Prescription drugs
Qualifying prescription drugs and related costs may be covered through the HSA.
Health Spending Account
More choice for employees. More control over costs.
A Health Spending Account (HSA) gives employees a set amount to use toward eligible health and dental expenses while giving employers greater control over the amount they commit to the benefit.
Employee choice · Defined budgets
Health Spending Account at a glance
Employer funding. Employee choice.
Employer sets the amountChoose an annual allocation by employee or employee class.
Employees choose where to use itA wide range of health and dental costs may qualify for reimbursement.
Defined annual allocation
Flexible expense coverage
Claims administration
PHSP tax advantages*
Employee flexibilityEmployees can direct available dollars to eligible expenses that matter to them.
Budget controlThe employer determines the annual HSA allocation.
Complements insured benefitsUse an HSA to fill gaps, deductibles and uncovered eligible expenses.
Independent adviceCompare administrators, fees, funding and plan rules.
What is a Health Spending Account?
Different employees face different expenses.
One employee may need prescription eyewear, while another faces dental treatment or physiotherapy costs. An HSA can help with these different expenses without requiring a separate insured benefit for each, provided the claims meet the applicable eligibility requirements.
How it works
From an eligible expense to reimbursement.
Employees submit expense details and supporting documents to the administrator, who checks eligibility and determines the amount payable from the account.
01
Employer sets the allocation
Set the amount provided to each employee or defined employee group.
02
Employee has a qualifying expense
The employee pays a health or dental cost that is not fully covered elsewhere.
03
Claim is submitted
The administrator reviews the claim to confirm it meets the applicable HSA and PHSP requirements.
04
Employee is reimbursed
Once approved, the claim is paid from the funds remaining in the employee’s account.
Vision care
Vision-related costs such as eye exams and prescription eyewear may be reimbursed through the HSA.
Dental expenses
Eligible dental expenses—including amounts above insured plan maximums or coinsurance levels—may be reimbursable through the account.
Paramedical services
Services provided by certain health professionals, such as physiotherapists, chiropractors and psychologists, may qualify under the HSA.
Medical devices & equipment
Certain medical devices, equipment and supplies may be covered when they meet CRA requirements.
Coverage gaps, deductibles and coinsurance
An HSA can be especially useful for eligible expenses that are only partly covered—or not covered—under the insured health and dental plan, giving employees a flexible way to use employer-funded dollars where they receive the most value.
Eligibility note: Reimbursement depends on the HSA terms and applicable Private Health Services Plan requirements. Qualifying costs can vary, and some items may require additional supporting documentation.
Plan design
The allocation is only one part of the decision.
Before implementing the account, document how it will operate so employees and administrators have a consistent reference for questions and decisions.
01
Set the annual allocation
Use realistic expense examples to assess how much assistance a proposed allocation would provide over the plan year.
02
Define employee eligibility
Establish waiting periods, eligible classes, dependent rules and what happens when an employee joins or leaves during the plan year.
03
Choose the carry-forward approach
Depending on the plan design, unused balances or claims may carry forward for a limited time, subject to applicable PHSP requirements.
04
Align the HSA with existing coverage
Clarify which costs should flow through insured coverage first and where the HSA can supplement the plan.
05
Choose the right administrator
Choose an administrator based on the tasks your team can manage internally and those it needs the provider to handle.
Independent comparison
Compare more than the administration fee.
We clarify what each provider’s quoted fee includes, identify additional charges and explain conditions that could affect the comparison.
What we compare
- Administration and claims fees
- Funding method and cash-flow requirements
- Online and mobile claims experience
- HSA amounts by employee group
- Carry-forward rules and plan-year administration
- Reporting and employer administration
- Integration with insured health and dental benefits
Budget & tax treatment
Budget for the account as a whole.
Estimate the employer’s expenditure at different claim levels, including administration charges and applicable taxes, and confirm when payments will be required.
Confirm how funding is handled
Understand what happens to employer funds throughout the arrangement, including when circumstances change.
- Required initial funding
- Timing of subsequent payments
- Treatment of unused funds
- Departing employees’ outstanding claims
- Account closure and reconciliation
Where traditional insurance still matters
An HSA’s available balance can be small relative to a major claim. Consider the insured protection employees would retain for expenses beyond the account’s capacity.
- High-cost prescription drugs can exceed the available HSA balance.
- Emergency medical care while travelling can involve substantial expenses.
- Combined prescription, dental, vision and other eligible expenses can exceed the annual HSA allocation.
Canadian tax note: When an HSA qualifies as a Private Health Services Plan, eligible reimbursements are not taxable to employees for federal income-tax purposes. Employer costs may be deductible as business expenses, subject to the applicable rules. Quebec may treat the employee benefit differently, so employers should confirm the tax treatment of their arrangement.
Frequently asked questions
Health Spending Accounts, explained.
Details can vary by provider and plan structure, but the following answers address the questions most often raised by employers.
What is a Health Spending Account?
An HSA gives employees access to employer-funded dollars that can be used to reimburse qualifying health and dental costs, up to the amount available in the account.
Is an HSA the same as a savings account?
No. A Health Spending Account is not a deposit or investment account. It provides access to employer-funded dollars that employees can use for qualifying health and dental costs, subject to the terms of the HSA.
What expenses can employees claim?
Reimbursable costs are determined by the requirements that apply to Private Health Services Plans. They can include prescription drugs, dental and vision care, paramedical services, and certain medical devices or supplies. Additional conditions or documentation may apply to some items.
Can an HSA be added to an existing group benefits plan?
Yes. An HSA is often added to existing health and dental coverage to help employees with costs that are only partly covered or fall outside the insured plan.
Can unused HSA dollars carry forward?
Some HSA arrangements allow unused balances or claims to carry forward for a limited time. The available approach depends on the plan and should be confirmed with the administrator.
Are HSA reimbursements taxable to employees?
If the HSA qualifies as a Private Health Services Plan, eligible reimbursements are not taxable to employees for federal income-tax purposes. Quebec may treat the employee benefit differently. Employers should confirm the treatment that applies to their plan and employees.
How much should an employer allocate?
The appropriate amount will vary by employer and should reflect the existing benefits structure, workforce needs, compensation approach and overall budget.
Can different employee groups receive different HSA amounts?
Often yes. Employers may establish reasonable employee classes with different allocations, subject to the administrator's rules and applicable legal and tax requirements.
Explore an HSA
Would more flexibility improve your benefits plan?
We can review your existing health and dental coverage, identify where an HSA may add value, and compare available structures, administrators and costs.