What is a Health Spending Account (HSA)?

An HSA is a flexible health benefits plan that enables employers to provide tax-free health benefits to their employees. At Coastal HSA, employers simply allocate a fixed dollar amount to each employee’s virtual health wallet. Employees can then receive reimbursement for eligible health expenses by submitting their receipts on our platform. Employees can use their HSA for a wide range of eligible healthcare expenses, including dental, vision, prescription drugs and over 100 other health expenses.

Who Can Open an HSA?

Canadian operating companies and non-profit organizations are eligible to open Health Spending Accounts for their employees, including employees who are also shareholders. Holding companies are not eligible. Additionally, sole proprietors and partnerships can open HSAs for themselves and all their staff if they have at least one arm’s length employee. An arm’s length employee is someone who is not related to the business owner. If you have a sole proprietorship and all your employees are related to you, you are not eligible to open an HSA.

How Does an HSA Work?

A Health Spending Account is funded by contributions made by the employer. When an eligible expense is incurred, the employee submits a claim to the HSA provider for reimbursement. The reimbursement is tax-free and does not count towards the employee’s taxable income. The HSA provider then bills the employer for the claim amount plus an administration fee.

For example, for a $200 dental expense, the employee pays and is then reimbursed $200. The employer is billed $200 * 0.08 admin + (5% GST on admin fee) = $216.80 total. The $216.80 is a fully tax-deductible corporate expense, and the $200 dental expense is a non-taxable benefit for the employee.

 

What are the Benefits of Having an HSA?

Having an HSA provides a number of advantages for both employees and their employers. One of the biggest benefits of flexible employee health benefits is that they allow companies to meet the diverse needs of their employees. Not all employees have the same needs or preferences when it comes to health benefits, and offering a range of options allows employees to choose the health benefits that best suit their individual needs.

For Employers:

Fully Deductible Business Expense: An employer who contributes to an Health Spending Account is able to deduct the amount of all approved health claims as a fully deductible business expense.

Flexible Coverage: With an HSA, employers can let employees choose the health benefits they need.

Cost Effective and Cost Control: HSAs can be more cost-effective than traditional group health plans. Additionally, they give employers the ability to pre-determine an annual cash amount that they are prepared to spend on their employees’ medical expenses.

Employee Attraction and Retention: Providing employees with access to a Health Spending Account can be an effective method for recruiting and retaining staff.

For Employees:

Non-Taxable Benefit: When an employee uses their Health Spending Account to pay for healthcare expenses, the benefit they receive (the reimbursement) is non-taxable.

Flexible Coverage: With an HSA, employees can choose the health benefits they need.

Easy Claim Process: The process of submitting a claim for reimbursement from an HSA is often relatively simple. At Coastal HSA, we’ve designed a super simple 30-second claim process.

Transparency: Users are able to view an accurate accounting of the funds in their account and have the freedom to allocate those funds to the medical services and treatments that are most important to them.

How Does an HSA Compare to Traditional Group Health Insurance?

 

Traditional Group Health Insurance

Comprehensive: Traditional group health insurance plans can include group life insurance, critical illness (CI) insurance, disability insurance (DI) and extended health insurance all in one package. However, with all that insurance, group plans can also be very expensive.

Monthly Premiums: Traditional insurance plans typically have a set premium, deductible, and copay, and they cover a wide range of medical expenses. With group insurance plans, individuals or employers pay a set amount each month for their coverage, and then the insurance company pays for all or a portion of their medical expenses. The organization’s monthly insurance premium depends on plan usage, but typically the employer will pay 110% – 120% for each dollar spent on extended healthcare. For example a $300 dental claim with 100% coverage will cost the employer around $345 (300*1.15). The fee in this example is 15% which includes agent commission, customer service, risk, claims adjudication, and administration.

Agents and Brokers: Typically agents and brokers are paid a commission from the insurance company ranging from 5% – 12% of the total monthly premium. A plan that cost $6000 per month with a 10% commission rate would result in a commission of $7200 per year for the agent or broker.

Deductibles & Copays: With extended group health insurance individuals may still have to pay a portion of their medical expenses out-of-pocket, depending on their deductible and copay. For example of a dental appointment costing $300 with a 20% copay would result in the employee paying $60 out of pocket.

Health Spending Accounts

Flexible: One of the key benefits of a Health Spending Account is its flexibility. Unlike traditional insurance plans that have set category coverage limits, an HSA allows employees to tailor their healthcare spending to their individual needs. Empowering employees with the agency to chose the healthcare they need is a meaningful way to engage and promote health and wellness within your organization.

Pay-Per Use & Transparent: With HSAs, employees know exactly how much their health benefits are worth. The ambiguity of how much the employer is spending and how much the employee is receiving is gone. Furthermore, employers know how exactly how much they have allocated for health benefits, and don’t have to deal with renewals, plan price negotiations and coverage changes. Instead, with the pay-per use, employers simply pay for approved claims plus an admin fee. At Coastal HSA, our admin fee is 8% and always will be.

Direct & Value-Driven: HSAs can help employers spend less on plan fees and more on actual health benefits. At Coastal HSA we’ve simplified the administration of HSAs and we’ve passed the saving onto you.

Accessible: At Coastal HSA, we don’t impose any plan restrictions, deductibles, or copays, that can impede access to healthcare. Eliminating these barriers, healthcare becomes accessible to all company employees. We believe in a flexible and personalized approach to health. This is why Coastal HSA was started.

HSA Carryover and Claims Outside of Canada

Our HSAs are packed with features employees love like no category limits, 1 year carryover, dependent coverage and the ability to use your HSA outside of Canada. In this section we’ll go over some of these features and how to use them.

How to Use an HSA to Save for Large Health Expenses

With an HSA, you can save for large health expenses like braces or laser eye surgery by utilizing the carryover feature. Not all HSAs offer this feature, but it is standard here at Coastal HSA. Carryover is limited to 1 year as per Canadian Revenue Agency (CRA) guidelines. Here’s an example of how it works:

Doug has a balance of $2000 at the start of 2022. He spent $1000 in 2022. When the plan renews in 2023, the remaining $1000 will carry over. Doug will then have a balance of $2000 (plan amount) + $1000 (carryover) for a total of $3000.

Doug has a balance of $3000 at the start of 2023. He spends only $500 in 2023. Once the plan renews in 2024, Doug will forfeit any unused carryover from 2022, in this example, it’s $500. Doug will carry over any balance from 2023, which in this example is $2000. Doug will then have a balance of $2000 (plan amount) + $2000 (carryover) for a total of $4000 at the start of 2024.

Using Your HSA Outside of Canada

With Coastal HSA you can use your account outside of Canada. As mentioned previously, the best part of an HSA is that it’s flexible and this characteristic continues to shine even when you go abroad. As long as the health expense is on the approved list, you can use your HSA to pay for it regardless of the country you’re in. However, in addition to submitting the foreign receipt, you’ll need to provide a screenshot from you credit card showing the exact amount you paid in Canadian funds as we do not exchange any currencies.

Dependents and HSAs

HSAs can be used for dependent health expenses. The first step is for the employee to ensure they meet the requirements listed below. The second step is for the employee to add them as a dependent under their HSA. Once added, health claims for the dependent may be submit by the employee.

CRA Definition of Common Law Partner – A person you are living with in a conjugal relationship, but are not married to, and one of the following situations apply.

They: have been living with you for at least 12 continuous months. This includes any period you were separated for less than 90 days because of a breakdown in the relationship. OR they are the parent of your child by birth or adoption. OR have custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

Medical Expenses Tax Credit (METC) vs Health Spending Account

This section is for small business owners and incorporate professionals who are primarily looking to provide a health benefit plan for themselves. A Medical Expense Tax Credit (METC) and an HSA are both ways to reduce the cost of personal medical expenses. For the METC and HSA the list of eligible medical expenses is the same. However, there are some major differences.

The METC is a non-refundable tax credit that Canadians can receive for out-of-pocket medical expenses when they file their personal income tax. This credit is applied to your personal tax return to reduce the amount of tax you owe. It cannot be used for a refund, meaning it cannot bring your tax balance above 0. Additionally, only expenses in excess of the lesser of $2,479 for 2022 or 3% of line 23600 net income can be claimed. The METC never reimburses 100% of the cost.

On the other hand, an HSA is a CRA-regulated plan where organizations reimburse their employees for personal medical expenses. All expenses are tax-deductible to the corporation, and an HSA reimburses 100% of the cost from the very first dollar spent. Overall, an HSA is the better option because it reimburses dollar for dollar from the very first dollar spent, whereas the METC only covers a portion as shown in the calculation below.

Income: $100,000

Eligible Medical Expenses: $5,000

The government gives this credit at the lowest marginal tax rate. Lowest Marginal Tax Rate = 20.6% (5.06% BC + 15% Federal)

METC

Lesser of $2479 or 3% of net income

$100,000 * .03 = $3000

$2479 < $3000

$5000 – 2479 = $2521 Medical Expenses For Tax Credit

$2521 * .2006 = $505.71 Tax Credit

HSA

$5000 *.08 = $400 Admin Fee

$400 * .05 GST = $20 GST

$5420 Fully Deductible Business Expenses

Bottom Line

In this scenario, you have the choice between receiving a personal non-refundable tax credit of $505.71 after spending $5000 of personal dollars or a fully deductible business expense of $5,420 by using an HSA. The 2 most important considerations are the tax you’ll pay to withdraw the $5,000 from the business and declare it as personal income (in this example it’s $2353), and the fact that the METC only kicks in after meeting the $2479 threshold. The clear advantage lies with the HSA as it provides reimbursement for every dollar spent, starting from the first dollar.

HSAs for Canadian Small to Medium-Sized Businesses (SMBs)

Providing an accessible and flexible health benefits plan is a great way for businesses to demonstrate their commitment to employee health. With Health Spending Accounts, Canadian Small to Medium-Sized Businesses (SMBs) can offer their employees accessible and flexible health benefits while staying within budget. SMBs simply allocate a predetermined sum of money into each employee’s HSA.

When working with the right Health Spending Account provider, administering the plan can be incredibly easy. This allows all employees to focus on the core functions of the business, rather than filling out paperwork for claims or going through a lengthy onboarding process.

At Coastal HSA, we’ve created an HSA-based benefits platform specifically for Canadian SMBs. Do you own or operate a Canadian SMB and want to provide flexible health benefits to yourself and your employees? Our team is here to answer all your questions and work directly with you to make benefits simple, accessible, and flexible.

HSAs for Incorporated Professionals

For most incorporated professionals the decision to set up an HSA is a piece of cake. If you’re the only person working for your corporation setting up an HSA will simply help convert your and your family’s personal health expenses into a tax deductible business expenses. It’s so easy and straightforward that we recommend all incorporated professionals in Canada consider opening an HSA.

How to Create an HSA

Let’s discuss how to create a Health Spending Account. Essentially there are 4 rules. All accounts must meet these requirements to meet the CRA’s definition of an HSA.

Once all of those conditions are met, the next step is to separate your employees into groups. You could have groups called Part-Time Staff, Managers, Junior Accountants, and Senior Web Developers. The name of the group doesn’t matter as much as ensuring that all members of a group have similar duties and responsibilities. For smaller organizations with many different roles, it’s acceptable to group people with different roles together. However, employees with similar duties and responsibilities cannot be in different groups.

Once you have established your groups, you need to determine how much health credit to allocate to each health wallet. For example you might decide that everyone in the group called “Junior Accountants” will each receive a $3000 health credit every year.

Before you launch your health spending wallet at Coastal HSA, our specialists review the wallet to ensure that it complies with all the guidelines.

When Can a Business Open an Health Spending Account?

Businesses can open an HSA at any time of the year. The amount allocated to the employees’ health wallets will be prorated based on the renewal date of January 1st. For example, if an HSA is allocated $2000 per year and created on July 1st, the account will receive an allocation of $1000.

At Coastal HSA, amounts are distributed quarterly on January 1st, April 1st, July 1st, and October 1st. For example a health wallet with a $2000 credit per year, will have a $500 credit applied at the beginning of each quarter.

Travel, Prescription Drugs, Life, Critical Illness and Disability Insurance

Health Spending Accounts (HSAs) can cover prescription drugs and travel insurance premiums. However you cannot submit expenses for life insurance (LI),critical illness (CI), or disability insurance (DI) premiums. This optional coverage can be purchased as group or individually from an insurance broker if desired. Below we’ll discuss some of the important considerations when building a benefits plan.

Travel Insurance

We believe that emergency medical travel insurance is essential for those who are traveling. At Coastal HSA, we recommend individuals purchase the coverage they need online and then submit a claim through their HSA.

After purchasing travel insurance you can submit an HSA claim for the emergency medical travel insurance portion. Trip cancellation and other non-medical travel insurance expenses are not eligible. Keep in mind, emergency medical travel insurance coverage can vary, so it’s important to read the policy to understand what’s covered.

Prescription Drugs

You can use your Health Spending Account credit to pay for any prescription drugs you or your family may need. For high-cost prescription drugs and contraceptives the Government of British Columbia provides coverage to all BC residents. This publicly funded prescription drug program is called Fair PharmaCare. All BC residents can register for the Fair PharmaCare plan, which helps families pay for many prescription drugs, dispensing fees, and some medical devices and supplies. The plan is based on income, so the less a family earns, the more assistance they receive.

After meeting the family deductible, PharmaCare covers 70% of eligible costs until the family maximum is met. Once the family maximum has been reached, PharmaCare covers 100% of eligible costs. You can view the Fair PharmaCare assistance levels here. Any money contributed from your HSA will count towards the deductible. 

Life Insurance

For life insurance organizations have 3 options: purchasing a group life insurance policy, encouraging employees to individually purchase coverage, or the combination of both, in which a relatively low level of coverage is offered and employees are encouraged to purchase additional coverage as needed.

Life Insurance can be crucial, especially if you have dependents or large financial obligations. The problem with group life insurance coverage is that usually it’s not nearly enough. For example a policy providing life insurance coverage of 2x an employee’s salary would result in a $160,000 benefit for someone making $80,000 per year. For the vast majority of people, a standalone $160,000 life insurance policy is not sufficient and they’ll need to purchase additional coverage.

Individual term life insurance often proves to be an excellent option due to its higher coverage options and the independence of coverage from a person’s employment status. An individual term life insurance policy allows individuals to obtain a desired amount of coverage, such as $500,000, $1M or $2M, and decide on the duration of the coverage needed, whether it be 10, 20 or 30 years. For the majority of Canadians, a term life insurance policy is the optimal choice because of its affordability, choice of term and higher coverage limits.

Disability Insurance

Obtaining Disability Insurance (DI) coverage can prove to be quite expensive. Fortunately, the Canadian Government has expanded Employment Insurance Sickness Benefits to provide coverage of up to 55% of an individual’s earnings for up to 26 weeks in the event that they are unable to work due to medical reasons. Both employers and employees automatically contribute towards this insurance through EI premiums. In the event that this coverage is insufficient, the employer or employee has the option to purchase a separate Disability Insurance plan through an insurance broker. However, it is essential to note that DI plans can be quite intricate, and obtaining good coverage can come at a high cost. Therefore, it is highly recommended to consult a reliable and licensed insurance broker before making a decision to purchase a DI plan.

Bottom Line

Choosing the right group benefit plan can be a tricky and costly task for organizations. A comprehensive plan that includes a Health Savings Account (HSA), Extended Health, Travel, Prescription Drugs, Life, Critical Illness and Disability Insurance provides an excellent range of coverage, but it comes with a hefty price tag.

A Health Spending Account (HSA) coupled with purchasing individual insurance coverage as need is excellent option for many employees. However, businesses operating in high-risk industries such as construction or mining may desire additional coverage such as a group life and a disability policy to help mitigate the unique risks associated with their work.

When designing a benefit plan, it’s important to avoid double coverage by paying for something privately that is already publicly funded. The value of coverage should also be considered carefully. For instance, a group Critical Illness policy that pays out only $15,000 may not be a valuable investment for employees. It is vital for each organization to work with its employees to determine which group coverage is the most important to them.

Coastal HSA’s Approach

At Coastal HSA, we’ve developed a powerful and accessible health benefits platform for Canadian Small to Medium-Sized Businesses (SMBs). With our HSAs, employees are empowered to choose the healthcare they need.

We’ve reduced barriers to healthcare access by offering flexible coverage and a super simple 30 second claim process. We’ve eliminated the need for paper forms and confusing plan booklets. We handle the entirety of the claim adjudication and reimbursement procedure within just 2-5 business days.

We work directly with business owners, human resources, and business operators to help them provide an amazing HSA-based health benefits plan. You can sign up and open an account for your business or organization directly on our website.

Book a Time to Chat About Health Spending Accounts

Interested to chatting with an HSA expert? Book a 20 minute chat with Coastal HSA here

What’s Covered Under an Health Spending Account?

HSA Coverage

Canada Revenue Agency (CRA) determines what healthcare expenses can be reimbursed through a Health Spending Account (HSA). Some items require a prescription or doctor’s written confirmation for the listed item to qualify*.

Dental

• Routine Dental Care, including Exams, Cleanings, Polishing, Oral Hygiene, X-rays, and Gum Treatments
• Restorative Dental Work, including Repairing, Root Canals, Fillings, and Tooth Extractions
• Denture-related expenses, including Repair and Replacement
• Orthodontic work, including Braces paid to a medical practitioner or a dentist. Expenses for solely cosmetic procedures are not covered
• Multiple allowable dental expenses

Durable Equipment

• Air conditioner for a person with a severe chronic illness, disease, or disorder. The eligible amount is $1,000 or 50% of the amount paid, whichever is less*
• Air Filter, Cleaner, Purifier for severe chronic respiratory ailment*
• Any apparatus or materials paid directly to a doctor, dentist, nurse, or hospital
• Any device designed to assist an individual in walking where the individual has a mobility impairment
• Baby breathing monitor with written certification from a medical practitioner that the infant is at risk of sudden infant death syndrome*
• Bathroom aids to help a person get in or out of a bathtub/shower or on and off a toilet*
• Brace for a Limb, Spinal brace
• Braille note takers, printers, synthetic speech systems, large print-on-screen devices, computer peripherals, and other devices designed for a person who is blind to operate a computer*
• CPAP – Continuous Positive Airway Pressure Devices and Supplies
• Crutches
• Diabetic Supplies and Devices
• Electronic bone healing device*
• Exercise equipment prescribed by a physician for treatment or recovery from an illness or injury*
• Hearing aids or personal assistive listening devices including repairs and batteries
• Heart and blood pressure monitoring devices, pace makers, including repairs and batteries*
• Hospital bed if required in home*
• Incontinence Supplies – catheters, catheter trays, tubing, etc.*
• Needles and Syringes
• Orthotic Inserts, Orthopaedic Shoes or Boots*
• Oxygen and equipment*
• Phototherapy equipment for treating psoriasis or other skin disorders. The expenses incurred for the purchase, operation and maintenance of the equipment can be claimed
• Prosthetics, Artificial Limb
• Renovation expenses specifically required for person with mobility impairment. Doctor Confirmation Required*
• Support hose, compression stockings, to relieve swelling*
• TENS/Electrotherapy Devices*
• Wheel Chair, Scooter, Power Operated Chair or lifts for persons with mobility impairment*
• Wigs – for people who have suffered abnormal hair loss because of an accident, disease, or medical treatment*

Medicines

• Any Prescription medicine obtained through a licensed pharmacist is eligible. Over-the-counter medicine is not eligible. Additionally, expenses incurred for drugs and medical devices purchased through Health Canada’s Special Access Program are eligible, even if they have not been approved for use in Canada
• Medicinal cannabis. Doctor Confirmation Required*
• Vaccines*

Hospital

• Ambulance charges – to and from Hospital
• Hospital bills

Vision

• Eyeglasses or Contact Lens*
• Laser eye surgery – the amount paid to a medical practitioner or a public or licensed private hospital
• Optician, Optometrist, Ophthalmologist
• Multiple allowable vision expenses

Miscellaneous

• Doctors note or form completed by a Doctor
• Employee premiums paid to a non-government health, dental or vision plan, such as Blue Cross are eligible for reimbursement. Premiums for critical illness, accidental death or dismemberment, life, or disability coverage are not covered
• Gluten-Free Products – expenses for gluten-free products related to celiac disease can be claimed, but only the incremental cost difference between the regular product and the gluten-free version is eligible. A qualified practitioner’s letter confirming the celiac disease diagnosis must be provided as supporting documentation*
• Home Care for an illness or disability. A letter from a licensed medical professional must be submitted with the claim to confirm that the home care is medically necessary*
• Private Healthcare – Membership or access fees paid to a private medical clinic must be pre-payment for eligible medical expenses
• School for individuals with mental or physical impairments. A written certification from a medical practitioner or the school’s principal/head is required to confirm that the equipment, facilities, or staff provided by the school are necessary due to their specific impairment*
• Under paragraph 118.2(2)(a) an eligible medical expense includes an amount paid to a medical practitioner, dentist or nurse or a public or licensed private hospital for medical or dental services provided to the patient
• Travel Insurance (Emergency Medical Only) The medical amount must be shown separately from any other travel insurance expense
• Travel 40-80km. Expenses incurred for public transportation (e.g. taxis, buses, trains) for travel of at least 40 km (one way) but less than 80km from home for medical services may be eligible for reimbursement. If public transportation is not an option, expenses for use of a personal vehicle may also be claimed. To claim transportation and travel expenses, all of the following conditions must be met: Substantially equivalent medical services were not available near your home, you took a reasonably direct travelling route, and it is reasonable, under the circumstances, for you to have travelled to that place to get those medical services
• Travel over 80km and outside of Canada. All of the following conditions must be met: substantially equivalent medical services were not available near your home, you took a reasonably direct travelling route, it is reasonable, under the circumstances, for you to have travelled to that place to get those medical services.
• For travel claims contact support@coastalhsa.ca to help you put an eligible claim together

Procedures & Treatments

• Cosmetic surgery – considered a medical expense if it is performed for medical or reconstructive purposes, such as correcting a congenital deformity or injury from an accident
• Covid Tests – completed and processed by a lab or pharmacy
• Electrolysis – amounts paid to a qualified medical practitioner. Expenses for solely cosmetic procedures are not eligible
• Fertility-related procedures – expenses incurred for medical treatment or hospitalization for conception of a child. Expenses for a surrogate mother are not covered
• Laser eye surgery – the amount paid to a medical practitioner or a public or licensed private hospital
• Medical services provided outside of Canada – if you travel outside Canada to get medical services, you can claim the amounts you paid to a medical practitioner and a public or licensed private hospital
• MRI, Ultrasound, X-Ray Treatments
• Tests – the cost of non-holistic diagnostic tests such as electrocardiographs, stool examinations, sugar content tests, metabolism tests, radiological services or procedures, urine analysis, spinal fluid tests, allergy and asthma testing*
• Treatment centre for a person addicted to drugs, alcohol, or gambling. A medical practitioner must provide written certification that the specialized equipment, facilities, or personnel provided at a treatment centre for drug, alcohol, or gambling addiction are necessary for the individual’s treatment*

Professional Services

• Acupuncturist (R.Ac.)
• Anesthesiologist
• Athletic Therapist (must provide professional registration number)
• Audiologist
• Chiropodist
• Chiropractor (DC)
• Dermatologist*
• Dietitian or Nutritionist (Registered)
• Gynaecologist (Ob. Gyn)
• Homeopath (Registered Professional)
• Kinesiology
• Massage Therapist (must be provincially registered)
• Mental Health Professional (Registered): Clinical Counselor (RCC), Psychiatrist (M.D.), Psychoanalyst, Psychologist (R. Psych), Psychotherapist (RP), Registered Psychotherapist, Social Workers (RSW, MFT)
• Midwife (Registered)
• Naturopaths (ND)
• Neurologist
• Nurse (RN, LPN, NP)
• Occupational Therapist
• Orthopedist
• Osteopath (must have a certificate or be licensed in the jurisdiction where the individual resides)
• Pharmacist
• Physician (MD), Pediatrician, Podiatrist (DPM), Surgeon
• Physiotherapist (B.PhysT, B.ScPhysio, B.Physio, CPTA)
• Plastic Surgeon (Must be medically required with doctor certification)*
• Prosthetist
• Respiratory Therapist
• Speech Therapist (SLP)
• Traditional Chinese Medicine Practitioner (TCM)
• X-Ray Technician

*Prescription or doctor’s written confirmation is required for the listed item to qualify.

**Expenses listed as eligible medical expenses in the Income Tax Act, its regulations and Interpretation Bulletins, as described in this list are subject to change as the Act is amended.

Reference: (Canada Revenue Agency, 2022). Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return

How to Calculate Travel Expenses

You may be eligible to claim travel expenses for medical services under certain conditions.

For travel between 40-80km, expenses incurred for public transportation (e.g. taxis, buses, trains) may be reimbursed. If public transportation is not available, expenses for use of a personal vehicle may also be claimed. For travel over 80km and outside of Canada you may claim all transportation and travel expenses.

For any travel expense to be reimbursed, all of the following conditions are met: substantially equivalent medical services were not available near your home, you took a reasonably direct travel route, and it is reasonable, under the circumstances, for you to have traveled to that place to receive those medical services (Canada Revenue Agency, 2022).

You must provide receipts for any accommodation and public transportation expenses. You are not required to keep detailed receipts for actual meal and vehicle expenses. Coastal HSA will determine a reasonable meal and vehicle allowance based on the distance traveled.

To calculate travel expenses:

• • Public transportation: submit receipt

• • Accommodation: submit receipt

• • Vehicle: $.58 per kilometer

• • Meals: $23 per meal, up to a maximum of $69 per day (sales tax included) per person. Subject to change. For the most update to date rates click here.

If you are a Coastal HSA client and need help, contact us via chat and we will help you submit an eligible claim.

Conclusion

A Health Spending Account (HSA) allows employers to offer a wide variety of tax-free health benefits to employees and their families. The health benefits in an HSA are fully tax-deductible for the business and they are tax-free for the employee.

Here at Coastal HSA, we believe in a personalized approach to health. We’ve built a powerful, flexible and accessible health benefits platform for Canadian Small to Medium-Sized Businesses (SMBs) so they can empower their employees to choose the healthcare they need.

References

1. 1. Canada Revenue Agency. (2022). Income Tax Folio S1-F1-C1, Medical Expense Tax Credit. Retrieved April 12, 2023, from **https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-1-individuals/folio-1-health-medical/income-tax-folio-s1-f1-c1-medical-expense-tax-credit.html#toc40**
   2. Canada Revenue Agency. (2022). Meal and vehicle rates used to calculate travel expenses. Retrieved April 12, 2023, from **https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-25500-northern-residents-deductions/meal-vehicle-rates-used-calculate-travel-expenses.html**
   3. Canada Revenue Agency. (2022). Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return. Retrieved April 12, 2023, from **https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html**