Health Spending Accounts

Traditional group benefit plans provide predefined coverage categories with set limits. An HSA offers a more flexible approach, allowing you to allocate funds that can be used for eligible healthcare expenses based on individual needs. A Lifestyle Spending Account (LSA), by contrast, is generally used for wellness or personal development expenses and is treated differently under tax rules.

Health Spending Accounts can be structured to include business owners, employees, and their eligible dependants. Eligibility is based on your business structure and how the benefit plan is set up, so working with an advisor helps ensure the arrangement fits your company and overall compensation strategy.

How unused HSA amounts are handled depends on how the plan is set up. Some plans allow limited carryover of unused balances or claims, while others do not. Because these rules are determined when the plan is designed, it’s important to understand your carryover options before choosing a structure.

As the employer, you decide how much funding to allocate to the HSA. When you or an employee incur an eligible expense, a claim is submitted through the plan administrator with supporting documentation. Once approved, the expense is reimbursed from the available HSA balance. This structure allows you to provide health benefits in a controlled and predictable way.

An HSA is designed to reimburse many common healthcare expenses that employees or business owners may incur. Reimbursable expenses are generally based on the Canada Revenue Agency’s definition of eligible medical expenses, and may include medical, dental, vision, and other healthcare services. Coverage is also subject to the rules of your specific HSA plan, so reviewing plan details helps ensure you understand how the account can be used.