Health & Welfare Trusts in Canada

Are the Health Care Spending Accounts tax-free in Canada?

The Health Care Spending Accounts are tax-free vehicles for financing the healthcare costs of business owners and employees. It is a comprehensive benefits plan that provides flexible coverage, and is a management tool that controls cost for business owners and their employees.

It provides the security of a benefit plan without expensive premiums or restrictions. HCSA's are self-funding plans, endorsed by the Canada Revenue Agency. Today, they are popular forms of health spending accounts. Following are five key coverages that HCSA offers:

• 100% reimbursement
  Employees are reimbursed for 100% of their health, dental and vision expenses (up to the plan maximum), with tax-free dollars.
• Flexibility of coverage
  PHSP Employee Health Spending Accounts can be used for medically necessary health, dental or vision expenses. Employees use Health Spending Account credits on the services they need, when they need them.
• Tax savings
  As a business owner, you realize tax savings when you purchase health and dental expenses with before-tax dollars – an immediate saving equal to your personal tax bracket. Health expenses become a tax-deductible business expense, and reimbursements are paid to you personally, tax free.

• Low administration costs
  Not only are there no premiums to pay, but also our PHSP offers the lowest administration fees in the industry.

• Low cost control
  Employers decide how many credits / dollars will be applied to employees’ Health Spending Accounts each year. Therefore, the employer knows the maximum amount to be spent on the employee benefit plan in a given year.

PHSP pays health, dental and vision care expenses not reimbursed under other benefits plans. CRA interpretation bulletin IT-339R2

The following eligible expenses can be claimed through a Health Care Spending Accounts: