a tremendous amount of research looking for the best company to use when it comes to Health Spending Accounts.
Contact us to learn more.
By Jeff Romansky
CHS, CPCA Principal, SecurePlan Insurance Solutions
Jeff started his insurance career in 2006 when he joined RBC Insurance. During this time, he helped hundreds of insurance advisors grow their business by providing them with comprehensive advice, consultation and training. His commitment to building strong relationships, paired with his positive attitude and specialized expertise led him to win multiple awards including being #1 in his position throughout Canada on numerous occasions.
After nine successful years at RBC Insurance, he decided to pursue his dream and start his firm to help professionals, executives and owner-managed businesses with their individual insurance and employee benefits. Jeff proudly serves clients throughout Southwestern Ontario and the GTA.
Jeff Romansky is a broker, so you can be confident that he is working for you and not the insurance company. He consultative approach is welcomed by his clients as they never feel pressured and are always correctly informed. When necessary, Jeff will work with or bring in trusted partners to meet your overall financial goals. He is committed to building long-term relationships with all his clients and viewed as a trusted partner to many.
Jeff’ resides in Grimsby with his wife and daughter. When Jeff isn’t hard at work, you can find him with friends on the golf course, curling rink or camping with his family.