{"id":1648,"date":"2025-04-01T05:45:12","date_gmt":"2025-04-01T12:45:12","guid":{"rendered":"https:\/\/immixgroup.ca\/blog\/?p=1648"},"modified":"2025-04-01T06:20:04","modified_gmt":"2025-04-01T13:20:04","slug":"health-and-wellness-spending-accounts","status":"publish","type":"post","link":"https:\/\/immixgroup.ca\/blog\/2025\/04\/01\/health-and-wellness-spending-accounts\/","title":{"rendered":"Your Benefits, Your Way: The \u201c101\u201d on Health & Wellness Spending Accounts"},"content":{"rendered":"\t\t
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by Lindsay Byrka\u00a0| B.A., B.Ed, CFP<\/span>\u00a0| Vice President<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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If you\u2019re a Canadian business owner looking to offer flexible, tax-effective coverage that empowers your team, an HSA could be the missing piece of your benefits offering. <\/em><\/p>

In this guide, we\u2019ll break down what an HSA is, how it works, and why businesses like yours are making it a staple in their employee benefits package.<\/em><\/p>

Health and Wellness Spending Accounts are Increasing in Popularity<\/h2>

Most people have heard of Health Spending Accounts, which have become increasingly popular over the past decade or so, with around 40% of plans offering some form of HSA<\/a>.<\/p>

This is in response to multiple generations in the Canadian workforce and their diverse needs, the increasing desire for flexibility and choice, and the simplicity of offering this predictable-cost benefit.<\/p>

Most Canadian carriers now facilitate not only Health Spending Accounts (non-taxable, for items on the CRA\u2019s Eligible Medical Expense listing) but also Wellness or Lifestyle Spending Accounts (taxable items that fall outside the CRA listing). In addition, many specialty providers offer robust, low-cost, user-friendly platforms for Health and Wellness Spending Accounts with many customizations available.<\/p>

What is a Health Spending Account?\u00a0<\/h2>

A Health Spending Account is set up by an Employer and provides a pre-determined annual allocation to an Employee, to be used for CRA-eligible medical expenses. Employees have the flexibility to choose which expenses are submitted through the Health Spending Account. Employees receive reimbursement for eligible claims on a tax-free basis. As the Employee uses their account, their available balance reduces.<\/p>

Employers pay for the amount of the expense, plus an administrative charge for adjudication, and any applicable taxes on the admin fee. The total expense is tax-deductible to the Employer. To be CRA-compliant, Health Spending Accounts need to be facilitated via a third-party provider.<\/p>

What is a Wellness Spending Account (WSA)?<\/h2>

Also known as a Lifestyle Spending Account (LSA), the primary difference from a Health Spending Account is WSAs\/ LSAs are for taxable expenses (i.e. those not found under the CRA listing). The funding and cost for the Employers are the same as with a HSA, and Employers can also deduct the expense. The main difference is that expenses reimbursed through a Wellness\/ Lifestyle Spending Account are a taxable benefit to Employees.<\/p>

What is a Flexible Spending Account?<\/h2>

This simply refers to an account where the employee has both HSA and WSA reimbursement available. Typically, they can choose what percentage of the total allocation falls into each of the buckets (taxable or non-taxable) as described.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"health\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Collectively, many people refer to these accounts as \u201cHealth Spending Accounts\u201d or \u201cHealth Care Spending Accounts\u201d or by the American term \u201cHealth Savings Accounts,\u201d although they may offer the ability to remit expenses under each tax bucket.<\/p>

The Benefits: Why More Employers are Implementing Health Spending Accounts<\/h2>

From our perspective as benefits advisors, the answer to this is twofold: employees love Health Spending Accounts for the flexibility <\/strong>and choice<\/strong>, and employers find them cost-effective, simple and practical. The benefits are vast:<\/p>