This article will help you understand why you can't change your allocation decisions once the window closes and provide some helpful tips for making those decisions within the given timeframe.
Understanding Allocation
The myFlexplan empowers employees to decide where their funds will be available for the year, a process known as "Allocation." Each year, you can allocate funds to a Health Spending Account (HSA) and a Wellness Spending Account (WSA), and there may be other options like Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), or other company-specific initiatives.
The "Allocation Window" is the designated period during which you must make your allocation decisions. This window is usually 30 days long from the start of the benefit year, giving you time to plan and forecast your expenses for the upcoming year. You might wonder why this decision must be made upfront and why it can't be changed later.
The requirement to make allocation decisions in advance is not just myHSA's policy; it’s a rule set by the Canada Revenue Agency (CRA). According to the CRA (refer to paragraphs 5-6 of this CRA bulletin), employees must allocate their benefits before expenses are incurred. This rule ensures that the benefits are treated correctly for tax purposes.
Think of it like buying insurance: you can't purchase coverage after an event has happened. Similarly, you must allocate your benefits before the expenses occur.
Tips for Making Your Allocation Decision
Having 30 days to decide for the entire year can feel overwhelming, so here are some tips to help you through the process:
1. Understand Your Needs and Priorities
Consider your current health status, medical needs, and wellness goals. Are you generally healthy, or do you have chronic conditions that require regular medical attention? Do you prioritize preventive care and wellness activities? Understanding your needs will help you determine how much coverage you require for both HSA and WSA.
2. Carefully Review All Options
Familiarize yourself with the details of the allocation options available to you. Understand what services and treatments are covered by each plan, their respective costs, and any limitations or restrictions. If you have any questions about your options, reach out to myHSA's support team for assistance.
3. Factor in the Full Scope of Your Coverage
Do you have any other health insurance or spousal insurance available to you? Remember that insurance is always used before your HSA, so find out the limits of any other plans to maximize your coverage.
4. Project Potential Expenses
Estimate your potential healthcare expenses for the year based on your family unit, medical history, and any planned services. With a forecasted budget, decide how to allocate your funds to stretch your coverage as far as possible.
5. Make Your Decision
After considering all relevant factors, allocate your funds between HSA and WSA (and other options if applicable) based on what best aligns with your needs, priorities, and budget.
The requirement to make allocation decisions within a specific timeframe is a CRA rule designed to ensure proper tax treatment of your benefits. By understanding this process and utilizing the tips provided, you can make informed decisions that best meet your needs and maximize the value of your myFlexplan. If you need further assistance, don't hesitate to reach out to our support team.