Health Spending Account (HSA), Wellness Spending Account (WSA – also known as a Lifestyle Spending Account in some circles), Flexible Spending Accounts - are all these terms really that complicated? What do they all mean? What is the best option for your business? It’s easy to get overwhelmed with options. Luckily, we are here to make it simple and help you through it!
Health Spending Account (myHSA)
A non-taxable spending account. Businesses can offer this to employees (or as an incorporated business owner, to yourself) as either an alternative to traditional health insurance or as a “top up” to traditional health insurance. In the simplest terms, employers can provide their employees a set amount of money in an HSA to be used for medical expenses. The eligible expenses are determined by the CRA, for things like dental care, vision care, chiropractic, massage, and many other items and services. Employees pay for their service, like a dental cleaning for example, and then submit a photo of the receipt through the myHSA app for reimbursement. The employer decides how much money is available in the HSA for employees, and can be different for different levels of employees, what we refer to as a “class”. This can mean that executive employees can receive a different amount of funds in their HSA than part-time employees or employees with under one year of service at a company, however the employer decides to class the employees. The great thing about an HSA is that employers only pay for what an employee uses. If someone only uses $250 of the $500 in their HSA, the company only pays for that $250, plus admin fees and taxes. This makes it easy to stay on budget and eliminates the extra expense that can be associated with traditional insurance plans of paying for services that the employee may not use at all. HSA funds are a tax-deductible expense for the business and the funds are tax free when they are reimbursed to the employee.
An HSA allows employees to choose their health benefits that suit them the best, making their benefits flexible and personal to them.
Wellness Spending Account (myWSA)
Sometimes referred to as a Lifestyle Spending Account, Personal Spending Account, or a Taxable Spending Account. Where an HSA covers medical expenses and the eligibility of these expenses is governed by the CRA, an employer can make the WSA eligible expenses suit the values of that company. WSA eligible expenses can be as specific or as creative as the business wants them to be. Some companies choose to allow only fitness related expenses, some decide on offering professional development expenses, others allow for anything and everything, including rent/mortgage payments, pet day care, cosmetic procedures, winter tires, the list can be as endless as the employer wants.
Exactly like an HSA, employees pay for their item or service, take a photo of the receipt and then submit it for reimbursement through the myHSA app. The difference between an HSA and a WSA is that the WSA expenses are taxed. A WSA is used to promote healthy lifestyles and employee satisfaction.
Just like the HSA, the employer decides the amount of funds that employees receive in their WSA, making it easy to stay on budget. Once the funds are used, they are gone! There is no going over budget when it comes to an HSA or WSA. If the employee does not use all the funds in the year, there is the option to allow for carryover of funds – but we won’t get into that quite yet. This is just the basics, remember?
Flexible Spending Accounts (myFlexplan)
The myFlexplan is the most popular and versatile option for employers and our most popular plan option. It combines the HSA and WSA, but it lets the employee decide how they want to use the funds. Every employee is provided a certain amount of funds to use, but they have 30 days from the start of the plan to decide how they want to allocate their funds for the year. This means they decide how much of their funds they want to use in their non-taxable HSA, and how much they want to use in their taxable WSA. They can choose to put all their funds in either the HSA or WSA, or split it up however they see fit. myFlexplan lets your employees make use of their funds in the most flexible and personal way possible. They get to choose what is important to them, what benefits suit them and their family needs the best, and how they think is the best way to spend it.
Think about the different generations in the workforce right now. Their needs are all SO different. Even among employees in the same generation, the needs and values that people have now could not be more different. myFlexplan is the best way to address these different needs – by letting employees choose for themselves.
Crystal clear, right?
myHSA: a non-taxable benefit for employees. Eligible HSA expenses are determined by the CRA and are tax deductible for the business. An HSA allows employees to choose to spend their funds on the medical related items that they choose.
myWSA: a taxable benefit for employees. A business chooses the eligible WSA expenses and can be as creative or specific as the business wishes. A WSA promotes a healthy lifestyle and satisfaction among employees.
myFlexplan: the most popular and versatile option. The employee can decide to allocate their funds between an HSA and WSA in the way that suits them best.
All options ensure that the employee (and the business) do not go over budget. Once the funds are used, they are gone! All options allow for flexibility and personalization, letting employees choose the benefits that suit them the best.
Ready to add an HSA, WSA or myFlexplan to your business? Reach out to us here!