Health Care Spending Accounts (HCSAs)

A Health Care Spending Account (HCSA), is an individual employee account that provides reimbursement for eligible health care expenses or other benefits that are not covered under provincial health insurance plans or other benefit plans sponsored by the employer. A Health Spending Account can be implemented on a stand-alone basis within a traditional benefit plan or part of a flexible benefits plan.

 

Spending accounts can sometimes be the answer to situations where an employer wants to give employees increased involvement and more choice in their benefits while also limiting its financial responsibility. A health care spending account is a simple, tax-effective way to provide health and dental benefits flexibly. Through a Health Care Spending Account, employees can use pre-tax dollars to pay for expenses that would normally represent an out-of-pocket expense .

 

A HCSA can offer more flexibility than traditional plans as its scope of coverage is far broader than a typical benefit plan. 

 

A HCSA can be used to pay deductibles, coinsurance, amounts in excess of benefit maximums and to broaden the scope of coverage of an existing plan. For example, a HCSA could cover:

 

•Professional services (e.g. chiropractor, physiotherapy) above the annual maximum

•Medications not included in a plans drug formulary

•Eye glasses and contact lenses if not covered by the existing plan or amounts in excess of the maximum if covered

•Dental services that may not be part of the existing dental plan (e.g. caps, crowns, bridges, orthodontics)

•Dental expenses above the plans annual maximum

 

The Mechanics of Health Care Spending Accounts

​

Health Care Spending Accounts that are provided on a stand-alone basis are funded entirely by the employer. Each member of a class receives an equal allocation of funds from the employer.

 

At the end of the year, any unused balance in the account can be carried over for one year, but unused funds in the account for more than two years are forfeited to the employer. Alternatively, unclaimed expenses for a given year can be carried forward for a year. However, a plan cannot include both a carry-over of the account balance and unclaimed expenses.