A Health Spending Account is available as an optional additional benefit that works together with a Group Plan if chosen by the Employer.
The Employer decides on an amount per person to contribute annually (ie. $600 or $1000) and that amount is distributed monthly and can be used by the employee for any Health or Dental purpose not covered on the standard plan ie, once plan limits have been reached or for a benefit that typically is not covered under a standard plan.
It is used as a bonus supplement benefit that is flexible and transportable.
How does a Health Spending Account work?
This BONUS Health Spending Account works like a bank account. The amount chosen is deposited for the employee and the employee accesses the money as needed. There is a 10% administration fee and an additional claims administration fee added to this as well as appropriate taxes, in order to satisfy Revenue Canada and allow this contribution to remain tax deductible for the employer.
What happens when the money is all gone?
Once this amount is completely utilized, there is no more money available for this purpose. Alternately, if the money has not been used, there is a carry over to the next year for the employee. This amount of money in a Health Spending Account belongs to the employee and not the employer, but can be stopped at any time by the employer and similarly increased by the employer as well. It is important to note that any health and dental expenses put through the Health Spending Account is not counted on the claims experience of a group therefore never negatively affects renewal pricing.
How is the Health Spending Account Plan option used?
The Health Spending Account option has been offered to groups who wish to enhance benefits for their employees and provide them with additional benefits that would typically not be covered with a standard Group Benefits Plan. It also allows employees to choose where their Health Spending money dollars would go in terms of coverage. In the past, the Health Spending Account option was only available to large groups over 100 employees, but is growing in popularity now in the smaller group market due to its flexibility, making it now accessible and an excellent incentive benefit to offer employees.
If you require further information regarding the Health Spending Account option, please book an appointment with Nancy Zins.