Is a Health Spending Account or HSA right for my business?
A Health Spending Account (HSA) is a special account used to pay for your healthcare expenses. The benefit is 100% tax-free to you and 100% tax-deductible for your corporation.
An HSA is a type of private health service plan (PHSP) as defined by the Income Tax Act. A Health Spending Account allows an employer to reimburse an employee (including shareholder/employees) for eligible medical expenses on a tax-free basis while deducting these expenses.
Medical benefits paid on behalf of an employee by an employer are not taxable as a benefit to the individual, nor are the claim benefits themselves taxable to the individual employee. The cost of these benefits is considered a business expense.
We recommend the HSA account offered by Olympia Benefits.
The CRA has guidelines that require a limit for each employee covered in the plan year. Your spouse is the only employee that can be added to the plan as an incorporated individual. Children are included with your plan if you claim them as dependents on your tax return.
For more information on HSAs please refer to the Olympia Benefits website.