How Does an HCSA Work?
 
An account is opened for each eligible plan member. The plan sponsor then credits each HCSA with the amount a plan member is eligible to receive. Plan members then use their HCSA balance to pay for eligible health and dental expenses not otherwise covered by their group benefit or provincial health plans. Typical expenses include paying for any unpaid balance remaining from the traditional benefit plan, such as:
  • Deductibles or co-insurance payments for health and dental expenses;
  • Health or dental expenses in excess of maximum coverage amounts; or
  • A wide range of other health-related expenses not covered by their organization’s health and dental plan that qualify as a medical expense under the Canada Federal Income Tax Act.

  

Flexibility for All

A Health Care Spending Account (HCSA) can be used alone, as part ot a flexible benefits plan, or in combination with a traditional health and dental benefits plan. The HCSA adds flexibility to the way a plan member manages healthcare costs without affecting other benefits. An HCSA gives the plan
member increased involvement and more choice in benefits, while limiting the plan sponsor’s financial responsibility. It is an easy, tax-effective way to offer health and dental benefits choices and self-service options to plan members.
 
A HCSA also provides a vehicle for plan members to become better consumers of health and dental benefits. It involves them in benefit decision-making and forces them to understand the concept and importance of benefit dollar usage.
 
 
Coordination of Benefits (COB)
 

If a plan member has indicated a secondary carrier along with coverage by the primary carrier, any outstanding amounts not paid under the primary carrier will not be paid under HCSA until the claim has also been processed by the secondary carrier. A message will print on the Explanation of Benefits (EOB) stating that any outstanding balances not paid by the secondary carrier may be resubmitted for a payment under the HCSA. This offers protection for the plan member. They may forget that a second carrier could cover a portion of the claim cost, or that they may have other options as a first line of payment. This is how the plan member extends the life of their HCSA balance.

 
 
Easy to Read Explanation of Benefits (EOB) Statements 
 

Your EOB statements are intuitive and easy to read, combining payment details for traditional health and dental benefit payments as well as HSCA payments

 

For HSCA claims, statements include a claims section with payment details for the HSCA claim(s) as well as a contributions section which summarizes the following: contributions year, rolling type, start date, end date, line of business, contributions to date, contributions used, contributions remaining and use by date.

 

HCSA Administration 

HCSAs are designed to be hassle free- for employers and employees. You can expect:

  • Hands on support in implementing HCSA and educating employees                                                                                                                    
  • Streamline account administration processes and systems that are virtually automatic
  • Efficient coordination of employees’ regular coverage with HCSAs to maximize employee benefits
  • Convenient access to customer service for prompt answers to any questions related to HCSA
  • Regular assurance of HCSA reimbursement cheques and detailed account statements mailed directly to employees
Employer Advantages
 

You know how difficult it is to provide a cost-effective benefit plan that meets the diverse needs of all your employees. HCSAs respond to the needs of an employer.

 
Added Flexibility
 

With HCSAs, you can offer the flexibility in health care benefits your employees want, while holding plan costs at a level you can afford. HCSAs are funded with pre-tax dollars either through new money given to employees in lieu of salary raises or bonuses, or through money made available by restructuring your core benefit plan.

 
Cost Containment
 

HCSAs help you contain costs. You decide the level of coverage you can afford to provide with an amount you determine. Employees manage their own benefit dollars, and thereby become more aware of health care costs and become more responsible consumers.

 

Tax Advantages
 

HCSAs provide an avenue for you to deliver tax-effective compensation to your employees, using pre-tax dollars. At the beginning of the plan year, you decide the amount of a benefit plan design to be made available through an HCSA. Because these dollars are directed to the account before income tax is deducted, compensation provided through HCSAs goes a lot further than if employees were to pay for health- related expenses themselves.

Employee Advantages
 

Given the choice, every employee would spend their money differently when it comes to health care costs. HCSAs complement a benefits group plan to meet the diverse needs and changing demands of employees.

 
Increased Coverage Levels
 

HCSAs help your employees pay for benefits of their choosing, or benefits in excess of a health or dental plan including deductibles and co-insurance payments- all in a tax efficient manner.

 
Expanded Eligibility
 
Canada Revenue Agency allows a broader definition of dependants for expenses claimed through HCSAs- the perfect solutions for employees wanting to cover expenses for extended family members who would not otherwise be eligible under a benefits plan.  
  • Deductibles or co-insurance payments for health and dental expenses;
  • Health or dental expenses in excess of maximum coverage amounts; or
  • A wide range of other health-related expenses not covered by their organization’s health and dental plan that qualify as a medical expense under the Income Tax Act.

 

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