What are Healthcare spending accounts?
Healthcare spending accounts are a pre-determined amount of money that an employer provides to an employee to be used for routine health and dental expenses. It acts similar to a bank account. A deposit to the employee’s account is made at the beginning of the year and then the balance is reduced over the year as claims are paid out. Once the balance is zero, then the employee must wait until the beginning of the next benefit year for the account to be replenished.
The contributions made by the employer are tax deductible and the benefits received by the employee are tax free.
Using this form of employee benefits provides cost certainty to the company while the advantage to the employee is greater choice on how the benefits can be used based on their individual lifestyle. Also, any unused money left over at the end of the benefit year for an employee are carried forward to the next benefit year to be used in addition to their new limit for that year.
What can be claimed under a Healthcare spending accounts?
100% of claims are reimbursed up to the annual limit of the healthcare spending account provided they are recognized by the CRA as legitimate medical expenses for tax purposes. The following are highlights of coverage but not the only services covered:
- Semi-private or private hospital room accommodation
- Ambulance services
- Medical tests and bloodwork not covered by OHIP
- Prescription drugs
- Registered massage therapy
- Dental implants
- Eye Examinations
Contact Gary to discuss your individual situation or to find out more information about healthcare spending accounts!