5 Must Health Spending Account Features

The Complete Health Spending Account Guide

5 Must Have Features
for a
Health Spending
Account

How to Identify the Right Health Spending Account

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The optimal experience for a
Health Spending Account is the
combination of security with
exceptional service.
Health Spending Accounts are sold and administered with
countless variations. You will find stark differences in the
compliance levels and plan design, the administrators,
account access, and service levels.
The reason for the variety of Health Spending Accounts is the
vendors or administrators have all crafted their own unique
take on a small set of guidelines from Canada Revenue
Agency (CRA).

This abundance of choice in Health Spending Accounts has created a messy and confusing
marketplace for the small business owner. Deciding on a suitable Health Spending Account has
become difficult with potentially significant personal and corporate tax implications for the buyer.
Health Spending Accounts are inextricably linked to CRA. Factoring into your decision for a Health
Spending Account should be the administrator’s credibility and the overall compliance of the plan to
meet minimum conditions set by CRA.
Once you feel secure with the administrator and their plan, you should explore factors such as plan
management, plan access, and the overall service experience you will receive.
This guide will help you identify the right Health Spending
Account for you, your family and your business.

for a Health Spending Account

In recent years, the use of Health Spending
Accounts has grown in popularity. One overlooked
consideration in choosing the right Health Spending
Account is the administrator.
The relatively low barriers to entry have enticed
dozens of companies to set foot into the
administration of Health Spending Accounts.

1

This has created a flurry of choice in administrators.

Administrator
Credibility


3


1

A Health Spending Account can be potentially
damaging to you and your business if your armslength administrator lacks credibility. Perform proper
due diligence of the administrator by looking into the
history and operations of the firm. Some important
questions to ask include:
•
How long have they been in business? An
administrator that has less than 5 years experience
may warrant some caution.

Administrator
Credibility

•
How many customers do they have? Look
for an administrator that has a sizeable book of
business with at least 20,000 customers. Keep in
mind administrators typically only charge a small
fee for their services, meaning a significant volume
of customers is required to sustain all aspects of
operations.

Buyers Beware: Not all
administrators are created equal.

4


1

Administrator
Credibility

•
How many transactions do they process in a
day, week, and year? Try to understand what kind of
specialization they have developed. The higher the
volume of transactions, the more specialized their
knowledge and operations. A reputable firm with
20,000+ customers will process 40,000+ claims a year.
•
Can you speak to some of their customers? An
administrator with credibility will offer real customers
for you to contact. These customers should be in your
industry and the same size as your business.
•
What kind of experience do they have in dealing
with CRA? Through the natural course of business an
administrator will engage in discussions and dealings
with CRA. Find out how the administrator addresses
outstanding customer claims and circumstances with
the government.


5


1

Administrator
Credibility

•
Is the administrator regulated by a governing

body? The administration of Health Spending

Accounts is an unregulated industry but

that does not mean the administrators

should go unchecked. Find out if the
administrator is regulated

by a governing body and if they are

accountable for their actions. An example

would be an administrator

that is a public company and their

corresponding accountability to the governing

stock exchange and public shareholders.
•

Is the administrator transparent and audited by
a reputable accounting firm? Make sure you
know the financial wellbeing of your
administrator. You should have reassurance that
your $10,000 claim will be reimbursed.


6


2

Compliance
with Canada
Revenue
Agency

It’s important to be familiar with the background of
a Health Spending Account. By its nature, a Health
Spending Account involves corporate and personal
taxation. These events are inextricably linked with
acceptable accounting principles. A Health Spending
Account must be designed and administered in
accordance with Canada Revenue Agency CRA
guidelines. Here’s a list of the minimum conditions:
•
EMPLOYER/EMPLOYEE RELATIONSHIP

Adated contract must outline and establish this
condition.
•
ELEMENT OF RISK / IN THE NATURE of
INSURANCE

The Health Spending Account must be in the

nature of insurance with a necessary element of

risk. A reasonable benefit level of medical

expenses must be established for any given year

in advance.


7


2

Compliance
with Canada
Revenue
Agency

•
MEDICAL EXPENSES
Expenditures must be performed or prescribed
by qualified or registered practitioners and match
expenses found in the Medical Expense Tax Credit.
•
BACKDATING
Upon setup of Your Health Spending Account, it
cannot be backdated beyond the current month of
your enrollment. A wrongful assumption is often
made that all medical expenses can be deducted
regardless of the year they occurred. The contract
must be in place prior to the expense being
generated. For example: you cannot setup your
Health Spending Account on June 1, 2013 with an
effective date of January 1, 2013. A simple analogy is
you cannot purchase home insurance the year after
your home is destroyed and expect to make a claim
for the event.


8


Ensure you have convenient online access to your
Health Spending Account. A helpful online account
management system will have the following features:
•
•
•
•
•

3

Provide an update on current account status
View your claim history
Access reports
Edit your account details
Easy access to customer support with LiveChat

Online
Account
Management


9


4

Service
Level

A Health Spending Account is only as effective as
the accompanying degree of service you receive.
Investigate the following:
•
Claim turnaround time
•
Employee expertise and experience
•
Company policy for response time to your
inquiries
•
Multiple channels of access to customer

service (email, live chat, toll free phone,

Twitter, etc)


10


5

Perhaps one of the most important features for a
Health Spending Account is the ability to complete
a claim online. The more advanced online claim
systems will allow you to enter, submit, pay and be
reimbursed for your claim on one digital platform.
This key feature will dramatically improve your claim
experience by reducing your turnaround time for
claims, eliminating your trips to the post office, and
removing the use of paper for your transactions.

Online
Claims


11

Conclusion
and
Additional
Resources

We have covered a good deal of information on the must have features
of a Health Spending Account. You should now feel comfortable
understanding the most important elements surrounding a Health
Spending Account.
In summary, here are the key takeaways:
•

Investigate the credibility of the administrator

•

Verify for compliance

•

Look for online account management

•

Pay attention to the service level

•

Ensure you can make a claim online

Discover
the Savings
of a
Health Spending
Account
Now that you’re familiar with Health
Spending Accounts,
try our
Savings Calculator
and download your custom report.
Download Now


14

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