Health Spending Account (HSA)

A Health Spending Account (HSA) allows you to set aside some of your flex credits to pay for eligible out-of-pocket health or dental expenses that are not covered by your extended health and dental plans.

How it Works

During your initial enrolment and every year during the open enrolment period, you decide whether to establish an HSA and indicate how many flex credits to allocate to it. Then, during the plan year, when you have out-of-pocket health or dental expenses for eligible items or services, you can claim them against funds in your account.

First, use your flex credits for your non-taxable benefits—your extended health and dental plans. Next, allocate your remaining flex credits to a HSA (minimum $100).

If you do not allocate your remaining flex credits to a HSA, the remaining flex credits are added to your salary, taxed and then used to pay for your taxable benefits (Medical Services Plan coverage and/or employee basic life insurance) and any optional insurance products you elected.

Rules

  • Once flex credits are allocated to an HSA, you can only access those funds by claiming them for reimbursement of eligible expenses. You cannot cash in your HSA
  • Funds in an HSA must be claimed within two plan years or you lose them
  • If your employment ends, you cannot claim expenses incurred after your termination date. Any unused funds will be forfeited
  • The claiming deadline for your HSA is Feb 28 following the year in which the expense was incurred
  • You can access funds in your HSA after submitting your claim to your extended health or dental plan and your spouse's plan, if applicable
  • Unless you have coordinated benefits with your spouse, you can access your HSA funds when you submit your initial claim for reimbursement; just fill out the applicable HSA information on the electronic or paper claim. Check GroupNet for your balance
  • To be eligible for reimbursement under an HSA, the item or service must be recognized as an eligible expense under the Canada Revenue Agency (CRA) income tax guidelines

Key Feature

The list of eligible expenses and eligible dependents follows the CRA income tax guidelines, which are broader than under your benefit plans, enabling you to claim more items to your HSA.

Things to Consider

Review your previous claims history and try to determine if you have upcoming expenses (for example, new glasses). Given this information, are you likely to have out-of-pocket expenses? Is it worthwhile to you considering the risk involved and the extra effort required?

If you conclude that you'd like to allocate some flex credits to an HSA, what allocation would work best for you? Remember, you can't cash in your HSA, so choose an amount that you know you'll be able to claim.

Finally, the CRA's "use it or lose it" rule states that employees have two plan years to claim funds in their HSA or those funds will be forfeited.