Canadian small businesses looking to boost employee benefits and reduces taxes should consider Health Spending Accounts (HSAs). In this article, we’ll discuss a tax-efficient way to provide employees with access to 100+ medical benefits.
How Does a Health Spending Account Work?
A Health Spending Account is a benefit plan that allows employees to pay for eligible medical expenses with pre-tax business dollars. These expenses can include medical, dental, vision, prescription drugs, and over 100 other health related expenses. Employers simply allocate a fixed dollar amount to each employee’s HSA. In this tax savvy solution, employees can then receive tax free reimbursement for eligible health expenses by submitting their receipts.
What Are the Tax Savvy Solutions that come from Health Spending Accounts (HSAs)?
There are several benefits of a Health Spending Account for both small businesses and their employees. For small businesses, HSAs provide a tax-efficient way to provide benefits to employees. The contributions made to an HSA are tax-deductible for the employer and are not subject to payroll taxes.
For employees, an HSA gives them access to funds to pay for eligible medical expenses and receive reimbursement from the HSA as non taxable benefit. This can result in significant savings when compared to paying for these health expenses out of pocket with after tax dollars. An HSA also provides flexibility, as employees can use the funds for a wide range of medical expenses that may not be covered by traditional health insurance plans.
Read More: The Ultimate Guide to Health Spending Accounts (HSAs)
