Health Spending Account (Reimbursing Medical and Dental Expenses)

Quick Tour

Many employers choose to provide defined contribution Health Spending Accounts for their staff to supplement or replace health insurance. This provides the employer with certainty over costs, while giving the employee the flexibility to design a customized benefit plan.

Health Spending Accounts provide both the employer and employee with a great deal of flexibility. The employer sets the monthly contribution amount, and can change it at the beginning of each calendar year. Employees may use the contributions for any health care expense permitted by the Canada Revenue Agency. Amounts that are not used by the employee within 2 calendar years are refunded to the employer.

You can provide each employee with $1,200 to spend on health care during the year at a cost of $121.50 monthly per employee. Any amounts that employees do not use within two calendar years are refunded to the employer.

Please note that you have a great deal of latitude in designing a contribution schedule, to ensure that it specifically meets the needs of your organization. The contribution schedule may vary by occupation or seniority, and can be expressed as a specific dollar amount or percentage of earnings. Furthermore, the contribution schedule may be adjusted at the beginning of each calendar year. A worksheet is provided to help you customize the contribution schedule to suit the compensation structure of your organization.

A Health Spending Account has the following advantages:

• Employee Satisfaction:
  • Employee claims are fully paid, as permitted by law and to the extent of their health spending account balance.
  • Employees may choose to use the amount in their health spending account for any combination of health insurance, drugs, dental, vision care, etc.
• Employer Satisfaction:
  • The employer determines, and may change, the contribution schedule at the beginning of every calendar year.
  • The employer's cost are limited to their contributions, a 10% administration fee, plus 10.5% in provincial and federal taxes.
  • Contributions that are not used to pay claims are refunded to the employer and be distributed as a special contribution to those with benefit coverage.

Advantages:

Benefit Budget Worksheet

Employer Application

Sample Employee Booklet

Employee Claim Form

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