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  • myHSA

What is the Element of Risk?

The CRA guidelines for HSA's indicate that an HSA must act like a plan of insurance, and like insurance, there must exist an "Element of Risk". ​

So you know how you can't buy insurance after your house catches fire, or you can't buy health insurance after you have been diagnosed with an illness? The same exists for an HSA. ​

Here is where the "Element of Risk" really has to be taken into consideration:​​

  • Mid-Year Changes: HSAs have rules about changing plan amounts in the middle of the year. This is because an HSA is based on predictions for the year's health needs. Changing it midway could raise red flags with the CRA. For this reason, generally, we recommend any plan limit changes be done at renewal.


There are circumstances where a plan increase can be mid-year but there are a few things to keep in mind:

  1. Balance cannot be increased for just one employee, it must be increased for all employees in the class

  2. If you are increasing the balance because an employee has incurred expenses greater than the plan limit set it could be seen as offside with the CRA to increase the limit mid-year

  3. In any situation we always recommend you get the sign off of the corporate accountant


  • Reallocating Funds: The CRA has set rules on when you can reallocate your funds, because that "Element of Risk" has to exist on a myFlex plan as well. You can't move funds between HSA and WSA freely, because you might have an event occur that you didn't plan for and reallocating the funds to accommodate that removes that "Element of Risk".


  • Backdating Plans: You can't set up an HSA and backdate it to be effective prior to an even occuring. That would eliminate the "Element of Risk" that comes with having insurance, or an HSA in this case, to protect against future expenses. There are some situations where backdating is possible, download our guide to Backdating Guidelines below for all the details.

Download PDF • 36KB

Danielle Constantine

CX Manager


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