Have you ever heard of the Health Spending Account? Though you may have,do you know what this account is meant for, and how can it be beneficial? If you are not familiar then read further. The HSA or Heath Spending Account lets you use tax-free money for covering your health expenses. All the pre-tax income that your business allocates to employees, or employee-owners can be used for a wide variety of health care services.
An HSA is very beneficial for the small incorporated Canadian businesses. Most small businesses either have, or are considering an HSA. Most of these small businesses use adopt an HSA as their only plan, while some use it to supplement coverage gaps from traditional health insurance plans. When entrepreneurs decide to start your own venture or business, you have to leave your employment and this often means giving up a number of health benefits which were very important salary perks. In fact, a Benefits Canada study found that health coverage is more important for employees that the an equivalent salary increase. Small businesses can address replicate or often surpass the health benefits they had with a large employer by turning to a Health Spending Account. Why is it that many small businesses are giving up their traditional monthly health insurance plans in favor of an HSA? The truth of the matter is that a typical small business gets an average of 70% back in routine health benefits from the monthly premiums they contribute to traditional monthly insurance plans. Traditional plans often only cover a percentage of traditional health expenses (e.g., 80% of dental cleanings), and fail to cover many other types of valued health care services leaving employees to pay out of pocket for these services the HSA solves this very nicely. An HSA is not an insurance plan. It is primarily meant to cover routine health care expenses. If a business wishes to also provide its employees with accidental or emergency health insurance there are many alternatives available in the market today from traditional health insurance, financial institutions, and others.or
Health Spending Accounts can be a very important factor used by prospective employees when they are considering joining a small business. Unlike salary increases, when an employee is reimbursed for health care expenses under an HSA this money is non-taxable in the employees hands. For the business owner an HSA is a very flexible and economical way to go. The business can decide how much to allocate each year to different employee categories and the money is not required until claims are actually filed. For example, if a business budgets $5000/year for an employee and they only spend $3000 for the year this is all the business is responsible for. At the end of the year a business can deduct all HSA health expenses (and all HSA admin fees) they are 100% tax deductible overall taxable income.
An HSA is very beneficial for the small incorporated Canadian businesses. Most small businesses either have, or are considering an HSA. Most of these small businesses use adopt an HSA as their only plan, while some use it to supplement coverage gaps from traditional health insurance plans. When entrepreneurs decide to start your own venture or business, you have to leave your employment and this often means giving up a number of health benefits which were very important salary perks. In fact, a Benefits Canada study found that health coverage is more important for employees that the an equivalent salary increase. Small businesses can address replicate or often surpass the health benefits they had with a large employer by turning to a Health Spending Account. Why is it that many small businesses are giving up their traditional monthly health insurance plans in favor of an HSA? The truth of the matter is that a typical small business gets an average of 70% back in routine health benefits from the monthly premiums they contribute to traditional monthly insurance plans. Traditional plans often only cover a percentage of traditional health expenses (e.g., 80% of dental cleanings), and fail to cover many other types of valued health care services leaving employees to pay out of pocket for these services the HSA solves this very nicely. An HSA is not an insurance plan. It is primarily meant to cover routine health care expenses. If a business wishes to also provide its employees with accidental or emergency health insurance there are many alternatives available in the market today from traditional health insurance, financial institutions, and others.or
Health Spending Accounts can be a very important factor used by prospective employees when they are considering joining a small business. Unlike salary increases, when an employee is reimbursed for health care expenses under an HSA this money is non-taxable in the employees hands. For the business owner an HSA is a very flexible and economical way to go. The business can decide how much to allocate each year to different employee categories and the money is not required until claims are actually filed. For example, if a business budgets $5000/year for an employee and they only spend $3000 for the year this is all the business is responsible for. At the end of the year a business can deduct all HSA health expenses (and all HSA admin fees) they are 100% tax deductible overall taxable income.
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