Healthcare Spending Accounts (HSA)

As the Trustees announced last October, a new optional feature will be available with Flex Plans 1,2,and 3, effective September 1, 2006. This new feature is a Healthcare Spending Account (HSA).

HSAs are the latest innovation in employee benefit plans and are becoming very popular as a tax-effective way for employers and employees to partner in benefit plan cost management. As the name implies, they are pre-tax accounts set up in the names of employees, funded by the school, and administered by Manulife. Employees authorize payments from the accounts for expenses that are not covered, or only partially covered by the insurance plans. Things like the other 50% of major dentistry, or chiropractic expenses beyond the plan limit are covered, as are payroll deductions for health and dental plans and coverage for dependents not eligible under the group plan. HSAs are tax-smart because they are funded with pre-tax money, and payouts from them are not taxable to employees (outside Quebec).

HSAs are regulated by the Canada Revenue Agency (CRA). Eligible expenses are defined in the regulations, and are more comprehensive than those items covered by any group insurance plan.

The CSI HSA is intended to enhance the flexibility of our flex plans by making it possible for participants to use benefit dollars exactly as they see fit. Our arrangement enables each member school to set up exactly the right arrangement for them, and to make changes each year, if desired.

HSA Plan Details

  • Employees covered for health by Flex Plan 1, 2, or 3 are eligible for the HSA plan.
  • The HSA plan year will be from September 1 to August 31.
  • A member school will decide to offer an HSA to all or some of its staff. The school can define one or more eligible groups of employees, such as teachers.
  • The school will select the annual funding level for the HSA. The level can be any multiple of $50, with a minimum of $100. The same amount is to be applied to all employees in an eligible group. A different amount can be applied to employees in a different eligible group, if desired.
  • The school will remit one-twelfth of the funding level, plus the administration fee of 6.5%, to CSI every month.
  • Participants will be able to claim reimbursement of eligible expenses using a standard Manulife claim form. In general, any health-related expense which could be used to meet requirements for deductibility on an employee’s income tax return is eligible for reimbursement under an HSA. The CSI web site has a list of eligible expenses.
    • If participants leave the member school before the end of the plan year, they forfeit further contributions to their account. They have 60 days from their termination date to submit claims against their account.
  • At plan year-end, unused balances are carried forward to the following year and applied to the first claims that are presented. If a balance from one year remains unused at the end of the following year, it is forfeited and returned (net of administration expenses) to the member school
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      A school can elect either of the following arrangements:
    • The school chooses one flex plan for all employees and associates the HSA with it, or
    • The school enables all employees to choose their own flex plan and associates the HSA with one or more of the flex plans.
  • Premium-sharing arrangements for all CSI plans except the HSA are completely flexible. The HSA must be funded with employer money.

    • Full Issue: No. 302 - March 31, 2006

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