Health Spending Account (HSA) Frequently Asked Questions
Q: What is a Health and Welfare Trust?
A: The legal name for a feature in the Income Tax Act which allows self employed individuals and employees of corporations to deduct deposits which can be used to pay health and dental expenses. The deposits are directed to a Health Spending Account.
Q: Do I need to arrange a legal document?
A: Corporate trustees/administrators exist who arrange and monitor plans for a small fee.
Q: What are the fees?
A: The participant pays a 10% claim processing fee as well as applicable taxes.
Q: Why use an administrator/trustee?
A: CRA insists upon an arms length adjudicator to determine that claims are in compliance with the Income Tax Act (Section 20.01(1)).
Q: Are there maximum allowable deductions?
A: For employees of corporations there is no annual limit. Any unused deposits carry forward indefinitely.
Q: What if my business in not incorporated?
A: There are limitations to the annual deposits. Unused deposits must be used within 24 months of the deposit date.
Q: What if I have a benefit plan at work?
A: The HSA can be used to pay for co-insurances or for expenses not normally covered by your plan (i.e. orthodonture, spinal decompression therapy, laser eye correction).
Q: How do I go about setting up a plan?
A: There must be an employer/employee relationship to the plan. You may need to discuss your options with your employer. The Total Concept Group is here to help –click here to get started.
Q: What does my employer do?
A: The only involvement is the original arrangement and the recording of the deductible deposit in box 85 on your T4 slip.
Q: Does the employer need to include all employees?
A: No. You may be the only individual who has an interest or a need for solving unique or excessive medical expenses.
Q: What is covered?
A: This is not insurance as you know it. There are no limitations. For an extensive list of treatments and services click here.
Q: What if my claims are higher than the deposit total in the HSA?
A: You decide your deposit commitment annually. You can save the expense until future (i.e. monthly or annual) deposits allow the bill to be reimbursed.
Q: Is there a medical involved?
A: Once again, this is not insurance that requires medicals because it is a reimbursement program. Some treatments/services may need to be confirmed by the administrator/trustee to confirm compliance with the Act.
Q: What sections of the Income Tax are applicable?
A: Refer to IT339R2, IT85R2 and IT519R2.
Q: How do I start?
A: Simply click here and follow the instructions. A representative from The Total Concept Group will be in touch with you once you have contacted us through the site.
Q: What if I am not currently working?
A: The concept relates to medical care for all family members. There must be some relationship to a company for the HSA to be applicable. This is not available on an individual basis. However, if you were interested in the concept of Tax Free Medical Care but do not work, you will qualify as the dependent of your spouse, if your spouse works. The plan can be arranged through the spouse’s employer.
For information on how YOU can save with a Health Spending Account, click here to get started.
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