HSA Advantage #3 – Flexible Spending

Every few weeks, I am showcasing a different advantage of owning a Health Spending Account in this segment called…

HSA Advantage….

Many readers would argue that this is the number one benefit of having a Health Spending Account.  Others will say it is the tax-savings.  Personally, I would agree with the Flexible Spending crowd on this one.

In case you did not know, Health Spending Accounts cover a wide range of services and procedures – far more than any insurance plan on the market today.  While an HSA is technically an insurance plan in the eyes of Canada Revenue Agency (CRA), it follows a claiming schedule designed for tax deduction purposes as opposed to caps or maximums based on general insurance risk and claiming patterns.   To clarify, think of your traditional health insurance plan from Manulife or Sun Life.  The plan has maximums for things like prescription drugs, massage therapy visits, and private duty nursing.  These caps or maximums are tied to the premium you pay.  The lower the maximum or allowance for each item, the lower the premium you pay – similar to the deductible on your car insurance and the price you pay in premiums. 

A Health Spending Account on the other hand has no plan design and the items you can claim for reimbursement are at the discretion of the owner - as long as you have sufficient funds in the account and the claim is considered eligible by CRA.  The rules for claiming come from Canada Revenue Agency’s interpretation bulletin IT-519R2 Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction.  In addition to covering the basic items (drugs, therapy, dental, etc..) the funds can also be used to pay for many of the items insurance plans refuse to cover – such as smoking cessation, fertility drugs, elective surgery, cosmetic surgery, special needs schooling and more…

The key advantage is that you dictate the amount you want to spend and what you want to cover, not your insurance provider.  If you or your employer decide to deposit $1,200 into your Private Health Services Plan (PHSP) or Health and Welfare Trust (HWT), you can spend it all on one service (such as massage therapy) or on a variety of services for you and your family.  The flexibility of the HSA means that you have complete control over what you spend and when you spend it – a true advantage.  For more information on claiming, feel free to view our making claims information page here at HSACanada.com.