Health Spending Accounts (HSAs) and Wellness Spending Accounts (WSAs) play very different roles in supporting your health and well-being. While they might seem similar, there are fundamental differences between the two that every employee should be aware of to maximize their benefits effectively!
Health Spending Account (HSA)
An HSA is a non-taxable account designed to cover specific health-related expenses. Here's what distinguishes it:
Tax Implications: HSAs are non-taxable, meaning the funds allocated to this account are not subjected to income tax.
Covered Items: The list of covered items under an HSA is determined by the Canada Revenue Agency (CRA). It typically encompasses health, vision, and dental expenses—essentially, medically necessary things!
Scope of Coverage: HSAs focus on essential healthcare needs, providing financial support for treatments and services required to maintain or restore health.
Wellness Spending Account (WSA)
On the other hand, a Wellness Spending Account (WSA) differs in several key aspects:
Tax Implications: Unlike HSAs, WSAs are taxable. Reimbursements from a WSA are taxed similarly to income, either through payroll deductions or noted on your T4. The specific tax process varies by company, so it's best to inquire with your Plan Administrator for clarification if you have questions about it!
Covered Items: The list of covered items for a WSA is entirely governed by the employer. Employers decide what expenses fall under the WSA, focusing on elements that contribute to their employees' needs, but might not necessarily be medically essential. This can include fitness equipment, sporting goods,expenses related to alternative wellness practices, and much more!
Scope of Coverage: The WSAs main job is encouraging employees to invest in their health and lifestyle choices. They are also a great perk for employees, so they help companies to stay competitive in the workforce!
The covered items within these accounts can vary from one employer to another. It's important to refer to your specific account dashboard to verify the list of covered expenses for your plan.
Questions? Email support@getmyhsa.com or start a live chat with one of our agents!