Health Spending Account
Health Spending Account (HSA) is also known as Private Health Services Plan (PHSP). A Health Spending Account is recognized by the Canada Revenue Agency (CRA) as a vehicle which allows businesses to deduct health-related expenses eligible under the Income Tax Act. The premiums can be a deductible business expense.
The HSA or PHSP is designed to self-fund employer & employee healthcare expenses. This is a ‘pay-as-you-claim’ plan which is an employer-funded flexible benefit plan.
How It Works
Throughout the year the employer/employee use tax-free dollars to pay for medical, dental or vision care expenses that are not covered by other plans. Your company submits the original receipts with a cheque to the HSA or PHSP provider for the amount of the receipts plus a processing fee and applicable taxes. The business deducts the entire cost. The reimbursement to the employee.