Health/Wellness Spending Accounts
As an employer, providing comprehensive employee benefits helps to attract and retain talent. Total compensation packages that extend beyond salary and vacation time also positively impact employee productivity and job satisfaction. Two employee benefit solutions that have become increasingly popular in recent years are the employee Health Care Spending Account (HSA) and a Wellness Account (WSA). These accounts allow employees to customize their healthcare and wellness to suit their needs as part of their benefits plan.
What is a health care spending account (HSA)?
A health spending account (HSA) provides employees a fixed allowance to spend on eligible health expenses – offering personalized employee health benefits with the flexibility to choose how benefit dollars are spent.
What is a wellness spending account (WSA)?
A WSA is a taxable spending account provided by employers to promote healthier lifestyles and employee satisfaction. myWSAs are taxable so they are extremely flexible. The only governing body over eligible items in the program is the employer. A Wellness Spending Account will typically encompass what the company believes are items that reward and incentivize their staff. There are many standard wellness items that include things like daycare costs, gym memberships, vitamins, and personal training. With this plan, you can be as creative as you want when building it.
FAQ
Can I implement an HSA and wellness spending account as part of my employee benefits plan?
Yes, an employer can implement either an HSA, a wellness spending account, or both at their discretion.
What expenses are eligible for HSA?
Eligible expenses for HSAs are those that meet the requirements as a deductible medical expense according to the Income Tax Act of Canada.
What expenses are eligible for wellness spending accounts?
Generally, eligible wellness expenses focus on nutrition, physical fitness and mobility, and cognitive habits. As the employer, you can work with Gifford Carr to select which costs to cover as part of the wellness spending account.
What happens to the HSA or wellness spending account allocation if the employee does not use the full balance in a calendar year?
The employer can choose to have it terminated at the end of the calendar year. Or, they can elect to allow the remaining balance to roll over into the following year. To meet the criteria set by CRA, there must be an element of risk to the employee where the allocated amount is either used or lost.
