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Are Health Care Spending Accounts For Everyone?

I would like to thank Benefits by Design for their assistance regarding Passive versus Active businesses and how it can affect a Health Care Spending Account.

What is a Health Care Spending Account, you ask?  Pacific Blue Cross has provided some insight into answering this question.

“A Health Spending Account (HSA) is a unique benefit that lets you choose where your benefit dollars are spent. Eligible expenses are reasonable medical expenses not reimbursed by any government-sponsored or private health care plan. Eligible expenses can also include expenses incurred outside your province of residence, deductibles, co-payments, and amounts above plan maximums.”

Benefits by Design has provided the following explanation on why this is not an option for Passive Corporations:

As mentioned, Health Spending Accounts are considered to be an “employee” benefit which an employee is defined as: “In an employer-employee relationship, the payer is considered an employer and the worker an employee. Employers are responsible for deducting Canada Pension Plan (CPP) contributions, EI premiums, and income tax from remuneration or other amounts they pay to their employees. Employers must remit these deductions along with their share of CPP contributions and EI premiums, to the Canada Revenue Agency (CRA).  An employer who fails to deduct the required CPP contributions or EI premiums has to pay both the employer’s share and the employee’s share of any contributions and premiums owing, plus penalties and interests.”

I have provided some general information below for your reference; please note that we would defer to the expertise of the group’s tax authority who would be considered the expert on the specifics of the group.  It is highly recommended that any group looking to set up an HSA/PHSP speak with their accountant/tax authority to ensure they are following all regulations.

Private Health Services Plan

ITA S2-F1-C1

CRA Buyer beware

Tax Tips

If you would like to review your Health Care Spending Account (HCSA) or Cost Plus, please contact Glendinning Insurance Services at (250) 764-0142

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