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What is a Health Spending Account (HSA)?

An HSA is a great alternative (or supplement) to a traditional health benefits program. It is a Self-insured Private Health Services Plan arranged by the Plan Sponsor for their Members residing in Canada. The Member may use the allocated funds for:

Why an HSA?

EFFECTIVE

  • Decreases number of fraudulent claims
  • Increases Member’s appreciation of the benefit plan

AFFORDABLE

  • Predictable health care expense. The Plan Sponsor allocates a set amount of funds to the Member’s HSA account and the Member can claim up to their individual maximum
  • It is a tax deductible business expense for corporate Plan Sponsors

FLEXIBLE

  • Can be imbedded within a traditional health care plan or can be used as a stand-alone plan
  • Can be imbedded within a traditional health care plan or can be used as a stand-alone plan
  • Member can use HSA funds on expenses that are not covered in traditional benefit plans or government programs

HSA Types

1.Carry forward “balance”

Unused balance at the end of the benefit year (Year 1) is carried forward into the next benefit year (Year 2). If any of the balance from Year 1 remains unused at the end of Year 2, the balance is returned to the Plan Sponsor. Under the Income Tax guidelines, if the Member uses their full HSA balance, additional expenses cannot be carried forward into the next year.

2.Carry forward “expenses”

Expenses not claimed at the end of the benefit year (Year 1) are carried into the next benefit year (Year 2) and reimbursed from the Year 2 balance. If the Member does not use their full balance within any given year, the balance is returned to the Plan Sponsor as Members are not eligible to carry forward the unused balance into the next benefit year.

3.No carry forward “use it or lose it”

Any unused funds not claimed against in the benefit year are returned to the Plan Sponsor.

For all HSA Types Members have 90 days after the plan year end to submit claims.

How it Works

HSA funds are allocated to the Member’s account annually. Claims submitted are paid in a similar manner as a traditional benefit plan. Eligible expenses are paid up to the total dollar amount available in the HSA.

How it is funded

An HSA can be funded annually, semi-annually, quarterly or monthly.

Eligibility

CLAIMANTS:

  • Member
  • Member’s spouse/common-law partner
  • Memeber or Member’s spouse/common-law partner’s children
  • The Plan Sponsor has the option to include any Member of the Member’s household with whom the Member is connected by blood relationship, marriage or adoption

EXPENSES:

  • Eligible expenses not covered under a current benefit plan or provincial health plans
  • Any item that qualifies for the medical Tax Credit is eligible for coverage through an HSA.
  • Please refer to the CRA website http://www.cra-arc.gc.ca/ menu-eng.html for a detailed list of eligible expenses which are subject to change. Some examples are:
  • Payments to medical practitioners, hospitals, etc.
  • Care of individual with mental or physical impairment
  • Care in a self-contained domestic establishment
  • Care due to lack of normal mental capacity
  • Care in an institution and care
    and training in a school
  • Artificial limbs, aids and other devices and equipment
  • Products required because of incontinence
  • Eyeglasses
  • Oxygen tents
  • Guide and hearing-ear dogs
  • Bone marrow or organ transplants
  • Renovations and alterations to a dwelling that are deemed medically necessary
  • Rehabilitative therapy
  • Devices and equipment prescribed by regulation
  • Preventive, diagnostic and other treatments
  • Dentures

We Care, You Benefit.