Health Spending Accounts
If you like the idea of making employees happy while keeping operating costs down, then a Health Spending Account with flexible options can help you achieve these worthy goals. It is a tax-effective solution too. Here’s how this neat idea akin to a special savings account works in practice:
- After creating health spending accounts for each employee benefiting, a firm credits each of these accounts annually according to internal policy. There are no restrictions to the amounts involved, except that these should be in line with relative remuneration.
- As the year progresses employees may spend their credits to pay for dental and medical care not included in their group benefit plan.
- A health spending account program could be combined with an entry-level group insurance plan, or be offered as a stand-alone benefit option.
Cost Smoothing – A health spending account is a capped benefit vehicle that reduces the threat of fluctuating overall claim rates and facilitates accurate cost budgeting.
Tax Efficiency – Health spending account disbursements and administrative fees are fully tax deductible.
Flexibility of Choice – Health spending account credits can be spent on any eligible medical or dental treatment. Within this restriction, company employees have autonomy to choose which treatments suit them best.
Reduced Out of Pocket Spending – Provided that a health spending account program is combined with an entry-level group insurance plan, credits standing to the account of an employee may be used to:
- Settle deductibles applying to services otherwise covered by the group insurance plan
- Pay above-ceiling amounts for group insurance benefits
- Pay for medical and dental care excluded from the group insurance plan, provided that these are recognized under the Income Tax Act.
- With the exception of Revenue Québec, amounts credited to a health spending account are treated as non-taxable income by the government
Could you think of a more tax-effective way to keep employees happy while manage costs down? Speak to the consultants at WDG Inc. and discover how easy it is to implement a health spending account program for your company.